PropNex Realty, Singapore’s biggest agency in terms of head count has scored another win this New Year’s Day with its latest figures of 10,798 agents based from the Council for Estate Agencies (CEA) public register. In the last twelve months, 1,880 agents have joined the company according to Ismail Gafoor, executive chairman and CEO of PropNex. Gafoor has also bolstered his management team by adding 14 of his key employees.
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In the meantime, ERA Realty Network, Singapore’s second-largest real estate company, began 2021 with 7,771 agents and ended the year 2022 by having 8,146 people. The company that regained its third position comes Huttons Asia, which has grown up to 4,155 people. It owes its standing mostly due to the its four Navis Living Group managing partners and co-founders who joined in October. They were which was followed by 700 employees. OrangeTee & Tie has therefore been able to climb up to fourth position. SRI has crossed 1,000 agents at the beginning of 2021, added 129 agents to its roster which puts it in fifth position with 1,139 agents as of today.
While the five top agencies continued to increase their size The bottom five agencies shrank further, leading to an even more pronounced gap between the two parts (see the table “Estate agency ranking in 2022 vs. 2021”).
With more than 10,000 employees, PropNex has raised the goal yet once more. The next goal is to create an inventory of 12,000 agents in 2023. “Eventually we’d like to have to have 15,000 sales agents” Gafoor says. Gafoor during an interview EdgeProp Singapore.
with 15,000 members, PropNex would effectively have 50% market share of licensed agent in Singapore. CEA data shows that the agents in Singapore have varied between 29,416 in the year 2019 and 30,399 the previous year.
Jostling to gain market share
Based on Gafoor’s estimates, PropNex has brokered more than 50% of HDB sales this year, as well as 45% of units during new project launches as well as in the resales market. This is based on the staffing levels this year, which is equivalent to around 30% of the total sales force. “If we had 15,000 agents as well as 50% of the market, we’d be in a position to increase the number of agents further, ranging from 60% or 65% of all transactions in these different housing segments,” he says.
PropNex’s financial results for first nine months of 2021 released on November 10, revealed that revenues doubled up to $715.5 million , up from $358.4 million during the same time period of the year prior. Profits increased 114.8% to $49.9 million from $23.2 million the year before. This was mostly due to the rise in commission income from agency and project marketing services.
The sole realtor that is listed that is listed on the Singapore Exchange is APAC Realty who has its ERA Realty regional franchise. It has also seen strong growth with total revenues of $537 million during its first 9 months in 2021, an increase of to 115% from the year before. In terms of segmentation, new home brokerage revenues grew by to 177% year-over-year up to $211.3 million. Rental brokerage and sales reported $325.7 million in revenues, 88% over the year prior. Earnings jumped by 139% up to $26.1 million.
In APAC Realty’s 3Q2021 update on business The market share of ERA’s newly launched properties stood at 32.6% for the first nine months of 2021 and the market shares were 42.6% for the private market for resales of homes in the same period. 42.1% for the HDB market for resales during the same time.
The URA and HDB flash estimates for the 4Q2021, published on January 3, shocked the market with their surprising impressive performance. The total privately owned property price index rose 5% in a row, bringing the annual price increase for 2021 up to 10.6%, according to the URA flash estimate. HDB price index grew 3.2% in 4Q2021, which brought the total increase up to 12.5%.
“No one could have predicted an increase of double-digits in price,” Gafoor says. Looking back, the increase in prices during the 4Q2021 quarter and for the whole year led to the conclusion that the new cooling measures announced on December 16 were a good idea. “It could put a stop on the rate of price growth that is accelerating,” he concedes.
But, the recent price increase of double-digits in the HDB market for resales is a welcomed relief for homeowners who had experienced the market in a slump for at least six years prior the surge in growth. “The HDB price index had been on the verge of a negative reading for at most the past six months,” Gafoor notes.
It was reported that the 12.5% jump in HDB price for resales last year was the highest rate of growth since 2011, when flat prices increased to 10.7%. Gafoor acknowledges that sustained two-digit increases would be insanity. He cites an illustration for an HDB property that was purchased for $500,000 in the present. If prices rise by 10% each year then the property is worth $805,255 by the time 5 years. In 10 years, the value would be close to $1.3 million.
“Tougher” market ahead
After having seen both the market for private homes and HDB markets reach upwards at the end of 2021 PropNex has been planning for a disappointing 2022, given the small inventory of new residential development launches and the depletion of unsold stock especially within the Outside Central Region (OCR).
“The chilling measures made it harder,” Gafoor concedes. “But we’re prepared to tackle it as we have planned every aspect of our plans for 2022. The tough times give PropNex an edge. If the market is down we must assist all the players that are involved — property developers as well as the agents, and the consumers.”
PropNex anticipates that price growth in 2022 that will slow down up to% or 5% in 2022 as cooling measures affect the demand for investment. In the Core Central Region (CCR) as it is more reliable for investors in comparison to different segments of the market, can be expectedto bear the brunt of cooling measures. PropNex expects prices to drop to the range of -2% to 0% in the coming year.
The brunt of the load
It is the CCR could also represent a market which foreigners traditionally have favored. The rise in the additional buyers’ stamp duty (ABSD) from 30 to% is expected to have a negative impact on. This can be seen in a recent sale mediated through PropNex on behalf of the CCR. It was a 20 million apartmentwhere the purchaser is a foreigner and would have to shell out 20% ABSD which is the equivalent of 4 million in addition to the cost. In the case of changes to cooling, he’d need to shell out an additional $2 million in ABSD.
