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Centaline Property, one of the largest property agencies in Hong Kong, began eyeing the Singapore market a decade ago. The firm even registered its business in the city-state back then.
It was not until July 8, however, that it officially opened an office at 2 Havelock Road (the former Apollo Centre). It believes the time is right to open an office now as the Council of Estate Agencies, which was established in Singapore last October, will regulate property agents.
“Before the CEA came into effect, anyone could be an agent,” says Clarence Chow, Centaline’s division manager for Singapore, who is based here but travels back to Hong Kong twice a month. “The whole industry will undergo a big change — from out of control to under control — and now this is the perfect moment for us to come in.”
In a sense, the CEA’s laws are similar to those of Hong Kong’s Estate Agents Authority, established in 1997, he adds. Both authorities require all property agents to be registered with them and have at least a secondary school education.
Expansion plans in Singapore are already on the cards. Centaline Singapore has 25 employees and intends to hire 30 to 40 more by year-end. Centaline also intends to deploy the same strategy that has proved a success in establishing itself in China and Hong Kong — the opening of a network of branch offices in neighbourhoods that their clients are interested in. Such a practice is the norm in Hong Kong and China, explains Chow, adding that Centaline entertains more walk-in enquiries at its various branch offices than it does from its website or over the phone.
At the start of the year, the 32-year-old Centaline had 1,400 branch offices with a total staff strength of 27,000 in Hong Kong and cities across China, as well as Macau and Taiwan. Prior to Singapore, it opened its office in Taipei in January and plans to set up five branches across Taiwan in the future.
Five branch offices in the pipeline
Chow also plans to open three to five branch offices in Singapore by year-end. Desired locations for a branch office or outlet include the traditional Orchard Road-Bukit Timah neighbourhood of Districts 9, 10 and 11; the core city centre, Marina Bay and Sentosa Cove; and the prime East Coast neighbourhoods, especially the new condominiums with premium sea views in the Amber Road and Meyer Road neighbourhoods.
High net worth investors from Hong Kong and China prefer talking to agents face to face instead of over the phone or via email, says Chow. Thus, many Chinese and Hong Kong realtors set up branch offices in Hong Kong and cities across China. So far, none of the major property realtors in Singapore has branch offices across the island, although they may have them in China. Centaline will be the first to do so in the city-state.
Chow believes that this strategy of setting up branch offices in prime districts in Singapore will facilitate their reaching out to the same wealthy Chinese investors, he adds. “Even though there are thousands of online property listings, Chinese buyers tend to locate property agents through their branch offices,” he says.
Setting up a branch office in each locale also helps Centaline to familiarise itself with the neighbourhood. “We will then be able to better advise our clients and give them a true and fair opinion of the neighbourhood in terms of living environment, transportation network, and schools in the area,” says Chow.
Mainland Chinese have topped the list as the largest group of foreign homebuyers in Singapore for both 1Q and 2Q2011, says Chua Chor Hoon, head of research for Southeast Asia at DTZ. Thus, mainland Chinese homebuyers occupied the top spot for 1H2011, beating Malaysians and Indonesians, traditionally the largest group of foreign homebuyers in Singapore. Chua says both permanent residents (PRs) and foreigners accounted for 29.6% of all purchases in 2Q, and 29.5% in 1Q.
“When Chinese buyers explore buying properties overseas, the first place they naturally look at is Hong Kong, as it’s the nearest international market, followed by Singapore,” says Chow. “This is because of Singapore’s transparent market, robust economy, strong currency and relative stability.” The rise in residential property prices has also moderated in the last few quarters, unlike in Hong Kong, where prices have shot up 10% to 15% in just the last two months, he adds.
Interest in prime districts
In Singapore, Centaline has more than 100 clients from North Asia who are interested in investing in Singapore property. Their budgets range from S$3 million to S$5 million for a high-end condo in the prime districts, to S$20 million to S$30 million for a luxury villa in Sentosa Cove. Chow adds that Centaline’s mainland Chinese clients sometimes pay for their properties in full using cash, with large sums of money being handled through the clients’ lawyers. About half of the firm’s clients in Hong Kong employ this method of payment.
