There are a number of publically listed companies that have an acquisition growth strategy and they are known as aggregators. It's also known as a roll up strategy, and in general they are very profitable. They buy small business, in a fragmented market, then apply the resources of a large business (procurement, finance, human resources, management etc) and make super profits.
This list of aggregators is quite long, I won't bore you with all of them. Off the top of my head I can think of:
ONT - 1800 Smiles, a dentistry aggregator
RFG - Retail Food Group, a franchise aggregator
DMP - Dominos Pizza Group, another franchise aggregator
GEM - G8 Education, a child care centre aggregator
etc etc
OK, so the residential property market is pretty fragmented, with heaps of mum & dad investors, and a number of private companies.
My question is, why are we not all renting from an ASX listed company? Could they not build and maintain homes cheaper than Joe average, or the Mum & Dad investors? What would it take for publically listed companies to become involved in owning and mainting residental property? Is it changes to tax law, negative gearing, or is property just too flipping expensive for publically listed companies to contemplate investing in? i.e. ROI too low? Any other reasons to prevent publically listed companies investing in residential realestate?
As an investor, I don't really want to be the realestate equivalent of the corner deli when MacDonalds shows up, which can produce cheaper food faster than I can! What are the barriers to entry that publically listed companies face when considering investing in Australian Residential Realestate?
