Hybrid agencies won't hit 10% market share in next two years - ZPG

Zoopla has been reported as saying hybrid estate agencies will not reach their professed targets of achieving 10 per cent of the market share in the next two to three years, nor their longer term ambition of 15 per cent in the next five years.

The City consultancy Jefferies, which has an association with Zoopla, has told its investor clients in a note - sent also to journalists - that ZPG “remains agnostic about the pros and cons [of] estate agency models” but “it does not expect the hybrids to have 10 per cent market share in the next two to three years or even 15 per cent in the next five years.” 

The note says that the portal group, which last week reported record figures, believes hybrids “are more aligned with the philosophy of ZPG than traditional agents, by the fact they have fully embraced the digital channel” but felt that in the long term the hybrid and traditional agency models would increasingly converge.

The note also suggests that ZPG’s property services business could double in future, based on its four main product groups - portals, software, website services and data services. 

“If we assume a market of 25,000 potential partners and four products, there are around 100,000 revenue opportunities, of which it is reaching in the region of 25,000 with a realistic aspiration to sell into 50,000 of those opportunities. In short ZPG believes its Property Services penetration could double from here” says the note.

Jefferies says Zoopla, which is currently trading at around 370p per share, could have a target price as high as 483p. The firm gives ZPG a ‘buy’ recommendation.