Singapore’s largest real estate agency, PropNex, has once again risen to the top of The Edge Singapore’s Centurion Club, which ranks listed companies with market capitalisations between $100 million and $999 million, as part of the Billion Dollar Club 2024. For the third consecutive year, PropNex has earned accolades for Highest Return to Shareholders, Highest Weighted Return on Equity (ROE), and the most prestigious award in its category, Overall Real Estate Sector Winner.

PropNex started the Year of the Dragon with a big bang by setting the Guinness World Record with 3,268 people participating in a simultaneous Lo Hei Toss at its Lunar New Year celebration on Feb 15. 

Despite an optimistic start to the Year of the Dragon, the first nine months of 2024 proved challenging for new home sales, with developers selling only 3,049 private homes — a level not seen since the 2008 Global Financial Crisis, when 4,264 units were sold.

The subdued new home sales reflect the impact of the April 2023 property cooling measures, elevated interest rates, and concerns over ongoing global tensions, including those between the US and China, the Russia-Ukraine war, and the Israeli-Palestinian crisis.

Market share growth

“We knew this year would be challenging,” says Ismail Gafoor, CEO and chairman of PropNex. “We were hoping the US Federal Reserve would cut interest rates sooner, but that was postponed until Sept 18.”

See also: Driving a sustainable corporate sector

mute
Even so, in its mid-year financial and business updates on Aug 13, PropNex reported that its sales force of 12,700 salespersons had achieved a significant market share of 34.8% — representing one in every three salespersons in Singapore.

PropNex also secured a 63.3%* market share of transaction volume, with its salespersons involved in two out of every three home transactions across both private and public housing segments. This figure includes transactions by PropNex salespersons representing buyers or sellers as well as co-brokered deals with external salespersons.

Its performance and market share gains did not go unnoticed. OCBC Investment Research analyst Donavan Tan initiated coverage on the firm with a “buy” call on Oct 21. “PropNex salespersons successfully closed around two-thirds of home transactions, highlighting the exceptional productivity of the company’s sales team,” wrote Tan in his report. “We attribute this growth to PropNex’s comprehensive training programs and substantial investments in proprietary technology platforms that can scale alongside the increasing number of salespeople.”

PropNex CEO Gafoor attributes PropNex’s success in seizing market share to the management team’s “clear-minded focus on its salespersons”. 

See also: Montblanc on being a successful luxury brand: quality and companionship

 

Seizing opportunities in the private resale market

The property cooling measures introduced in April 2023 doubled the additional buyer’s stamp duty (ABSD) for foreign buyers to 60%. “We anticipated the Core Central Region (CCR) would be most affected, as it has the highest proportion of foreign buyers,” says Gafoor.

On the upside, fewer foreign buyers have opened up more opportunities for Singaporeans to enter the CCR market. “However, developers must identify entry-level pricing that appeals to Singaporean buyers,” Gafoor adds. “Singaporeans have become savvy with market transparency and easy access to information. Without a compelling reason to buy, many prefer a wait-and-see approach.”

As developers adjusted their products and pricing, PropNex recognised the need to sharpen its sales force’s skill set to remain relevant in the post-2023 cooling measures market. “The market dynamics and buyer profile have completely changed,” says Gafoor. “We can’t sell property the way we did in the past.”

Source: PropNex Financial Results and Business Updates for 1H2024

 

To stay competitive, PropNex prioritised upskilling its salespersons to help clients identify value buys across market segments. While new home sales lagged in the first nine months, PropNex’s salespersons remained active in the resale market, which continued to thrive.

Additionally, the price gap between prime condominiums in the CCR and those in the city fringe or Rest of the Central Region (RCR) has been narrowing, as has the gap between the RCR and suburban properties in the Outside Central Region (OCR).

“The price gap between new project launches and resale properties, as well as between different market segments, has created buying opportunities for homebuyers,” says Gafoor. “As a result, the private resale market has been vibrant.”

As of the end of 3Q2024, 10,351 units changed hands in the private resale market, accounting for 71.9% of all private transactions, according to URA data released on Oct 25.

Capitalising on upgrading fever in HDB market

The HDB resale market remained resilient despite the government’s latest cooling measures on Aug 20, which reduced the loan-to-value (LTV) ratio for HDB housing loans from 80% to 75%.

