by Colin Tan

05:55 AM Jan 07, 2011

When the real estate figures for the private housing market for Q3 2010 were released in late October, the landed sector pulled off a huge surprise by going against the market trend.

Instead of slowing down like the rest of the market as it absorbed the impact of the most recent set of cooling measures, prices rose at an accelerated pace.

The rate of price increase for high-rise apartments and condominiums slowed from 5 per cent in Q2 to 1.6 per cent in Q3, while that of landed homes rose from 6.2 per cent in Q2 to 7.7 per cent in Q3.

The usual reasons were trotted out. The supply remains limited while buyers of landed homes are not hindered by affordability concerns and are therefore better able to cope with price increases.

Personally, I think this is a common marketing ploy of real estate agents to get buyers to pay higher prices. Anyone who has been following the market for many years will know that prices of all properties, when faced with the same set of measures or regulations, will behave in the same way - meaning, they follow the same trend, if not the magnitude, of the impact.

Since the release of the Q3 statistics, there have been a lot more news reports and articles than usual extolling the appeal of landed homes, especially good class bungalows (GCB). Limited supply is the most common reason given to support the strong growth potential of GCBs.

But given the high cost of GCBs, how big really is the market for such properties? Buying one is already such a big commitment; maintaining it thereafter is another. The demand for such properties is inelastic. Whether prices rise or fall, real owner-occupier demand remains more or less the same. How often do we hear of tycoons and CEOs owning and living in two or even three GCBs at the same time?

All this means that the surge in demand must come mainly from investors. Rapid price growth in this segment can come about only when investors sell to other investors.

This brings me to the other commonly cited factor: Affordability. For owner-occupiers, this is not likely to be a concern. For investors, who tend to fully leverage their cash resources, affordability is definitely a concern, especially if they already have a number of properties on their hands. They carefully weigh the risks against the potential capital gain before investing.

Is landed property among the safest buys? For one, when prices of this segment shoot up too rapidly, it is difficult to get valuations to match the purchase price. A large proportion may then have to be paid in cash.

As real demand is inelastic, what happens to the last investor holding the property? Yes, you've guessed it - he walks away from the deal with a substantial loss.

It was therefore not a real surprise that the buyer of the $36 million bungalow in Sentosa Cove walked away from the deal. I hear another similar over-the-top purchase on the island met with the same fate. My sources tell me there are also similar aborted deals on the main island. I personally know of one case.

All these aborted deals leave me wondering whether the caveats filed for these purchases have added more spice than usual to the price index for landed homes. It will certainly explain the Q3 anomaly.

The same reasoning can be applied to semi-detached and terrace houses. However, here, the budgets of owner occupiers are constrained by their wealth and household incomes.

You will know when this segment becomes highly speculative. It is when the dirty tricks come out. There is big money to be made and fair play is the least concern of many housing agents.

The complaints have been piling up and I am hearing of many of them. I expect the newly-formed Council for Estate Agencies (CEA) to be really busy.

Finally, the flash estimates for 4Q 2010 have indicated that price growth of private homes has slowed to reasonable levels. Most of us have been wondering whether another set of cooling measures is imminent. If rapid growth is the main concern of the authorities, I do not expect another set any time soon.



The writer is Head, Research & Consultancy at Chesterton Suntec International.

Source:  www.todayonline.com

Local websites cashing in on the red-hot real estate market

by Jo-Ann Huang Limin

05:55 AM Jan 03, 2011

SINGAPORE - The strong property market in Singapore has now moved beyond real estate and spread into virtual space.

Rising demand for property has spawned several online property portals, which offer their visitors thousands of property listings to help them buy their desired homes.

While most Internet start-ups would be dependent on online advertisement revenues to survive, these property portals have taken a different tack: Most sites have minimised the number of advertisements to add ease in navigating the site.

Their main source of revenue comes from subscription fees paid by property agents to advertise the properties they are marketing.

