Despite the fact that British online property portal Zoopla continues to lag behind the sector’s number one property portal, in the shape of RightMove, this has not stopped Zoopla looking at its strategic options going forward. The company has appointed stockbroking giant Credit Suisse to look at a variety of options one of which could be a £1.3 billion stock market flotation. If this does not signal the hazy days of a property boom then what does!
We are in no way shape or form suggesting that Zoopla is or is not worth £1.3 billion but the fact that the company is looking to float on the back of the property boom in the UK certainly reflects the opinion of many that we are approaching a property house price bubble.
The UK property sector
As we have discussed time and time again, the UK property sector is certainly moving quicker than the UK economy even though this is now starting to show signs of recovery. There is a general feeling that a lack of quality stock is encouraging competition for properties and indeed the UK government’s Help to Buy program is unfortunately making the situation worse in the short term. At this stage of the economic recovery, and taking into account the financial weakness of many banks in the UK, there would be nowhere near the same mortgage finance available without the government’s financial support.
Quote from PropertyForum.com : “Despite the fact that the UK economy is still struggling to move towards a consistent growth path after the various financial shocks of recent times, the UK property market continues to push higher and higher.”
It will be interesting to see how the UK property sector performs in the short to medium term and indeed whether the Bank of England, in the shape of new governor Mark Carney, is able to control the potential house price boom.
Zoopla continues to expand
News that Zoopla is looking towards a possible stock market flotation, which would net the company’s founder around £100 million, comes hot on the heels of a number of property portal acquisitions and multi-million pound TV advertising campaign. The company is certainly pushing out the boat to get its name out and about and make the most of the ongoing demand for UK property.
While much of the talk revolves around a potential stock market flotation valuing the company at £1.3 billion there is every chance that this “strategic review” could indeed flush out a potential buyer for the company. It does not appear to be the company’s prime aim at this moment in time but when you show your cards, and the cards appear to show the current owners are willing to give up control, this does somewhat put you in the shop window.
One interesting fact which has emerged with news of a possible £1.3 billion stock market flotation for Zoopla is that this would value the company at 50 times earnings for 2013. This is a phenomenal figure which is way above the traditional ratings for UK companies on the stock market let alone those looking to float in the current economic environment.
There will be rumours and counter rumours with regards to the future of Zoopla, the strategic review could take some time to complete but this is a story which is set to run and run and could turn out to be very interesting indeed!