Top tier London agency Knight Frank has denied closing their super prime London property department, as two senior partners left in a rumoured redundancy cull. The casualties were Tim Wright and Richard Cutt, both veterans at the firm and department heads within the super prime division.
Officially quoted as “retiring from the partnership”, DMZ investigates whether these were one-off redundancies or if the news speaks to a broader trend in the London market.
The agency were keen to play down the impact of the news. A spokesperson said “the announcement regarding two partners retiring from the partnership is unrelated to anything else. However, there is always going to be a certain level of attrition in a business of our scale.”
Nevertheless, there is now an alleged rumour that the agency have laid off their entire super prime division in London, which would create waves through the market on a number of levels. The slashing of central London staff (particularly senior management) is allegedly being blamed on a sales slump triggered by tax hikes on investment properties, the 2014 stamp duty rise and uncertainty caused by the Brexit vote.
The official statements from Wright and Cutt were stereotypically corporate in style.
Wright said, “I have loved my time at Knight Frank…but it’s time for a complete change” while Cutt added, “I have been proud to be part of the global success story of Knight Frank for the past 20 years. However, I have now decided that the time has come to explore new opportunities in the prime London property market”.
It isn’t just Knight Frank who are feeling the winter chill of redundancies. Last week, DealMakerz reported on the Countrywide redundancy bloodbath and there are rumours in the market that numerous other established agencies, including Strutt & Parker, are ready to make cuts in reaction to the super prime slowdown and the emergence of online-only agents.
Last month Strutt & Parker released a statement on the back of alleged dismissals, “we have made appropriate changes within our business having considered our exposure to the market – and we have reviewed resources and headcount as part of this.”
You don’t need a jargon buster to see how significant ‘reviewing headcount’ could be for the agencies staff.
The layoffs at Knight Frank can hardly have come as a surprise to the two department heads, the usually bullish agency has been warning on the implications of a prime London downturn for over a year now.
This week Knight Frank’s Head of Global Research Liam Bailey said “looking at the prime London market, we believe that a 7% fall in prices across the western part of central London in 2016 means that we are close to the bottom in terms of price adjustment in this market”.
DMZ thinks calling the bottom of the London super prime market is premature; a large majority of super prime buyers are foreign nationals and with the Brexit outcome still far from secure, high-end buyers are surely going to continue to adopt a wait-and-see approach until the political dust settles. As for the broader agency redundancy trend, we at DMZ see two separate issues – prime central London stagnating due to political uncertainty and broader structural changes, with online agents making inroads into traditional estate agents bottom line.
This week Purplebricks announced their first ever profit of £300,000 – not world-changing by any means, but how many instructions have they taken from traditional agents?