Singapore's 50 largest real estate agencies in 2017

With Proptech shaking up the real estate industry, PropNex Realty and DWG’s merger may just be the opening salvo of more titanic mergers to come.

More than half of the top 20 largest agencies slashed their salesforce as technology innovations opened up new platforms for consumers to handle their own property transactions directly instead of hiring a property agent. On the other hand, four of the top ten real estate agencies this year increased their staff: PropNex, Huttons Asia, Orangetee. com, and KF Property Network added salespersons to take advantage of a buyer confidence upswing. Overall, 2017 has been kinder to property firms. The rollout of government cooling measures eased and private home sales surged. But for the biggest player in Singapore, even these positive drivers might not be enough to shield smaller, margin-squeezed firms.

“There is only space for two or three big real estate agencies in the country,” said Ismail Gafoor, CEO of PropNex Realty, arguing that consolidation in the Singapore real estate industry has become a question of when, not if. “Ultimately, we can expect more numbers of small and mid-sized agencies to unite with the bigger players in the upcoming years,” he noted.

He reckoned the Singapore real estate market is relatively fragmented and mergers are becoming more attractive given the tougher operating environment. For PropNex, which rose to number 1 in Singapore Business Review’s Largest Real Estate Agencies 2017 rankings, the merger meant a talent boost critical to staying ahead of the pack. 

Nearly nine out of 10 active DWG salespersons who earned at least $50,000 or above in the past year signed on to PropNex in July. “With the added strength and network, PropNex is confident that our close to 7,000 strong salesforce will add greater value to all property developers in their outreach to home investors whilst at the same time, match consumers to their dream homes with the wider range of listings available,” said Gafoor. 

PropNex has been flexing its muscles in the new homes segment, with three new project launches — ARTRA, Martin Modern and Le Quest — doing well. All 531 units of Hundred Palms Residences EC in Hougang sold out within 7 hours in July. It also completed seven collective deals so far in 2017 valued at $2.5b, up from the three deals worth $1b for the whole of 2016. 

Another mega merger was announced in August between the associate agency division of OrangeTee and Edmund Tie & Company Property Network, the fourth and fifth-largest agencies in this year’s ranking, respectively. This would create OrangeTee & Tie Pte Ltd., the third-largest agency with more than 4,000 agents, as well as a combined portfolio of more than 50 existing residential projects and four upcoming launches.

“To do well in real estate, we need to be able to create economies of scale to enhance productivity and cost effectiveness, harness adequate manpower with broad skill sets for market coverage and penetration, and leverage on technology to maximise efficiency and effectiveness,” says Steven Tan, managing director of OrangeTee. 

“The similarity of organizational cultures is a good start towards a successful merger that is sustainable over the long term. Additionally, both firms complement each other well in terms of capabilities,” adds Ong Choon Fah, CEO of Edmund Tie & Company.

AI, automation, and talent glut 

Whilst bigger firms are taking advantage of a buyer confidence rebound, smaller firms might be tempted to join forces amidst the pressures of technology disruption and sales agent oversupply. 

Artificial intelligence and automation technologies are starting to force firms to invest heavily on digital-friendly platforms or risk losing customers. They must also start spending on additional training for sales agents to provide better servicing skills that automated systems cannot provide. 

“Real estate agencies must prepare to integrate their businesses with information technology and transform into a global interconnection which embraces differences in cultures and practices,” said Merson Chow Yi Tong, KEO at Mindlink Groups, which landed 15th in SBR’s ranking this year. Chow noted that the consolidation trend is driven by the fact that a majority of real estate agencies have seen a profit nosedive in recent years and made it more tempting to sell to or merge with a bigger company. This has created a ripple of fear amongst salespersons, driving them to become more prudent on choosing what they perceive to be more reliable agencies. 

For KF Property Network Pte Ltd's key executive officer and head Tan Tee Khoon, the issues of technology disruption and salesperson oversupply are intertwined. Consumers are becoming less dependent on human agents to handle their property transactions, preferring to do it themselves through digital platforms that cut down the complexity. “Today’s more educated and tech-savvy consumers are increasingly comfortable with handling complicated processes themselves, or with the help of userfriendly digital platforms. Already, several players have entered the market in recent years to cater to such consumers, and this will change how property marketing and negotiations are carried out,” said Tan. 

He pointed out that around 40% of Singaporeans intend to DIY (do-it-yourself), or are undecided about whether they intend to hire an agent for their next property transaction. With these shifting consumer preferences, nearly one in four Housing and Development Board resale transactions now have either a buyer or seller who did not engage an agent’s services — and Tan said this trend seems likely to continue. 

For the thousands of property agents in the island competing for a shrinking pool of transactions, this represents a sink-or-swim ultimatum: Distinguish yourself as an impeccably polished professional or become obsolete. “I believe that property agents would do well enhancing their professionalism and maintaining the trust of consumers. With increasing disruption, it is all the more vital that property agents maintain a high level of professionalism,” said Tan.

A welcome recovery 

Navigating technology and staffing concerns will be critical for property firms that want to pull ahead of the industry as it experiences a confidence recovery. Collective sales and private home sales, in particular, have surged. Knight Frank, which shed three salespersons this year to 61 and slid one place to 26th in this year’s rankings, had two notable collective sales deals this year: Hougang Avenue 7 sold to Oxley-Lian Beng Venture Pte Ltd for $575m and One Tree Hill Gardens for $65m to a subsidiary of Lum Chang Group. 

Meanwhile, JLL Singapore had also been active in the collective sales market. It sold Goh & Goh Building for S$101.5m to a unit of BBR Holdings and The Albracca, a 10-storey residential development along Meyer Road, to Sustained Land Pte Ltd for $69.12m. 

“The buoyant home sales has led to a decline in developers’ housing inventory, and this has brought about an active development land sales market, particularly on the collective sales front, given the limited state land supply in the Government Land Sales programme,” said Tay Huey Ying, head of research and consultancy at JLL Singapore, who rose three places to 16th in the Largest Real Estate Agencies 2017 rankings. 

Sanguine outlook 

ERA Realty Network, second-largest real estate agency in Singapore with 6,178 salespersons behind PropNex, chose to focus less on recruitment and more on launching projects driven by renewed home buying interest. ERA was the agency for 8 out of the 9 new major project launches in 2017 that totalled more than 5,000 units, including The Clement Canopy and the record-breaking Hundred Palms Residences EC which sold out within 7 hours of launch. “Prices have largely stabilised and buyers feel that there are less downside risks and more upside potential,” ERA Realty’s key executive officer Eugene Lim said, pointing out that new project sales in the first half of 2017 rose by 64% and private resale climbed 63% from the same period last year. ERA holds a sanguine outlook considering resilient household balance sheets, low unemployment and stable economic growth.