Sherry FitzGerald is now set to become a major force in the new homes market following the acquisition of the Ross McParland agency. Although this week's take-over took the property industry by surprise, it was known Sherry FitzGerald had been looking for ways to cash in on a vibrant sector of the property market. Its decision to target the Ross McParland agency makes good business sense, given the broad range of developments handled by the company and the loyalty of its clients in the building industry.

While Sherry FitzGerald has had a new homes division for almost a decade, it was not one of the front runners in the Dublin market. Ross McParland, on the other hand, saw his business grow rapidly through the 1990s. The agency handled some of the most prestigious and expensive housing schemes in the Dublin area, but also a considerable volume of starter homes in areas such as Bray, Lucan, and Clonee.

The agency's major clients have included Menolly Homes, Jackson Properties, O'Malley Construction, Ballymore Homes, McGarrell Reilly, Ravenshall Developments, Sherwood Homes, Noonan Construction, Tower Homes, Cosgrave Development, Dunloe Ewart, Dwyer Nolan, Temple Bar Properties and Kingcroft Developments.

Sherry FitzGerald is paying almost £4.5 million for an 80 per cent stake in the Ross McParland agency, with an option to buy the remaining shares. The price puts an overall value on the new homes agency of £5.6 million.

Significantly, Sherry FitzGerald's new acquisition will continue to trade under the Ross McParland name, because of its high profile in the business. Over the past eight months, Ross McParland and Sherry FitzGerald between them have sold over 1,700 new houses and apartments with a capital value of £240 million, with the lion's share being handled by Ross McParland.

The new company will obviously be a strong challenge to other players, notably Hooke & MacDonald, which sold over 2,500 houses and apartments in Ireland in the last 12 months. It also handled a considerable number of apartment sales in Scotland.

The other main competitors in the Dublin market include Hamilton Osborne King, which has forged a close relationship with the building industry, and Leixlip-based Gerry Leahy, who since leaving Gunne three years ago has built up a substantial new homes business, mainly in west Dublin.

One of the hidden benefits of the take-over for Sherry FitzGerald is that it will be in line to pick up sales of second-hand houses from people buying new homes from the company. The extra business should boost its overall market share.

The take-over could possibly encourage one or two of the building societies to consider taking a shareholding in one of the agencies specialising in new homes. The societies are currently cash rich and are having to compete strenuously for the new homes business. By investing in a new homes sales agency, they would be in a strong position to corner an increasing share of the market.

Ross McParland, who founded his company in 1985, will be managing director of the new Sherry FitzGerald subsidiary. He will also be joining the Sherry FitzGerald board as an executive director. The other directors of the Ross McParland board will be existing executives, Brendan Byrne and Eamonn Foley. They will be joined on the board by Eoin O'Neill, Jill O'Neill and Conor O'Gallagher. Sherry FitzGerald's managing director, Claire Cullinan, as well as Peter Lynch and James Meagher, will become non-executive directors.

Bruce Murphy, who headed up Ross McParland's second-hand homes division, will become a director of Sherry FitzGerald.