ERA Realty eyes 40% increase in revenue amid boom in property transactions

Singapore

ERA Realty Network is on a roll, as it rides the momentum of the nation's gangbuster residential market.

The company, Singapore's second largest real estate agency is gunning for 40 per cent increase in revenue to S$550 million by early next year, in line with its 40th anniversary, senior executives said in an exclusive interview with The Business Times.

ERA Realty Network is the wholly owned subsidiary of mainboard-listed CLN which posted revenue of S$395.1 million for 2020, up 6.9 per cent.

The goal for this year is to have revenue of S$450 million, said Marcus Chu, ERA Singapore's chief operating officer.

To incentivise its army of almost 8,000 agents, ERA is offering a lucky draw prize, a Tesla Model 3 electric car worth about S$150,000 if it reaches the S$450 million figure, he said.

If revenue gets to S$550 million, which will be almost 40 per cent up over 2020's S$395.1 million, the grand prize is a penthouse unit in a condominium worth S$2 million, he said.

ERA's ambition is predicated on homes sales remaining strong, without the government cooling measures, and recruitment of more agents.

The biggest real estate agency here is PropNex with over 9,200 agents.

"We have to sell well, barring any cooling measures coming out," said Jack Chua, APAC Realty executive chairman and chief executive.

The Q1 2021 flash estimate for the private home price index released on April 1 has intensified talk of more cooling measures, as private home prices in the first quarter rose for a fourth straight quarter.

Singapore private home prices rose 2.9 per cent in Q1 from the previous quarter, according to latest flash estimates from the Urban Redevelopment Authority (URA). The price rise comes after a 2.1 per cent increase in the fourth quarter last year.

It was also the sharpest quarterly increase since the second quarter of 2018 when private residential prices rose by 3.4 per cent before property curbs hit in July that year.

Rather than dwell on what the government might do, Mr Jack Chua said that amid last year's challenging market, the agency was able to capture more market share.

It was appointed marketing agent to 24 projects with more than 7,200 new home units launched during 2020.

ERA's market share for all transactions - new sales, resales and rentals - in 2020 was 28 per cent, up from 26.6 per cent in 2019.

But ERA's estimated market share of the new homes segment fell to 28.9 per cent last year, from 29.6 per cent in 2019. Singapore's developers sold 10,940 private residential units (including executive condominiums) in 2020, an increase of 5 per cent from 10,417 units in 2019.

Mr Chua explained that the lower market share was due to the company telling its agents not to do deals which involved the re-issue of options to purchase (OTP). Seen mainly in the mega mass market projects, the re-issue of OTP was banned in September.

"The re-issue was a bit illegal, we encouraged our agents not to do it," he said.

Last September, the URA said developers could no longer re-issue options to purchase to the same buyer of the same unit within 12 months after the expiry of the earlier OTP, a practice which could inflate sales figures.

Following that directive, ERA's market share improved, Mr Chua said.

Of the 319 units sold at Ki Residences at Brookvale, ERA did 160 units (50.16 per cent); at Clavon, out of the 492 units sold, ERA's share was 220 units (44.72 per cent). Both Ki Residences at Brookvale and Clavon were launched in December.

Of the 522 units moved at Parc Central which had a January launch, ERA accounted for 239 units (45.79 per cent).

Based on market data, ERA ended 2020 with a 42.9 per cent share of the private residential and HDB resale market, up from 40.7 per cent in 2019.

This year, ERA has been appointed marketing agent for 24 residential projects with more than 8,800 units, he said.

To be clear, the top three agencies - PropNex, ERA and Huttons - are usually appointed to market most developments. While Singapore is ERA's biggest market, the group has been steadily expanding in the region, Mr Chua said.

There are many large potential markets outside Singapore, he said. ERA has a 100 per cent stake in ERA Indonesia, a 49 per cent stake in ERA Malaysia, it owns 80 per cent of ERA Thailand and 38 per cent of ERA Vietnam.

The group has 18,000 agents in its Asia Pacific network and the target is to reach 20,000 later this year.

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