Thursday, August 28, 2008

2008 will be the first difficult year for real estate consultants

The top five real estate consultancy companies in terms of turnover posted an over 26% profit margin last year, while turnover doubled (49 million euros in revenues). However, the growth rate is expected to slow down significantly this year, following the international credit crunch that has affected the domestic real estate market.

"This is a difficult year, in which three markets are slowing down and are not performing as well as they did last year. We continued to grow in the first half, but the problems on the market in the first six months will catch up with us in the second half. This goes for the entire market, but, speaking exclusively about Colliers, we set out, conservatively, to reach the same turnover and profit as in 2007," states Bogdan Georgescu, managing partner and shareholder of Colliers International.

Colliers posted 21.2 million-euro revenues and 7.3 million euros in profit and was also the market leader in 2007, according to data on the Economy and Finance Ministry's website.

Number two on the market was CBRE Eurisko, whose business stood at 14.4 million euros and profit reached 3 million euros, while Jones Lang LaSalle ranked third in the first year since its comeback on the market, with 4.6 million-euro revenues and 1 million-euro profit.

The other top five companies are Cushman & Wakefield Activ Consulting (4.5 million-euro business and 1.2 million-euro profit) and DTZ Echinox (4.3 million-euro business and 0.4 million-euro profit), so that this is the first year when companies that belong to international networks exclusively dominate the market, after CB Richard Ellis bought Eurisko Consulting at the beginning of the year and Regatta failed to make the top five.

After Eurisko posted over 150% business growth in 2007, the company's officials would not go into details about this year's targets.

"Whereas early in the year, we stated we set out to attain 40% growth, I can only say that the target remains the same. It remains to be seen whether we reach it or exceed it, but I do not want to comment too much on the subject until the end of the year when we draw the line," states Radu Lucianu, managing director of CBRE Eurisko.

The cumulated profits of the five companies amounted to 12.9 million euros in 2007, which made real estate consultancy one of the most profitable service businesses.

The market is affected by the decline in the sale of flats this year, as well as by the apathy of the real estate mergers and acquisitions segment, as only a few major deals were concluded, generally without real estate consultants. One of the few exceptions was the sale of the Iris Shopping Centre in Titan district of Bucharest, where CBRE Eurisko assisted the buyers, DEGI.



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