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Staying relevant amid changes
THESE days, the issue of succession planning takes precedence in the minds of the veteran head honchos at Knight Frank Singapore.
"Our top priority", says group managing director Danny Yeo, "is to ensure that we have a group of experienced and energetic younger professionals ready to take over and lead the firm within the next few years."
Grooming of the new leadership began three years ago. So far, the dream team includes Low Kin Hon, head of valuation; Ian Loh, head of investment and capital markets; Png Poh Soon, director of valuation; Tan Tee Khoon, head of residential services; and Margaret Ang, head of corporate services. "We will be adding more to the team soon," said Mr Yeo.Both he and Knight Frank Singapore executive chairman Tan Tiong Cheng - who collectively have more than 60 years' experience in the property consultancy industry - are keen to groom a team that can meet the demands of a rapidly evolving industry.
For one, the scene has become more crowded over the past few decades. "More international property consultancy firms have set up shop here, while pure-brokerage firms have grown and cut a niche in local residential project marketing," said Mr Yeo. "I believe the number of real estate salespersons must have grown ten-fold since the 1970s to 31,000-plus today," he added.
Advisory work (valuation and consultancy studies) has also become much more sophisticated now, with complex financial models for asset managers, funds and real estate investment trusts (Reits).
And because clients are employing very qualified real estate professionals, they have higher expectations of property consultants whom they engage to do advisory work.
Despite these challenges, Knight Frank - which will mark its 75th anniversary in Singapore next year - has stayed relevant through a deep understanding of changes in the business environment and taking advantage of these changes by tapping new opportunities, said its top brass.
The group pioneered collective sales in 1994 - at Cosy Mansion in the Upper East Coast area. Knight Frank also provided property valuation services for three bank mergers: Keppel Bank and Tat Lee Bank; OCBC and Keppel Tat Lee Bank; and United Overseas Bank and Overseas Union Bank.
When upmarket Japanese department store group Takashimaya began scouting for opportunities in the Singapore market in the late 1980s, Knight Frank bagged a property consulting appointment from the group and helped it to structure its investment in the Ngee Ann City project along Orchard Road.
Knight Frank also became the lead agent for marketing Ngee Ann City's retail space. Following that, Knight Frank expanded its retail agency department.
"The long and short of it is: Whenever there have been changes, we ourselves changed to take advantage of new opportunities," said Mr Tan.
The firm's origins date back to 1940, when Cheong Hock Chye set up an eponymous property consultancy in Singapore doing mainly valuations and auctions. When he passed away in 1949, his son Cheong Thiam Siew took over the company. In 1982, Cheong Hock Chye & Co merged with Knight Frank & Rutley group of UK and Baillieu Real Estate Australia group, with Cheong Hock Chye & Co holding 55 per cent of the new entity.
Today, Cheong Hock Chye & Co still owns 55 per cent of Knight Frank Singapore, with Knight Frank Asia Pacific now holding the other 45 per cent. Knight Frank Singapore in turn owns 25 per cent of Knight Frank Asia Pacific. This gives Cheong Hock Chye an effective stake (direct and indirect) of about 66 per cent of Knight Frank Singapore.
In 2011, the seven shareholders of Cheong Hock Chye & Co - all Singaporeans - trimmed their stake to 20 per cent when they divested 80 per cent shareholding in the company to LC Development, now known as LCD Global Investments Ltd.
Besides Mr Tan and Mr Yeo, the other five local shareholders are Lydia Sng, Nicholas Wong, Mary Sai, Foo Suan Peng and Low Kin Hon. Except for the last two, the rest have been with the company for at least 25 years.
Knight Frank Asia Pacific's operations span Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia, South Korea, Taiwan, Hong Kong and China.
As part of the stake sale to LC Development, Mr Tan and Mr Yeo have agreed to stay on with Knight Frank Singapore at least until end-2016. The two men are now 64 and 61 respectively. The other five shareholders of Cheong Hock Chye & Co have contractual obligations to continue working at Knight Frank Singapore at least till the end of this year.
Currently, the group has about 630 full-time staff and 900 associates (or agents who are not salaried but instead receive commissions) in Singapore.
Like most property consultancies in Singapore, Knight Frank's bottomline has been affected by the dive in property transactions following the implementation of the total debt servicing ratio framework in June last year as well as earlier cooling measures. Nevertheless, the group remains profitable.
While the Singapore residential sector has been bruised by the cooling measures, Knight Frank Singapore has seized opportunities in the past two to three years to sell overseas properties in London, New York, Bangkok and Australian cities to Singapore investors. Moreover, its investment department (handling big-ticket transactions such as office buildings and land) has done well in Singapore as well as abroad.
"We see little reason for retrenchments," said Mr Tan.
During all four major recessions over the past three decades, the firm did not axe any staff. There were pay cuts - later restored - with bigger reductions for senior staff, and none for the lower-paid. "We practise 'common misery'.
"At the end of the day, the staff understand and appreciate that being a home-grown company, we face difficult periods together like a family. In doing so, we have instilled confidence and stability with many staying with us through thick and thin."