According to HDB data, 8,142 flats changed hands in 3Q2024, bringing total resale volume for the first nine months of the year to 22,562 units. Strong resale volume has also driven prices up by 2.7% in 3Q2024. Cumulative HDB resale price growth reached 6.9% by the end of September, surpassing the full-year growth of 4.9% in 2023.

The number of HDB resale flats sold for $1 million or more reached 750 units by the end of September, exceeding the 469 units sold in all of 2023. Gafoor expects the total for million-dollar HDB resale transactions to hit 1,000 by year-end — more than double last year’s total.

He also anticipates the upward trend in million-dollar HDB flats to continue next year. “This is due to more HDB resale flats in the Central Area that have recently reached their MOP [minimum occupation period] changing hands at prices above $1 million,” he explains.

Since bottoming out in 2Q2019, HDB resale prices have risen by 47.5% over the past five years. Gafoor notes that this increase in capital values has allowed many HDB owners to upgrade to private properties, including executive condominiums (ECs) and private condominiums.

 

propnexThis year alone, PropNex has conducted over 100 large-scale consumer seminars. A notable event is the Property Wealth System, a two-day seminar that attracts over 1,000 attendees per session. (Photo: PropNex)

 

Educating consumers, clearing developer stock

An analysis of URA transaction data from 1H2024 showed that PropNex held a 55.5% market share of new project launch sales, a 60.1% share of private resale, and a 66.5% share of HDB resale.

With its substantial market shares, PropNex can leverage its proprietary data to provide “meaningful information” for its sales force.

Beyond upskilling its salespersons, Gafoor emphasises the importance of consumer education. This year alone, PropNex has conducted over 100 large-scale consumer seminars. A notable event is the Property Wealth System, a two-day seminar that attracts over 1,000 attendees per session.

PropNex’s market-leading position also enables it to collaborate with developers on strategies to clear unsold stock. For example, at the 396-unit private condo The Landmark, launched in November 2020, all units were sold by July, with PropNex’s salespersons handling 267 of the sales (67%). 

 

landmarkAt the 396-unit private condo The Landmark, launched in November 2020, all units were sold by July, with PropNex’s salespersons handling 267 or 67% of the sales (Photo: Samuel Isaac Chua/EdgeProp Singapore)

 

Similarly, at the 474-unit Hillock Green in Lentor Hills Estate, launched in November 2023, 313 units were sold as of Oct 18, with PropNex accounting for 212 sales (68%).

Another success is The Botany at Dairy Farm Walk, launched in March 2023, where 382 of 386 units (99%) were sold by Oct 18, with PropNex’s salespersons responsible for 239 units (62%).

Developers sometimes face time pressures on specific projects, particularly as ABSD deadlines approach, and often turn to PropNex for assistance. For instance, at the 36-unit Jervois Treasures, the developer had sold only five units and needed to sell the remaining 31 units within 10 weeks to avoid ABSD penalties. PropNex managed to successfully sell all 31 units within the timeframe.

Another notable achievement occurred at the strata-titled housing development Eleven @ Holland: At a bank sale of 48 semi-detached houses, all units were snapped up in a single day on June 3, 2023, with PropNex handling the sale.

‘2025 to be an exciting year’

With the prospect of further interest rate cuts, a higher GDP growth forecast for Singapore next year, a population at an all-time high of 6.04 million, and a reduced unemployment rate of 1.8% at the end of September (down from 2% a year ago), all indicators point to improved market sentiment in the coming year.

HDB prices are also trending upward, providing strong support for the Singapore housing market. Next year, over 10,000 new private housing units will be launched for sale — more than double this year’s figure.

Gafoor, therefore, anticipates that 2025 “will be an exciting year for the real estate sector”. He adds: “We believe that next year, we will see the results of our efforts to connect with consumers and to train and empower our sales team through technological innovations.”

PropNex’s share price closed at 81 cents on Nov 1. On Nov 14, the share price closed at 86 cents. The real estate company aims to reward its shareholders as well, according to Gafoor, who points out that PropNex has maintained a dividend payout ratio of over 80% over the past two years, distributing 92.9% of its earnings in 2023. 

 

Propnex