Purplebricks has announced it is entering the German real estate market which will be the online estate agent’s first move into Europe.
The agency has entered a 50-50 partnership with German media giant Axel Springer, already a major investor in the firm, to create a joint venture called NewCo.
This new operation is buying a 26% stake in German digital estate agency Homeday for €25 million (£22m) with the option to increase their shareholding next summer.
Homeday already dominates Germany’s online estate agency market with a 50% share after launching in 2015.
Purplebricks Says The Move Will Improve Market Share
In a trading update statement, Purplebricks says the move will improve its market share in what is proving to be ‘a challenging market’.
Chief executive Michael Bruce said: “Our Homeday investment secures a foothold in the second largest residential European market.
“This is an opportunity and allows us to partner with a committed and dynamic management team and remain focused on realising the opportunity.”
He went on to say that with support from Axel Springer and Purplebricks, the Homeday team will transform Germany’s online house selling and buying market and deliver value for shareholders and customers.
Homeday To Run Under Its Current Branding
The plan is for Homeday to run under its current branding and be led by its current management team with the new investors each having a seat on the board.
Currently, Homeday has revenues of around €3.5 million (£3.1 million) in the year to last December, but recorded a loss of €3.2 million (£2.8 million). The firm is predicting strong revenues this year and will break even in 2021.
However, Purplebricks has a 70% share of the online house buying and selling market in the UK.
Despite losing £26m in the year to April on a pre-tax basis, the firm says it will continue to invest heavily in its brand awareness campaigns.
More People Are Aware Of Purplebricks
And one survey recently highlighted this strategy is working as more people are aware of Purplebricks than they are of leading property portal Rightmove.
To underline its dominance, nearly £10 billion worth of properties were sold in the UK on the Purplebricks platform in the last financial year.
The move into Germany is the latest country that Purplebricks has expanded into and last month the firm announced it was breaking into Florida for the first time.
The firm already operates in Las Vegas, Los Angeles, Sacramento, Phoenix, Fresno and San Diego and parts of New York.
One reason for this, the agency claims, is down to a ‘total cultural shift’ in the US with traditional estate agents losing trust among house sellers and buyers.
Purplebricks also announced in July that it was planning to buy the Canadian real estate firm DuProprio for £30m.