High-end luxury properties on the radar screen of these high net worth clients tend to be those that have a prestigious address, are widely considered to be exclusive and are new — either still under construction or soon to be completed. On their radar screen is the likes of Far East Organization’s Boulevard Vue at Cuscaden Walk off Orchard Boulevard, which offers 28 exclusive apartments in a 33-storey tower designed by architect, Takashi Sugimoto of world-renowned architectural firm, Super Potato. Another is Wing Tai Holdings’ newly completed 140-unit Helios Residences, located at Cairnhill Rise, and the 58-unit Ritz-Carlton Residences by KOP Group, located along Cairnhill Road, which will be completed by year-end.
Most of Centaline’s branch offices or outlets in Hong Kong, China, Macau and Taiwan tend to be located in shop units on the first level of a mall, adds Chow. In Singapore, Centaline’s first branch office is located with its headquarters at 2 Havelock Road, which is in the Clarke Quay area, just on the edge of the CBD. The branch office will also handle the company’s respective client database, with queries from clients recorded and tracked. A team of 10 to 15 agents will man each branch office.
Finding a location for the Centaline branch offices in Singapore is a challenge, Chow admits, especially when it comes to the prime districts, owing to the premium rents. “It doesn’t necessarily need to have a prominent street frontage, as rental cost is an issue,” he admits. His first target is the East Coast area, where he is looking for shop space.
Another company in Singapore with satellite offices is local financial brokerage firm, PhillipCapital, which has set up Phillips Investor Centres across the island. These investor centres or branches are located in places such as Robinson Towers in the CBD, Raffles City Tower on Stamford Road and, in the suburbs, Marine Parade, Toa Payoh, Bukit Batok, Towner Road in Serangoon and Woodlands, for example. These centres are set up to facilitate face-to-face meetings, help residents in the area to set up their brokerage accounts, and conduct educational investment seminars via the use of computer terminals there.
Chow acknowledges that while most people in Singapore tend to look for properties for sale or for lease online, many of the property listings on websites tend to be in English. “These Chinese buyers are more comfortable with Mandarin,” he says. Thus, Centaline has put up listings of some of the popular luxury properties in Singapore in Chinese, both on Centaline’s Hong Kong and Singapore-based websites.
Expanding suite of offerings
Centaline achieved about HK$8.6 billion in commissions last year from its China, Hong Kong and Macau operations, and Chow hopes to achieve similar success in Singapore. He believes the strategy to adopt is to scale up its operations here. Setting up a research unit is also on the cards and could happen as early as next year, says Chow.
“However, residential sales and leasing will make up the core of the business,” he says. The forecast is that half of the residential sales will come from new launches, while the other half will be secondary market deals.
“Once we’re all set up, we will also do investment sales of residential and commercial properties as well,” he adds. “We are going to be a real estate agency that offers comprehensive services — everything from asset management, corporate leasing to rental management.”
Chow will consider cross-selling of properties in the China and Hong Kong markets, as well as Singapore. Property exhibitions for two Singapore developers in China and Hong Kong are already in the pipeline. “At the moment, I am also negotiating with developers in China to put up exhibitions of their properties in our offices in Singapore,” he says.
With the expectation that the volume of new home sales in Singapore will continue to stabilise in 3Q, more developers are once again exploring overseas roadshows. “On a broad view, and as seen in previous property cycles, when property market sentiment in Singapore wanes, developers will kick-start their overseas marketing activities,” observes Joseph Tan, executive director of residential services at CB Richard Ellis. “Indonesia and Malaysia have traditionally been target markets, while China is relatively new but a hot market right now.”
Hong Kong and Shanghai are prime locations for Singapore developers’ weekend property exhibitions to reach out to wealthy mainland Chinese homebuyers. For instance, on the first weekend of July, The Boutiq, a luxury freehold condo located at Killiney Road, was showcased at the Conrad Hotel in Hong Kong. Hamptons International is the marketing agent for the 130-unit development in Hong Kong. The project was officially launched in Singapore at end-April. As at end-June, 66 of 74 units launched had been sold, with the latest units achieving a median price of S$2,380 psf, according to URA data.
Centaline’s foray into the Singapore realty business could bring a new perspective to an already competitive market. Most local developers generally take a pragmatic view. “We can work with any marketing agency provided it can deliver the results we want,” says a representative of a listed developer in Singapore who declined to be named.
Jo-Ann Huang is a staff writer at The Edge Singapore
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 873, Aug 29-Sep 4, 2011