Property agents typically pay a package fee of 50 listings for about $300 a year, to 100 listings for about $1,600 a year to advertise the properties they are marketing on the websites.

Depending on the number of listings provided in the package, each online listing can cost about 5 to 8 cents a day. "This is much cheaper than the traditional form of advertising the property on newspaper classifieds, which cost $35 a day for a small ad of three short lines," said Mr Steve Melhuish, chief executive officer of the three-year-old propertyguru.com.sg.

Online property listings are also accessible internationally, giving the sellers more options from foreign buyers, he added.

With plenty of properties on sale, as well as approximately 30,000 real estate agents in Singapore, there is definitely money to be made for these websites, market players said. Although Mr Melhuish is unwilling to disclose exact figures, he said propertyguru.com.sg's revenues increased by threefold last year.

Propertyguru.com.sg has approximately 1.7 million visitors a month, with each visitor viewing an average of 15 listings on the website.

"About 70 per cent of our revenue comes from real estate agents; the remaining 30 per cent comes from property developers in Singapore as well as overseas who want to promote new project launches to those home buyers," he said.

The success of the online property advertising subscription model has inspired the creation of other online property portals - a quick search on the Internet rounds up at least nine of such websites.

The latest portal to be launched is the month-old proprietary website propmatch.com. The website has approximately 50 agents registered to advertise their properties for sale.

Propmatch.com was founded by Mr David Zhang, a former employee in a multi-national firm, and Mr Cheo Ming Shen, co-founder of blog advertising platform Nuffnang.com.

Mr Zhang believes that the property portal business is entering a new wave, with the Singapore property market more robust than before.

"This is one of the reasons why propmatch.com was set up - to capture the interest in property in Singapore and the increasing online search patterns that consumers are showing," said Mr Zhang.

Another property portal H88.com.sg has decided to differentiate itself through rampant social media marketing as well as original but tongue-in-cheek property commentaries.

Its property advertising service started only a month ago, said one of H88.com.sg's creators Mr Sandy Yeo, as a result of requests from its online community of about 7,000 members. H88.com.sg charges property agents $300 a year for 50 listings.

"Our community consists of home buyers, potential home buyers, agents and developers," said Mr Yeo, who runs a digital marketing agency full-time.

Source: www.todayonline.com

The stigma of being called a real estate "agent" has led to many renaming themselves as "marketing directors, sales consultants, etc" to avoid being associated with some of the agents who demonstrate questionable knowledge and dubious sales propositions.

I shared many of these perceptions prior to joining OrangeTee. However, after having worked at close quarters with some agents in the past months, I am beginning to re-evaluate my perception. The headline-grabbing superagents show that, if you are good at the job, you can get rich, very rich. While the payback is good, how many of us are willing to spend our weekends and evenings running from apartment to apartment, rain or shine, to stand at showflats for weeks and repeating your sales pitch five to six times a day, to bring a buyer to 20 apartments, only to see him or her buy from another agent?

Many are trying to make a decent living by selling a product and, as with every sales job, there is a reasonable boundary that any good salesperson will not cross and many do not. However, the unethical and unprofessional practices by a small minority have tainted the whole industry.

As such, the introduction of the new regulatory framework with the formation of the Council of Estate Agents is welcomed by many in the agency with open arms. Under the new framework, the entry requirements to be a salesperson (agent) will be raised. To ensure continued ethical and professional standards, the estate agency now has more teeth to weed out unethical agents, who will find it extremely difficult to switch agencies when faced with disciplinary action among many other requirements.

With the new regulations, expectations of better practices have probably been raised and rightly so. The next step will be how to handle such expectations. Getting higher educated and better trained people is no guarantee of ethical practices - just look at what unravelled during the last global financial crisis. Even locally, black sheep have managed to sneak into professions which have been regulated for years. Thus, the best protection remains with the buyers, who should expect themselves to play a role in helping to police the salespersons, as the agents will be referred to under the new regime.

