Franchise Spotlight: Real Estate
The future of the industry is bright thanks to government support for first-time buyers, among other factors.
Real estate franchisees typically oversee the sale of residential and/or commercial property on behalf of its owners. The industry growth rate of Australia’s $29bn real estate sector was 2.6% a year between 2015-2020, according to IBISWorld.
However, the market research firm predicts that the Covid-19 pandemic will shrink revenue by 8.1% between 2020-21, as net migration falls and many tenants and businesses struggle to pay their rent.
But while current industry trends have the commercial sector faring better at the time of writing, IBISWorld believes the residential segment – through rising house prices propelled by government support for first-time buyers – will power robust expansion over the next five years.
Online-only operators threaten the traditional business model, so the shrewdest aspiring franchisees will quiz franchisors about their plans for digital innovation.
Real Estate industry analysis
According to IBISWorld, the five largest real estate franchise networks in Australia are Ray White Group, LJ Hooker, Harcourts International, Raine & Horne and McGrath. All operate in both residential and commercial markets, save for McGrath, which is exclusively residential.
SVN is perhaps the largest franchise network to focus solely on commercial real estate, which the company says yields higher earnings, repeat business and more regular business hours.
This category also includes business broker franchises, which oversee the sale of businesses. Finn Business Sales, which mediates the sale of businesses and franchises in every state and territory across Australia, says most of its business comes from referrals.
Franchisee candidates might, depending on the franchise, need some experience in the real estate sector to be considered. If they already own an independent agency, they can often relaunch under the franchise brand.
This gives them the benefit of a well-known, (hopefully) trusted brand, and additional support, resources and tools to help them reach a broader pool of buyers and sellers.