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Activities, Commercial property, General News, Property news

Real estate sector to get Industry Transformation Map

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Minister of State for National Development Koh Poh Koon in Parliament announced that the real estate sector is the latest to have an Industry Transformation Map (ITM) developed for it, to help it transform and prepare for future challenges. He laid out the challenges that the sector is already facing in a digital age when this was announced on Tuesday (Mar 7).

For instance, he pointed out that a growing number of Singaporeans are choosing to complete their property transactions using DIY portals, without the need for property agents. “To survive and thrive, the industry must consider new ways of doing things,” said Dr Koh.

The real estate ITM is one of 23 of such roadmaps which outline Singapore’s jobs and growth strategy for the various sectors. Six ITMs have already been launched and 17 more, including the one for real estate, will be released this year.

Together, the 23 industries with ITMs make up 80 per cent of Singapore’s economy and such roadmaps were a key strategy recommended by the Committee on the Future Economy (CFE) last month.

The key points mentioned includes:
1. Raising productivity
The Government will do its part to streamline its processes, such as HDB’s resale transaction procedure, to reduce the total transaction time for the public, including possibly doing away with one of the HDB’s resale appointments by leveraging ICT technology.

2. Helping workers gain new skills and
With more information and services being it will be more important for property agents to “hone their skills in servicing clients and building their credentials”, rather than just competing on marketing and closing transactions. This is where training opportunities should be put in place to help workers “upskill”.

3. Helping companies enter new areas of growth.
In addition, real estate companies can take advantage of new areas of growth and better respond to market disruptions. For example of local company LHN Group, which has moved from its original focus on managing properties for lease to managing facilities such as carparks and providing services such as CCTV surveillance and security guards. The company is also expanding into China to manage mixed-used developments.

General News, Neighbourhood news, Property news

Tough market prompts more property agency tie-ups — Latest deal sees JLL S’pore taking 20% stake in PropNex unit

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http://www.businesstimes.com.sg/premium/top-stories/tough-market-prompts-more-property-agency-tie-ups-20140806

More property agencies here are consolidating to share resources and leverage on one another’s networks, as the residential market continues to shrink.

Yesterday, JLL Singapore announced that it has acquired a 20 per cent stake in PropNex International, the project marketing arm of the homegrown PropNex – a move which will give JLL better access to the mass market home segment as the high-end condominium segment it has been dealing in continues to languish.

With this, JLL’s current 170 sales associates have been invited to cross over to join the 5,600 sales agents at PropNex – culminating in a salesforce “marginally” larger than the other market leader, ERA Realty.

JLL’s managing director for Singapore and South-east Asia, Christopher Fossick, said his company has noticed developers of new projects increasingly seeking large salesforces, which represent wider buyer reach, to support their sales.

“Even though we’ve got our international reach, our ability to add value to our clients without enlarging our sales associate network was actually going to decline … For us the choice is: do we try to build 170 associates up to 5,000 associates? Or do we enter into a partnership with an already market-leading company that is well-established and highly respected?”

As for PropNex, which enjoys a third of the market share here with some 31,000 transactions closed a year, it would also get to leverage on JLL’s global reach, especially at a time when Singaporean buyers are eyeing overseas property investments to flee cooling measures at home. Meanwhile, developers are also casting their nets beyond Singapore’s shores in search of foreign buyers to counter the poor buying sentiment here.

“This partnership will allow PropNex to bring some of the developers’ projects regionally, working with JLL’s Jakarta or China office … to expose their properties, explaining to possible overseas investors that despite the ABSD (additional buyer’s stamp duties), at today’s discounted prices, it may still be a right time to enter the market,” said PropNex CEO Mohamed Ismail.

Beyond the residential market, there is also synergy to be made between PropNex’s access to retail investors and JLL’s numerous commercial strata-titled projects – another segment growing in popularity.

This announcement comes a month after four mid-sized property agencies – SLP International, OrangeTee, HSR International and Dennis Wee Realty – formed an alliance to rival the two largest players in the market, ERA Realty and PropNex Realty.

Steven Tan, managing director of OrangeTee, sees the latest acquisition as a natural move and expects more consolidation in the industry going forward.

“It makes sense because in any industry, when the market size shrinks in a big way, businesses will consolidate to share resources and leverage on each other’s network,” he said.

PropNex’s Mr Ismail also believes that the consolidation trend is “timely”.

“In any market, when there is a moment of challenge, the fittest will survive, the visionaries will think of solutions outside the box,” he said. Consolidation is one such solution.

JLL’s Mr Fossick views the consolidations as emulations of the existing successful model in the market, that is, the likes of ERA and PropNex. “It’s all part of the same theme.”

JLL’s initial 20 per cent stake in PropNex International may also just be “phase one”, he said. “If it succeeds as we expect it to, we will want to continue and grow the partnership because that’s natural.”

Mr Ismail added: “We never say the 20-per-cent is the end of the road. The next step would ideally be to see whether the partnership adds value to our respective objectives. If this value-add process continues, the possibilities are much wider.”

As for the four-agency alliance, Project Alliance Group has, since inception, sold more units at their existing projects and is now actively preparing to market their first joint projects – two executive condo projects – later this month, OrangeTee’s Mr Tan shared.

Several other small and mid-sized agencies have since also asked to join the alliance, but it is still deciding on their entry based on what each can offer in terms of expertise, network and size.