Firstly, buyers need to realise that it is not reasonable to expect "good" advice from a seller's salesperson because that salesperson is contracted to sell by his client, the seller, to get the highest possible price. It is just like any profession with a client-agent relationship; lawyers, accountants, investment bankers - which is to take care of the interests of the client.

Thus, as long as there is no misrepresentation or provision of false information, buyers should be expecting the seller's salesperson to highlight all the good points about a property and downplaying the bad, and evaluate the proposition themselves. It is no different from buying anything.

Secondly, no amount of regulation can help buyers who choose not to do their homework and find out the correct questions to ask. There are many websites that provide excellent content to help buyers in this. Comprehensive data are widely available, least of which from the Urban Redevelopment Authority's website. Why quibble over paying $80 to get access to the vast information in the URA, including detailed past transaction records when buying a $1 million property?

Better-off buyers who get a headache from doing their own research might want to consider hiring a "buyer" salesperson to help them source for a property. This practice, which has caught on in some of the more developed countries, offers many benefits.

Firstly, it establishes a clear client-agent relationship which ensures that the salesperson takes care of the buyer's interest and the buyer can expect and demand good advice.

Secondly, it removes the motivation for the salesperson to "sell" one house over another and to be able to show all properties that are available for sale, not just properties which will provide a co-broking fee.

Lastly, these agents could help secure a better price, being better versed in the negotiation process. Having a middleman can help to remove the emotive aspect of buying a house and this could be important in preventing the buyer from over-paying.

The bottomline is that, while the industry has been shaken up for the better, the buyer's role in the transformation is also important. Buyers need to get better informed or be willing to pay for information and advice, as the property is probably their single largest investment of a lifetime.

by Tan Kok Keong

05:55 AM Oct 22, 2010

The writer is head of the Research and Consultancy Department at Orange Tee.


http://www.todayonline.com

Published October 22, 2010

By UMA SHANKARI


PROPERTY firms have begun the process of registering their agents as the new statutory board set up to regulate real estate agents here, the Council for Estate Agencies (CEA), begins operations today.


With CEA up and running, new and existing real estate firms can apply to the council for new licences from Nov 1.

The firms are also required to register their agents under the new regulatory framework, which states that anyone doing estate agency work must be registered as a salesperson before he/she can practise.

Under a transitional arrangement provided by CEA, firms have until today to submit a list of existing agents who have passed an industry examination or have completed at least three property deals over the last two years.

After this, agents will have to apply as a new salesperson and satisfy the full registration criteria - which includes passing a new CEA examination - to practise.

BT understands that as of yesterday, a few hundred small property firms have submitted lists of their agents who meet the transitional criteria.

But most of the larger property firms have yet to make their submissions ahead of today's deadline.

Agency bosses here have estimated that the current pool of more than 30,000 agents will shrink by a third to about 20,000 once the new rules kick in.

They also hope that the government's move to set up CEA will ensure that property firms and agents have the knowledge to provide professional service while working ethically.

Minister for National Development Mah Bow Tan said yesterday that the establishment of CEA is a major milestone to raise professionalism in the real estate agency industry and protect consumer interest.

Added CEA: 'The immediate focus for CEA is to prepare the estate agents (property firms) and salespersons to meet the higher standards of the enhanced licensing and new registration framework.'

The council will be headed by executive director Chionh Chye Khye, who was previously executive director (designate) with the Ministry of National Development.

The Business Times had earlier in December 2009 reported that he had been picked to helm the new statutory board.

Greg Seow, chairman of AMP Capital Investors (Singapore), has been appointed as CEA's president.

Other council members include representatives from the Urban Redevelopment Authority, the Housing and Development Board, the Consumers Association of Singapore, and the National University of Singapore's real estate department.


http://www.businesstimes.com.sg

Published October 6, 2010
Chia Boon Kuah.


THE compensation structure for real estate agents here remains a hindrance to making the industry more professional, panellists at a congress said yesterday.

Most property agents in Singapore get a lot of their income from commissions, which can drive them to try to close sales at the expense of customers' interests, the panellists said.

