Foxtons to expand outside of London

Foxtons’ focus on London is now holding the group back

Foxtons (LON:FOXT), the London-based estate agent, has announced its new strategy as it looks to gain from the property sales boom.

The firm told its investors on Thursday that it intended to expand beyond the London market, by targeting sales across the south-east, in addition to other UK cities.

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Foxtons is also targeting the build-to-rent sector. It is doing this by buying small lettings companies, including the purchase of competitor Douglas & Gordon for £14.25m.

While it once provided the group with an edge, Foxtons’ focus on London is now holding the group back.

Over the past ten years, house prices have taken a hit and sales have slowed in the capital, specifically in the more expensive areas where Foxtons operates.

Since 2014, the Foxtons share price has tumbled from just under 400p to just below 60p, its level today.

The Financial Times reported that Catalist, an activist investor which owns 2% of the company, believes the estate agent has “lost its way”.

Catalist added that Foxtons had been outperformed by competitors in London, and that it had stalled over the past five years.

However, the analyst reckons Foxtons could become a £1bn company if it expands outside of London. At present, the estate agent’s market cap is around 20% of that level.

In a show of optimism, Foxtons said it expects to deliver H2 profits ahead of its levels before the pandemic on rising demand in London.

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