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A natural fit

"I can count money very fast," laughs Timothy Hor, as he recounts the days when he worked in a bank during his late teens.

Since then, Hor, who recently joined Reapfield Academy Sdn Bhd — the strategic think tank and training arm of Reapfield Properties Sdn Bhd — as CEO, has had a career that mostly focused on software and technology. He is responsible for leading and charting the growth of Reapfield. One would be forgiven for thinking Hor is an odd choice to lead one of the biggest real estate agencies in Malaysia.

Hor disagrees. He says a key component of his previous jobs was business development.

"And I think it is quite clear that in the next 10 years, the real estate industry will be a very digital one," he explains, adding that this is where his experience in software and technology will come in handy.

Hor dipped his toe into the property market at a young age. "I started working in a bank right after my A-levels and after a few years, I bought a single-storey terraced house in Kepong Baru for RM33,300. I was lucky — working in a bank, you can get a housing loan with good interest rates. That was in 1980. Today, the same houses in the area are going for half-a-million ringgit."

Three years after he bought the house, property prices went up. Hor seized the opportunity and sold his house for RM99,000. He used the profits to pursue an education in the US. Hor has an undergraduate degree in computer science from the University of Louisiana and a master's in technical and scientific communication from Miami University.

After graduating, he moved to Singapore in 1990 and worked there for 13 years before returning to Malaysia to raise venture capital funds for a Singaporean start-up called NexusEdge Technologies.

"NexusEdge was pretty notorious during its day. We went through a lot of challenges. There was a period when I decided to take a backseat and do some soul-searching," shares Hor.

NexusEdge was touted as Asia's first enterprise Rich-Thin Client infrastructure software provider. Things went south when one of its key investors sued the company for breach of contract in a partnership agreement for distribution of software in the US. The lawsuit was later dropped but the company didn't survive.

It wasn't long before Hor got back on his feet. He was the general manager for JobsDB.com before he was offered the general manager position in iProperty.com. During his tenure there, iProperty's revenue grew from RM11.84 million in 2010 to RM32 million in 2012.

It was a surprise to many, including his wife, when he left iProperty for Reapfield.

"My wife asked me, 'Are you sure you want to join a real estate agency?' I learned a lot about the real estate industry during my time with iProperty and I think there's no running away from the fact that the real estate industry is changing and information technology will play a big role in its transformation. I saw my move as a natural fit," says Hor.

New technology and the real estate industry

There is no doubt that technology has changed the way we live. As Hor points out, if you don't have your handphone with you, you'll feel like something is missing.

"This change is driven by the Internet and mobile phones. It has changed the way we behave as consumers and professionals. The younger generation consumes content and information very differently."

He believes the Internet will continue to change the way we live and do business. "This will not happen like it did in the travel industry as the real estate industry is still a very people-based business. But it may be possible down the road. For starters, you may not want to buy a house online yet but you may book one."

Using the recent launch of Dijaya Corp Bhd's Tropicana Gardens in Kota Damansara as an example, Hor says, "I went at four in the afternoon and there were only four units left. The place was like a market. The whole physical situation was amazing. Now imagine in the future, all this can be done online.

"If I'm a developer that knows my product is good and has done some nifty marketing to build hype, why should I do this physically? I can open my website for pre-registration and each registrant will be given a specific code. Within a specific time, I'll open a section of the website for the registrant to come in using the code. They can then select the units they want and book it with just a swipe of their credit card. You're not buying yet but you're locking in the unit," offers Hor.

However, he acknowledges that developers like physical events as they draw the crowd, which builds hype. Still, he says he believes that electronic booking will one day be the norm rather than the exception.

While the secondary market is different from the primary market, Hor notes that there is already a segment of people who search for properties online. This has been proven by the success of portals such as iProperty.com and PropertyGuru.com.my.

"In the future, it will be very natural for the next generation to look at properties online and actually make buying decisions based on the information they find on the net. From that perspective, real estate agencies like us will have to transform to cater for the changing consumer behaviour," says Hor.

Change has also been seen within the industry, even though there are some who are still reluctant to embrace new technology. "Within our organisation, you'll find some older real estate negotiators who refuse to list online. They tell me they only want to advertise in the newspaper. On the other end, we have the younger negotiators who don't even spend a single sen on newspaper advertising. All they need are the online portals. So, we have this interesting dichotomy," shares Hor.

Reapfield is conscious of the fact that the profiles of negotiators are changing and as such, expectations are now different. "We have more young people joining us as negotiators. They are more demanding — they want the best technology and tools that can make them more effective and productive. So we not only have to provide for consumers, but also for our negotiators. Using technology to add value is one area I'm highly focused on," he says.

