Apac Realty CEO upbeat about S'pore property market.
Mr Jack Chua, the chief executive officer of Singapore Exchange-listed Apac Realty, is passionate about all things property. The genial 57-year-old, who has lived and breathed real estate most of his life, has a penchant for land, buildings and architecture.
"As a kid, I always enjoyed looking at beautiful homes, and when I got older, I became interested in owning properties," he said. "A property is something that everyone needs. I love how it is able to preserve value, and how that value can appreciate over time. I guess it's very much a part of the local psyche - most Singaporeans desire to own homes and other forms of real estate."
Apac Realty, which owns the largest international real estate agency in Singapore, listed on the SGX mainboard on Sept 28. Its three main business segments are real estate brokerage services, franchise agreements, and training and other ancillary services.
Apac Realty's real estate brokerage services are operated by its wholly owned subsidiary, ERA Realty Network. It derives commission-based fees by providing property brokerage services for primary and secondary sales, as well as rental of residential, commercial and industrial properties. ERA Realty had 6,278 registered agents as of Nov 15.
The group holds the exclusive ERA regional master franchise rights over 17 Asia-Pacific nations, and the master franchise rights for Singapore for Coldwell Banker, one of the oldest and most established real estate firms in the United States.
Another wholly owned unit, Realty International Associates, conducts training for real estate agents, and provides valuation as well as property management services.
Apac Realty has a market capitalisation of over $300 million. The stock has gained more than 30 per cent from its initial public offer price of 66 cents per share.
Mr Chua expects blue skies ahead with the domestic property market on the cusp of a revival. "There's quite a bit of pent-up demand in the market over the last few years following the Government's cooling measures," he noted. "Unsold units have been depleted significantly, from 40,000 units to 17,000 units, while collective sales have surged. Post collective deals, these sellers, who need to get new homes, have flooded the market," he added.
"On the supply side, land costs remain high and are still rising, with the margin between land cost and the finished unit narrowing in per sq ft terms. That's worrying for many buyers."
Private resale transactions in the domestic market, which usually average about 10,000 units a year, could double next year, Mr Chua pointed out. "It's all about demand and supply dynamics. If demand is strong, the market will move, and right now, it's very active. Whether prices will reach the levels that buyers and developers expect is another story," he added. "Prices have not run up a lot, but looking at bids from land sales, we can see the direction is definitely up - it's just a question of how high the levels will be."
Next year should be a decent year for the Singapore property market - "that's a no-brainer", he noted.
"Normally, a cycle spans five years, and the market has been down since 2013. So it's about time for an upturn, and there are many signs that prices have already begun to recover." Nonetheless, the rebound should be slow and steady. "Prices will peak only in two to three years' time," he added.
Signs of a pickup in the sector come as a huge relief to Mr Chua. "Now that the market is starting to improve, I sleep a lot better," he said with a chuckle.
But everything that goes up must come down. "During the good times, we will ride the wave, but at the same time, we need to gird ourselves by boosting our non-property brokerage operations so we can weather the downcycle when it arrives," he said.
"This is our key challenge."
Apac Realty plans to boost its non-brokerage revenues, which contribute about 20 per cent of gross profit, by beefing up training programmes for existing and new agents, as well as extending such courses to the public to increase their knowledge of the local property market. It will also explore extending its property management services - currently focused on condominiums - to include landed homes.
In the next three to five years, the group aims to achieve a 50:50 split for its brokerage versus non-brokerage revenues.
It has franchise operations in only eight markets in the Asia-Pacific - Japan, South Korea, Taiwan, Thailand, Vietnam, Indonesia, Malaysia and Singapore. "The ERA franchise is performing well in Indonesia, and is one of the largest in the country with 5,500 agents. We're looking at turning the franchise into a brokerage model," Mr Chua said.
Going forward, Apac Realty will also target China and Cambodia. "Each country is at a different stage of readiness. It takes time for the market to accept a model that pays commissions, without a basic salary. China is now more mature, and the time may be right."
Apac's status as the only listed real estate agency in Singapore is also a feather in its cap. "By listing on SGX, the image and reputation of our company has risen one level above that of our competitors," Mr Chua said. "We're seen as financially stronger and more transparent as a result of meeting relevant compliance and disclosure regulations."
This not only boosts cross-border opportunities in the region, but it also helps to attract and retain agents, who are critical to the group's ability to grow its bottom line and economies of scale.
"Our set-up is very agent-focused. We want to provide our agents with excellent service because they are the ones who take care of customers and bring in the deals."
Mr Chua, known for his bubbly, cheerful personality, also has a big heart for his employees and agents.
"I enjoy motivating our staff and helping our agents," he said. "I want our staff to share the group's vision so we can all move forward in the same direction. I want to invest in the training and development of our agents so that when they grow, the company can also grow."
Adapted from: The Straits Times, 4 December 2017