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Property agency industry shrinks further in tepid market

Property agency industry shrinks further in tepid market.

Singapore’s property agency industry continues to shrink as more agents throw in the towel and smaller agencies close shop amid keen competition in a tepid market, with technological disruptions also nibbling at the transactions pie.

Following the latest licence renewal exercise, the number of licensed property agencies fell to 1,286 as at Jan 1, 2017, a 6.1 per cent drop from 1,369 a year ago, and the number of registered agents fell by about 3 per cent to 28,397 from 29,262, according to the Council for Estate Agencies (CEA).

"The reduction in the number of registered agents could point to a slight consolidation of the industry given the current property market sentiments," said CEA director for policy and licensing Heng Whoo Kiat.

"CEA also recognises that the real estate agency industry landscape is evolving," he added. "For example, with technological innovations, consumers' lifestyles and preferences in handling their property transactions are changing, and this could shift demand for real estate agency services."

A total of 95 property agency licences and 3,200 property agent registrations lapsed on Dec 31, 2016; over the course of 2016, 40 new property agency licences and 1,189 new property agent registrations were issued by CEA.

A 10-15 per cent drop in the number of agents across the top 10 property agencies here could be seen after the latest licence renewal exercise. This came despite some of the biggest agencies here having clocked higher gross commissions last year, reinforcing the adage that size does matter in this industry.

ERA Realty key executive officer Eugene Lim, whose firm crossed 6,000 agents, said that gross commissions grew by 20 per cent or more last year as the firm focused on serving sellers and developers, and diversifying its revenue sources by market segments in order to close more deals. "We are also using technology to improve our productivity so agents can advise on the most current selling prices and trends."

But agency chiefs noted that competition has become more intense and while the number of residential transactions picked up last year, they were still low compared to the heydays before the residential cooling measures set in.

In light of current market conditions, agents are under pressure to keep up with the competition and soaring customer expectations.

However, it still boils down to having economies of scale, which is why smaller agencies are finding it tough to cover their overheads and stay above water despite an improvement in transactions in 2016.

It is a challenging market for smaller agencies to compete, in terms of securing new projects, and as well as adding greater value to their salespersons by spending more in their training and marketing initiatives.

Technology disruption has become a force to be reckoned with as the availability of online tools and transaction information has made it easier for consumers to handle property transactions on their own, industry players say.

However, there are clients who still want the personal touch and advice on big-ticket transactions.

Said Mr Heng of CEA: "While technological innovations and disruptions could be a reason for the decrease in the number of property agencies and agents, it is too early to determine their impact on the industry."

He urged property agencies to embrace technological changes and innovate their services to raise the level of professionalism and service to their clients in order to stay relevant.

"Broadly speaking, we hope that property agencies will take a more client-centric approach rather than the typical sales-centric practice we see today," Mr Heng added. "For instance, the management layers of larger property agencies could take on greater top-down accountability for the professionalism and behaviour of their agents to drive this shift."

To equip property agents with updated, relevant knowledge and skills, the Singapore Estate Agents Association (SEAA) will be rolling out new courses and reviewing its current CDP (Continuing Professional Development) courses, its CEO, Wong Cheong Hong, told BT.

SEAA is also working with the agencies' key executive officers to consolidate technology tools so that more information can be shared among member firms and salespeople.

"This is the first step for SEAA to develop a property portal in the near future for the benefit of the industry as well as consumers," Mr Wong said.

Adapted from: The Business Times, 11 January 2017