Hor feels this is part of the reason why he was brought into Reapfield. "In order to change an organisation, you have to bring in people with a different DNA because they can look at things from a different perspective."

People power

Hor stresses that while technology is important, human resources is crucial. Training and leadership skills are very important to Reapfield. "We strongly believe in leadership training. As David Ong — Reapfield founder and president — always says, everything rises and falls on leadership."

Every new negotiator has to go through a training programme and leadership training is offered on a regular basis.

"I'm very proud to say that after working for more than 25 years in companies big and small, this is the first time I've come across a company that puts its entire team through leadership and character training. The training is a way to help them become better leaders so we can grow this organisation by empowering them rather than just treating them as tools, which is easy to do in this industry," says Hor.

As in any sales job, it is a numbers game — the more listings you have, the more revenue you will get.

"But it also has to allow the person to grow in the organisation in the long term. That's why we are very careful about recruitment and want to make sure we can provide our negotiators and agents with all the necessary tools and support so this truly becomes a career," Hor remarks.

However, he notes that growth in the real estate business is more challenging because negotiators and agents are not considered employees as they earn a commission instead of a salary. "Nobody works for you, they work for themselves. You can't force them to do anything. This is the greatest challenge in this business."

Currently, Reapfield has over 900 agents nationwide but not all are fully active. "As in most sales organisations, the principle of the top 20% bringing in 80% of the company's revenue is true. The challenge is how to grow the 20%? What happens if the 20% decide to quit? Some people say it can't be done but I believe it is possible through proper training and support," says Hor.

According to Hor, fees collected by Reapfield have grown by an average of 20% y-o-y from 2000 to 2010. In 2012, fees collected reached RM55.12 million, up from RM51.56 million recorded in the previous year.

Hor believes that consistent and steady growth is the hallmark of a sustainable long-term business. "Some companies can double their revenues every year. Different people have different philosophies but sometimes, like a rubber band, when you stretch it too far, it may snap."

On his end, one of his first steps is to create a better website for Reapfield and build a backend for negotiators to better manage their listings.

"For our website, we are going to start with the basics first. We want to make sure our corporate website has all the relevant information and can attract people to join us. Very important too is creating a better platform for our negotiators and agents to manage their listings. Our website is already integrated with iProperty.com and PropertyGuru.com.my. It will be integrated with two other portals in the future. This way, they can just list once and have the listing appear on different sites," says Hor.

Further down the line, he sees the need to make Reapfield's website a more engaging experience for consumers, which may include a 360° view of listed properties.

That's the future. For now, Hor says, "I guess in summary, the areas of focus for Reapfield in the next 10 years would be to grow the business on solid foundation and the three pillars of technology, people, and systems and processes."

Property prices to continue rising

Property prices, especially in the Klang Valley, will continue to rise, according to Reapfield Properties Sdn Bhd CEO Timothy Hor.

Based on Reapfield's transaction data, he notes that different types of properties and locations have different demand patterns and price changes.

"If you look at Mont'Kiara, Kuala Lumpur, residential property prices there have increased but at a slower rate while prices in Puchong and Kota Damansara, both in Selangor, are climbing at a faster rate. Landed properties have a higher propensity for capital appreciation than high-rises but high-rises tend to give you better ROI (return on investment) on rental returns. For example, a 2-storey linked house in Sri Hartamas, Kuala Lumpur, was going for RM800,000 a few years ago but today, it's asking for RM1.6 million."

Hor feels that if you are buying for rental returns, safer bets are areas with an established expatriate community, such as Mont'Kiara, especially if the property is near international schools. However, it also depends on the size of an apartment.

"Take MK10 for example (which offers units of over 3,000 sq ft). You are going after a smaller segment of the market so it may be more challenging to find tenants. But if you have a smaller unit (1,000 to 1,500 sq ft) in the mid-tier range, it moves pretty fast," says Hor.

The introduction of Bank Negara Malaysia's responsible lending guidelines last year— in which loan approvals will now be based on net instead of gross income— has impacted both the primary and secondary markets, says Hor.

"There have been cases of loan applications being rejected and I think in cases of new launches, sometimes a unit can be booked three to four times before it's sold because the loans weren't approved. I think consumers need to educate themselves. It's very straightforward— just be honest with your banker, tell them all your monthly commitments and they can tell you whether the loan will be approved. It may vary from bank to bank but the formula is quite fixed," offers Hor.


This story first appeared in The Edge weekly edition of Apr 08-14, 2013.


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