The buyer wanted the discount. Luckily the developer was willing to compromise by offering a $1 million discount and the buyer was able to proceed with the purchase. “The restrictions on cooling have placed developers in a difficult spot,” says Gafoor.
Other housing segments such those of those in the Rest of Central Region (RCR) and OCR are likely to see prices rise slow to 4 to% and 3 to 5% and 3%, respectively, this year.
Gafoor believes executive condominiums (ECs) will be the least susceptible to the chilling measures. The three EC projects in the development in the pipeline and Gafoor anticipates that the rate of take-up to be steady. “These segments will be fairly robust due to the genuine demand from local and upgrader buyers, the limited supply of homes that are not sold to the mass market and, for ECs which are more affordable, they offer lower price and the limited supply” he says.
However there are some developers remain on projects that have un-sold stocks in CCR and RCR. CCR and RCR in which the clock is ticking toward the end of the ABSD Remission Period. “Developers must choose between two options: to cut down on selling prices to get rid of their inventory or pay the ABSD?” says Gafoor.
He believes PropNex plays a part to assist developers to sell their un-sold inventory. “Developers need to be cautious in their pricing , in light of restrictions on cooling,” he adds.
Singaporean upgrader market
Singaporeans were the mainstay of the bulk of the private demand for housing in 4Q2021 and accounted for the majority of 82% of private new sales as well as 79% of private resales that were not landed transactions in the period According to PropNex Research. The company is expecting transactions to decrease to 9,000- 10,000 for new homes sold privately and 15,000-16,000 for resales of properties for 2022.
HDB upgraders could be impacted as well. People who haven’t already sold their HDB flats and are looking to purchase an unrelated property are required to cough for a 25% of the down payment as well as 17% ABSD in advance that’s equivalent up to% of the price of the property. With the addition of three% purchaser’s stamp tax it’s 45% cash up front. “The only option for upgraders to avoid the massive upfront cost is to sell their HDB flats. But in the event of a new project start-up and the completion date is approximately four to five years from now Where will they live for the time being?” Gafoor notes.
The land-based property segment is predicted to be fairly robust due to Singaporeans wanting to own a home according to Gafoor. For example an apartment on a 6,000 sq feet freehold site located in the eastern portion of Singapore such as Frankel Estate, could be valued at nine million which equates to $1,500 per square foot. “It’s difficult to find a condo with freehold at $1,500 per square foot nowadays,” he adds. “And when you own a land property there is large built-up areas, and you can even raise chickens in your backyard.”
Prices for homes that were landed increased in value by 3.7% q-o-q in 4Q2021, despite a lower volume of transactions and less big-ticket Good Class Bungalows (GCBs) that were sold, which been a factor in sustaining prices in prior quarters, as per PropNex Research. For the entire year 2021 the price of homes that were landed increased by 13,1% in accordance with the flash estimation.
New GCB and high-end landed property division
In 2017, PropNex transacted over 1,400 houses that were landed, and capturing 40.4% of the market share of this segment. Agents from PropNex brokered the sale of 49 homes that were landed properties with a value of more than $10 million in 2021. But, when it comes to GCB deals PropNex’s market share is lower than 10% according to Gafoor.
Not to be left out, PropNex is starting a new GCB and Prestige Landed Property Division which is led by Henry Lim, who joined PropNex in the last few days. Lim was previously the head of the GCB division of ERA Realty. Lim is believed that he has greater than 25 years of experience as a broker for the sale of luxury land properties and GCBs which included one billion dollars in deals during his career.
In his new position in PropNex, Lim will work closely with the team of management to expand the company’s sales share within this segment. In addition to GCBs and land-based property that exceeds $10 million on Island, Lim will also oversee the landed property acquisitions located in Sentosa Cove.
PropNex anticipates that prices to rise in the segment of landed homes to slow to 5-% up to 7% in the coming year.
Gafoor mentions the very first launch in 2022, the Belgravia Ace featuring 107 semi-detached, terraced homes. He anticipates a high demand and an impressive take-up even though it’s not a typical land-locked property and is an strata landed development. The project will be launching on January 8 and will the launch date on January 22.
Consumer outreach and training programs
Being aware that transactions are likely to decrease in the coming year and with more than 10,000 property agents on its roster, PropNex wants its agents to be trained to keep up-to-date. PropNex is planning the JumpStart event on the 10th of January with a number of 4,000-5,000 agents are scheduled to take part.
On January 24 it plans to hold an event focused on “prospecting” for agents, using the market information gathered from its analysis over the past year to assist agents in understanding the buyer’s profile that include those who have purchased property with trust funds, the ones who separated, upgraders who were forced the need to dispose of their HDB flats to fund their cash and those in wait for an ABSD release.
The events were implemented since the beginning of December, prior to those cooling steps, says Gafoor. Gafoor believes in the importance of education “We have to educate our agents as well as support them via Our IT platform,” he says.
PropNex is also planning to keep in its efforts to educate consumers and plans to create a nationwide outreach campaign. “When the market starts to turn south, we must assist in the development of consumers and agents,” says Gafoor.
