Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
SOME 140 real estate agencies have closed shop over the 12 months to March 31, 2015 and over 3,000 property agents have quit the industry in that period as the sluggish property market continued to take its toll on industry players.
The honchos of top agencies here told BT that they are expecting more "casualties" in the current renewal of CEA licence period, October to December, with more agents throwing in the towel.
The latest annual report from the Council for Estate Agencies (CEA) for its fiscal year ended March 31, 2015 shows that there were 1,654 new salespersons who entered the industry over the 12 months but the number of registered salespersons still dropped to 32,006 as at March 31 from 33,498 a year ago, meaning 3,146 people left the sector.
And while 109 new property agencies were formed, the total number still fell to 1,422 from 1,449, yielding a loss of 136 agencies.
Tan Tee Khoon, managing director of KF Property Network, a subsidiary of Knight Frank, said: "It will not be boom town 6-12 months down the road given the build-up of completed and unsold non-landed residential units, stringent access to borrowing and interest rates rising.
"The slowdown is also observed in commercial and industrial property sectors. Thus, the real estate agency profession will not appeal to those who are in for the money."
PropNex chief executive Mohamed Ismail noted that on average, it now takes double the amount of time to close transactions compared to three to four years ago in the face of the double whammy of sluggish demand and greater supply.
"Agents who are full-time and trained to understand the market can adapt and add value to their customers. But for those who are not prepared to retrain and cannot close the deals in the usual short period of time, they will find it hard to earn income to keep up with their commitments," he said.
But interestingly, the 109 new property agencies that opened in the 12 months to March 31 marked an increase from 81 in the year-ago period.
"This increase is more likely due to existing and experienced salespersons leaving their firms to strike out on their own rather than entirely new entrants into the industry," Mr Tan said. "The new estate agencies are thus more niche in targeting specific real estate sectors based on the experienced salespersons' core competencies."
Between Jan 1 till now, many smaller and mid-sized agencies have seen a drop in agent strength, while the bigger agencies have seen an increase.
Singapore's largest agency, ERA Realty, has 6,185 agents now, up from 5,707 as at Jan 1. The second largest, PropNex, has 5,959 agents, up from 5,358 as at Jan 1. For HSR International Realtors, however, its number of agents has shrunk to 826 as at Monday from 1,324 at the beginning of the year.
OrangeTee managing director Steven Tan felt that this migration of salespersons to larger agencies with competitive advantage or economies of scale will ensue, even though he is expecting a moderate pick-up in transaction volumes as prices become more attractive. The HDB resale market, for instance, has showed signs of stabilisation in recent months.
On a brighter note, the CEA noticed that there has been a decline in the number of consumer complaints against salespersons.
Over the past five years, the number of complaints on a per thousand transaction basis (to adjust for market volume) has declined by two-thirds from around 15 to about five currently, according to CEA.
CEA attributed this to enhanced industry standards stemming from regulatory enforcement, professional development of salespersons and consumer education.
Of the 702 complaint cases in the year ended March 31 (751 cases in the year before), HDB resales make up the biggest proportion (33 per cent) followed by private sales (19 per cent).
There were 224 letters of advice or warning issued to property agencies or salespersons arising from 191 cases in the fiscal year ended March 31, down from 644 letters arising from 458 cases in the preceding fiscal year.
Of the more serious actions taken, 12 court cases were filed and 17 concluded, compared to 19 filed cases and 13 concluded cases the year before.
CEA recognised that "the real estate agency industry is operating in an increasingly competitive and challenging environment". It has stepped up its engagement with industry stakeholders and received feedback on its upcoming plans.
Now in its fifth year of regulating the industry, CEA is looking into a certification programme to encourage property agencies to adopt good business processes to ensure professional and consistent service to customers.
"The working group is in the process of seeking feedback and suggestions from KEOs (key executive officers) and salespersons," CEA president Greg Seow and executive director Chionh Chye Khye said in their joint message in the CEA annual report. "We will also strengthen capabilities in support of industry development."
This followed the introduction of the Continuing Professional Development (CPD) Training Roadmap for KEOs and salespersons last year.