Property curbs to slash APAC Realty's 2018 sales by 5%

Both its primary and secondary markets are at stake due to higher ownership costs.

APAC Realty will be hit by the new property cooling measures in Singapore and the developer’s sales could fall by 5% to $43.1b in 2018 and flat in 2019, including both primary and secondary markets, DBS Equity Research analyst Lee Keng Ling said.

“We expect the new property cooling measures to affect market transactions,” he commented in a report. For the HDB segment, the analyst expects flat growth in 2018-2019, down from +10% and +5%, whilst earnings to be slashed by 23% for 2018 and 33% for 2019.

Lee noted that ERA Realty’s market share, based on transaction value, increased from 26.9% in 2011 to about 38% in 1Q2018. “ERA has established itself as one of the market leaders in project marketing, alongside Huttons whose strength is in mass market projects, and Savills and Knight Frank which are both strong in luxury developments,” he added.

Moreover, ERA secured 12 projects out of 19 (47%) in 2015; 14 out of 23 (66%) in 2016; and eight projects or 91% of projects launched in 2017. To date, ERA has already secured 21 projects to be launched in 2018 with about 11,343 residential units available for sale. This is double the 4,800 units (from eight projects) launched by ERA in 2017.

APAC Realty is also the second largest agency in terms of the number of registered real estate agents. Lee noted that APAC's agents are its primary sales force through which units are transacted, and are not employees of the group.

“The company has grown its network of agents over the years and has managed to gain market share. As at April 2018, APAC has about 6,100 agents with a market share of around 21%, up from 16% in 2014,” he said.

As a compensation, Lee said APAC’s technological initiative could enhance its competitiveness. APAC currently offers various tools such as mobile applications to its agents and customers to facilitate the execution of real estate transactions.

Lee noted that APAC has launched a new Property Investment Calculator in its i-ERA mobile app, which will provide salespersons with a one-stop financial analysis tool for any property. “They will be able to assist their clients to make more effective buying and selling decisions as all variables are dynamically updated,” he said.