'As long as the compensation package drives you the other way, it is very hard for you to be professional,' said Far East Organization's chief operating officer Chia Boon Kuah.

Leong Sze Hian, immediate past-president of the Society of Financial Service Professionals and a Wharton Fellow, agreed.

He reckons a minimum wage system would help somewhat.

'As long as you have a lot of people who don't earn enough to make a decent living, or who have to make a decent living in a way that loses the trust of the customers, then how can you be professional?' Mr Leong asked a room full of estate agents.

Mr Chia and Mr Leong were part of a panel on developing world-class real estate professionals in Singapore at the inaugural International Real Estate Congress.

The congress is jointly organised by the Singapore Institute of Surveyors and Valuers (SISV) and Singapore Accredited Estate Agencies (SAEA).

The other two panellists - PropNex chief executive Mohamed Ismail and ERA Asia-Pacific associate director Eugene Lim - said growing the public's trust in the profession is crucial.

Most panellists and real estate professionals are hopeful that the government's move to set up a statutory board - the Council for Estate Agencies - to regulate the industry will ensure that property firms and agents have the knowledge to provide professional service while working ethically.

They noted that this is especially important as the real estate markets become more globalised.

In recent years, foreigners have shown an increasing interest in real estate in Singapore and other Asian cities such as Shanghai and Beijing, said Senior Minister of State for National Development and Education Grace Fu at the opening of the congress yesterday.

'To serve an increasingly diverse global clientele, the role of the real estate professional will have to evolve to encompass regions beyond the local market,' Ms Fu said.

'With a global real estate market, real estate practitioners will need to possess the requisite knowledge on legislation and policies of many countries.'


Chia Boon Kuah.
Far East Organization's chief operating officer

Source: http://www.businesstimes.com.sg

MPs speak out in support of the measures aimed at making the industry more professional

Updated 02:30 PM Sep 16, 2010
by Esther Ng

SINGAPORE - Parliament yesterday passed the Estate Agents Bill aimed at shaking up the real estate industry and making it more professional.

When the new statutory board, the Council of Estate Agencies (CEA), starts operation on Oct 22 - it will have the power to set codes of practice, ethics and professional conduct to regulate the practices of estate agencies and their agents (Corrected at 2:05 PM Sep 16, 2010).

From Jan 1 next year, all property agents will have to be registered with the CEA. They will have to meet certain standards to continue working.

Information on all registered estate agents will also be available on a public register, including the agency they are working for. Any disciplinary action taken against them will also be published.

The Bill comes after a rising number of complaints against errant agents.

It follows a recent housing Bill passed by Parliament in July to close a loophole which had allowed moneylenders to lodge caveats on HDB flats to claim a stake in sale proceeds.

Members of Parliament have spoken out in support of the measures.

Mr Cedric Foo, MP for West Coast GRC, wanted to know whether the CEA would consider those with criminal records or undischarged bankrupts to enter the industry.

Minister for National Development Mah Bow Tan said he would ask the CEA to consider applications on a "case-by-case basis and not to automatically disqualify these people from the trade".

When MPs Lim Biow Chuan, Ang Mong Seng and Cynthia Phua asked whether the CEA would prescribe the amount of commission real estate agents could charge - currently between one and two per cent - Mr Mah said: "The CEA cannot fix the commission charged because it is anti-competitive."

He added that it is "better" for commission rates to be decided by the market and to educate consumers so that they can negotiate the "best commission rates based on the level of services to be provided".

MP for West Coast GRC, Ms Ho Geok Choo, expressed concern that those moonlighting as real estate agents could lose their full-time jobs if they are listed in the public register.

Mr Mah said: "The new regulatory regime does not prohibit people from doing part-time real estate work. But it will require all persons doing real estate agency work, part-time or full-time, to be registered."

He added that this is not to "deter" part-timers, but if they want to be part of this industry, they must be registered.

"I don't think we should exempt them from this, they will have to sort it out with their employer," he said.

Source: http://www.todayonline.com