The top 20 real estate consultancy companies in Romania make a EUR 42.6 million market, found a study carried out in January and February this year by CENTURY 21 Romania. The value of the market was calculated by adding the 20 companies' turnovers in 2005 from the Ministry of Finance.
The top 20 real estate agencies acting in Romania is led by a foreign company. Colliers International has the top position in the ranking with a 25.4 percent market share in terms of turnover, Gabriel Alexandru, vice-president of CENTURY 21 Romania exclusively told Business Review. In 2005, the agency's office in Bucharest posted more than EUR 5 million in turnover, while its profit was some EUR 780,000, according to the study.
Second in line comes local firm Eurisko with a little more than 13 percent in market share, followed by Euroest, Regatta and CB Richard Ellis. Only two real estate agencies active on the Romanian market enjoy market shares bigger than 10 percent, while the bulk of the agencies in the top 20 have less than 2 percent in market share, turnover-wise.
The top five companies in the ranking posted turnovers bigger than EUR 1 million each in 2005, while the next three in line were close to approaching this threshold, reveals the study.
Only 125 agencies have more than EUR 10,000 in turnover
The real estate agencies market is fragmented in Romania, Alexandru told Business Review. At end -2005, as many as 15,700 companies could perform real estate transactions, according to data from the National Trade Register Office (ANRC). However, according to the study, out of this number, only 1,700 had real estate transactions as their main business activity. A little more than 500 companies had zero turnover in 2005, while a similar number of companies had no employees at the end of the same year. These can be special purpose vehicles, said Alexandru, and these companies alone have a 7.5 percent market share. Of the total, 500 firms posted turnovers higher than EUR 10,000, which, according to Alexandru, is a very small turnover for a real estate agency.
The Bucharest real estate agency market numbers 125 companies which post more than EUR 10,000 in turnover and have more than four employees. The top ten companies on the market were excluded from the study.
Around 17 percent of the agencies surveyed believe they are in the top ten and 40 percent don't even know their market share. Despite their lack of theoretical knowledge of the market, the top 20 of these agencies increased their business 11-fold between 2000 and 2005, and the bottom 20 only four-fold. “Big ones are getting bigger, while small ones are getting smaller. The big companies will attack the smaller ones' market share,” said Alexandru. Overall, the productivity on the market is low; companies are weakly capitalized and indebted. Real estate agencies also face human resources problems, with one in three employees leaving the company.
The average market share for the agencies in the study stays at some 0.2 percent. In these conditions, it is hard for these agencies to create a strategy, which is exactly what they need. Other solutions would be to merge or to become part of a network, which is another thing missing in Romania. Agencies need to externalize training and other services such as accounting and legal services to improve their agents' productivity, access quality projects and gain exclusivity contracts, says Alexandru.
Two agents close a single deal a month
The average number of employees in a real estate agency in 2005 was ten, while the average value of assets was EUR 110,000. The average turnover stood at some EUR 100,000 and debts at over EUR 96,000.
“This shows a high debt ratio, almost 88 percent, which can also be translated into debts to shareholders and to companies in the group which are paying bills or funds otherwise invested in the company without increasing the social capital,” said the vice-president.
This high level of debt doesn't allow real estate agencies to get access to financing. Moreover, according to the study, these agencies achieve a productivity of only EUR 850 monthly per employee, which is quite low and may mean official data differ from the reality. The real estate agency's image is most important for agencies' owners and managers, the same study reveals. Second in line comes recruitment, followed by the need for training and for a property listing system. The number of transactions fell recently says Alexandru. Eleven real estate agents are closing seven deals a month, which roughly means two agents are needed to close a single transaction in a month. Despite this data and of the fact that one third of the agents in the surveyed agencies have been employed for less than one year, most of the agency managers are satisfied with their agents, says Alexandru.
Around 80 percent of the real estate transactions in Romania involve, in one way or another, foreign companies or individuals, which mean one of three clients is foreign, says Alexandru. Most of the clients – an overwhelming 76-percent majority – come from Europe. The percentage of customers coming from the US is likely to increase, believes Alexandru, due to the increasing number of US real estate organizations coming to Romania.
CENTURY 21 Romania, the master franchisor for the real estate brand in Romania, conducted its first study here to get to know the local market better prior to starting its activity in the country. It focused on managers and owners of 115 agencies in Bucharest.