Sept 20 - London estate agent Foxtons has made a strong debut on share markets - but could it be another sign that the UK capital's property market is overvalued? David Pollard reports.
Highly desirable and a good location. Not an estate agent brochure, but investors' enthusiastic welcome for Foxtons. Sixty per cent of shares went for 230 pence each. The very top of the expected price range - valuing the company just shy of £650 million. Investor appetite for the sale is logical, says Edward Hadas of Reuters Breakingviews. SOUNDBITE: Edward Hadas, Economics Editor, Reuters Breakingviews, saying (English): "The government seems very committed to a property boom that wins votes - and ends in disaster, but that's the future. And the investors' enthusiasm for Foxtons is fairly rational since they lead the London market and, you know, it's better to sell shovels than pan for gold, and Foxtons is the great shovel seller in this London property gold rush, so why not?." Foxtons specialises in prime central London property - a market riding the crest of a nearly 10 per cent year on year rise in sales prices right now - the fastest rise in seven years. Foxtons shares look set for big rises, too - judging by their peers in the same market, Countrywide and Crest Nicholson. Both have seen their stock gain over 50 per cent since floating earlier this year. Charles Stanley's Jeremy Batstone-Carr. SOUNDBITE: Jeremy Batstone-Carr, Chief Economist, Charles Stanley, saying (English): "It has to be said that the company might be taking advantage of extremely buoyant conditions, particularly in London - where the company has, of course, a focus - in order to relaunch itself. We could be in bubble territory and maybe the London property market will go on strengthening for some time, but I think that questions are becoming increasingly shrill regarding whether a bubble is being created in London property." Profiting most from the sale is private equity group, BC Partners, who owned the majority of shares sold. Though it's not known how much they'll gain. Back in 2007, the founder of Foxtons pocketed £360 million when he sold the firm. Just months before the start of the last UK housing crash.