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Purplebricks has secured an equity investment deal amounting to $177 million and will take its DIY real estate business to the global property mecca of New York, according to real estate portal Inman News.
Purplebricks’ expansion into the New York market follows its United States launch in Los Angeles earlier this year, and after a less-than-smooth launch and expansion into the Australian market in 2017.
The move to New York will be the group’s fifth city in the US after opening in San Diego, Sacramento and Fresno earlier this year.
Inman reported that this expansion has been made possible by a $229.61 million investment from German conglomerate Axel Springer.
Purplebricks CEO Michael Bruce said in a statement to Crowdfund Insider that the funds would enable the group to push boundaries and move forward.
“We are confident in the future, welcome the endorsement of Axel Springer and look forward to continuing to deliver value for all of our shareholders,” the CEO said.
Mr Bruce told The Independent that New York was an obvious choice of market to set up in and investors agreed, with their shares lifting 4 per cent on the news.
“With higher than average rates of commission and transaction volumes, New York was the natural first move on the East Coast for Purplebricks,” Mr Bruce said.
Fine
Earlier this year, the high-profile group was fined $20,000 in Australia for allegedly misleading consumers about not disclosing the terms of their fees.
The Queensland Office of Fair Trading found that the agency entered into agreements with clients between November 2016 and June 2017 without disclosing the fee terms.
The OFT at the time of the fine acknowledged that Purplebricks had amended both its advertising as well as its contracts and processes to ensure more transparency.
Purplebricks claims to be the biggest real estate agency in the UK, where it sells $16.55 billion of property a year.
It’s performance in Australia has yet to reach such heights, but it did sell $1.1 billion of property in its first 14 months.
The online agency launched to much fanfare in the Australian community due to their flat-fee model, which would charge a one-off to sell a home.
At the time of launching, the group said that the fee would include professional photos, marketing and advertising and would only charge a further top-up fee for homes taken to auction.
