Franchise & Brands are King in Portugal – What About your Country?
In my search for a CEO for Gray Stuart Portugal I have gone through a steep learning curve but as they say knowledge is Power and you never too old to learn. This is especially true in relation to the booming market here in Portugal. The similarities with Philippines are very similar but you have to understand one country is first world and the other is developing world.
The similarity is that both countries use big brands or franchises to recruit anyone who can sell and not concerned who they sell to be it a Grand Mother on her death bed or your best friend. They are not actually that concerned if you succeed or not. It’s almost like an MLM (Multi-Level Marketing) approach to real estate. The formula is very simple recruit enough people like this and good ones will survive and the 90% who don’t make it will still have bought in sales to the company. In essence it is all about economies of scale and volume.
This is what I call the mass market but to some degree is used also at high level sales just using different brands. The Developers in Portugal and Philippines use this same technique for their direct sales forces and I am sure it’s the same in many other countries in the world but more pronounced in these two countries
Let’s deal with Remax and Century 21 in Portugal, Portugal is number two market for Century 21 and number 3 for Remax in the whole world and with a population of around 10m, quite amazing when you think about it. In simple terms and very similar to MLM when your recruiting someone to sell especially to their friends they want a brand they can hang their hat on and say look at me I am now working for one of the world’s greatest brands let me sell you a house! There are some issues for these companies down the road is that as prices continue to rise less and less of their friends will be able to afford to buy what the market is offering. However, that is another subject for another day.
Franchises like Southerly’s and Fine & Country offer a slightly different more up market model but again are more successful than the stand alone boutique agents who find it very hard to compete in this market. However, some people still choose to go it alone and some are successful.
The interesting thing here is that the big Five such as JLL and Savills are very much into residential in a way they are not into in other markets which tells you something about the Portugal real estate market. Berkshire Hathaway recently bought Portugal Properties which again shows you big is beautiful here in Portugal. So if you want to be big in Portugal how do you achieve that against such strong competition for what in reality is a relatively small market? Again that’s another subject for another day but for EHP we feel quite convinced our business model will work here.
Now we have outlined and discussed Portugal we should look at how the rush to brands is affecting business in your market. Very interestingly and after speaking with Alfredo Bloy-Dawson of Bloy-Dawson Consulting it’s happening a bit in Spain in that the companies that have a Franchise such as Chesterton’s, Engel and Volkers, Southerly’s and similar are killing it in Costa del Sol as clients are drawn to the bigger brands. This market in particular has too many one man bands with some 1500 agents for a market that doesn’t sell 1500 properties a month. Again if you don’t want to be part of a Franchise or a large brand how do you make sure you stick out and get your market share?
I hope you found this article thought provoking and in some way made you think about your real estate business and your exit strategy. The most important question is what can you do different and what makes you relevant to your clients.