Millennials are now a force to be reckoned with in the high-end condominium segment. “In line with their rising affluence, these property buyers have a higher expectation of their real-estate agents,” says Jack Chua, CEO of ERA Realty Network.
As a result, ERA launched Plush, a high-end sales group that caters for the needs of the new breed of high-net-worth individuals. More than 100 agents signed up to join the new group at the launch event on Jan 3. ERA chief operating officer Marcus Chu is the head of Plush. The minimum requirement for an ERA agent to join Plush is to broker the sale of a property worth more than $5 million every two years, and to earn a minimum annual commission of $200,000. The Plush agents will receive training to increase their competency in handling the requirements of wealthy millennials.
“These buyers expect real-estate agents to be knowledgeable, all-rounded and aware of the current market trends,” says Chu. “In introducing Plush, we also hope that our agents will be professional, like financial advisers.” He believes this is “a necessary evolution for real-estate agents to remain relevant amid technological disruptions”.
Rich pickings
Last year, sales commissions of luxury properties contributed about $40 million to ERA’s annual revenue in Asia-Pacific, including Singapore. This translates into about 10% of the company’s total revenue in 2018, says ERA CEO Chua.
Chua’s aim is to double the proportion of luxury property sales going into the firm’s coffers over the next few years. ERA estimates that there will be 32 new launches in the Core Central Region (CCR) this year, comprising a total of about 5,500 units. This is far higher than the 23 new launches in the city-fringe area or Rest of Central Region (RCR) and 14 in the suburbs or Outside Central Region (OCR).
ERA launched Plush on Jan 3. More than 100 ERA agents have joined the high-end property salespersons club. (Credit: ERA Realty Network)
Allgreen Properties previewed Fourth Avenue Residences, located in prime District 10, on Jan 5. Likewise, Roxy-Pacific Holdings previewed two projects in the prime district: RV Altitude on River Valley Road in District 9 and Fyve Derbyshire in District 11. ERA is one of the appointed marketing agents for all three projects.
Chua says ERA has secured appointments for the launch of 32 new projects so far this year, and is in discussions for more.
Besides rich millennials, prospective buyers in the high-end segment are the en bloc beneficiaries, especially those whose projects were sold in late 2017 and 1H2018. Many of them want to buy replacement homes in the same neighbourhood, while others are looking at downsizing and using part of their windfall to purchase a home in the CCR for their children. Many of them are worried that their children will be priced out of owning properties in the CCR, says Chua.
Regional rollout by end-2019
Plush was launched in Singapore first, but by year-end, the plan is to launch it in ERA’s other markets across Asia-Pacific, namely Cambodia, China, Indonesia, Japan, South Korea, Malaysia, Taiwan, Thailand and Vietnam. Singapore- listed holding company APAC Realty owns the ERA Asia-Pacific franchise. Within ERA, there are already property agents who specialise in the luxury segment, says Chu. With Plush, the agents across the region can work together when there is a launch of a luxury project in Singapore or other key cities in the region, he adds.
In Singapore, ERA is marketing five highend overseas properties: White City in London, developed by Stanhope; Filmworks in London, by Berkeley Group; SO Sofitel Residences in Kuala Lumpur, by Singapore-listed property group Oxley Holdings; as well as The Monument Thong Lo and 98 Wireless in Bangkok, by Thai developer Sansiri.
Foreign buyers are also interested in buying prime properties in Singapore, despite the property cooling measures implemented last July. According to ERA, foreign buyers accounted for 27% of new home sales in the CCR over the past two years, compared with Singaporeans (51%) and permanent residents (18%).
Mainland Chinese buyers are the biggest group of foreign buyers in the luxury segment. “Most of them are buying for their own use, and many of them want to send their children to schools in Singapore. They also come to Singapore for the high-quality healthcare services here,” says Chu.
Mergers and collaborations
Today, ERA is the second-largest agency in Singapore in terms of number of agents. It had 6,490 agents registered with the Council of Estate Agencies (CEA) as at Jan 1. Last year, ERA acquired two smaller agencies in Singapore: CBRE Realty Associates, the associate arm of CBRE, and HSR International Realtors, which together increased its number of agents by 665. In Asia-Pacific, ERA has close to 17,000 agents.
According to Chu, talks are underway with a number of small agencies on possible mergers or collaboration this year. “We see revenue per agent as an important factor, and today, among the listed real-estate agencies in Singapore, ERA has the highest income per agent,” he says. “We focus our energy on training our agents and providing them with sales opportunities so they can increase their income.”