Ismail Gafoor, executive chairman and CEO of PropNex and Kelvin Fong, deputy CEO (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Ismail Gafoor, co-founder, executive chairman and CEO of Singapore-listed real estate agency PropNex, just celebrated his 60th birthday. "Based on my energy level, I can remain CEO for the next five years. But is that the right thing to do for the company, for it to remain relevant?" he muses. "The biggest challenge facing the real estate industry and many companies is leadership renewal."
However, Gafoor believes in building PropNex to last well beyond his tenure. The firm announced a "masterplan" for leadership continuity with several key appointments on Aug 23.
The most significant appointment is Kelvin Fong's elevation to deputy CEO. Fong, age 48, has been an executive director and board member of PropNex since the company was listed in 2018. Formerly with the Republic of Singapore Air Force for six years, Fong joined PropNex in 2002 and had once led the biggest group of agents at PropNex, numbering more than 3,000, before he joined the management team.
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As deputy CEO, Fong will lead PropNex's Singapore agency business, oversee the training development curriculum, and work alongside Gafoor on strategy and operations. Fong will also work closely with Michael Koh, the group's newly promoted chief technology officer, to accelerate the rollout of the firm's IT and digitalisation strategies.
Gafoor will continue to "provide strategic leadership and have overall executive responsibility for the group's business", according to the company statement.
Eddie Lim, currently senior vice president, has been promoted to the newly created role of chief agency officer (CAO).
Five others were promoted to agency vice president (agency VP). Bobby Sng has assumed the role of agency VP for leadership development. Cijay Tew has been made agency VP of training and development, while Marcus Luah has taken on the role of agency VP for business growth. Meanwhile, Benjamin Tan will be the agency VP for business strategy and Ken Ng, the agency VP for business development.
"We have put in place a corporate architecture, together with a system of processes where people can grow with the firm," says Gafoor. He believes that the top management has to be led by someone from within PropNex. "It has to be someone who has grown together with us, and immersed in our values, shares our passion for the business, and believes in making a difference in the lives of others. And he should be accepted by the people that he's leading. That is our long-term master plan."
The current PropNex key management, including the C-suite and agency VPs, have "over 200 years of real estate knowledge collectively", says Gafoor. "I am confident they are the right team to strengthen PropNex's market-leading position as we seek to achieve our Vision 2025 of reaching 15,000 salespersons."
Source: PropNex 1H2023 financial results and business update
PropNex had 6,684 salespersons when it was listed in July 2018; today, it has 12,073 at the end of July. "We almost doubled our salesforce in five years," says Fong. "And now we want to grow by another 3,000 in three years. If we can make that jump, our revenue likewise will grow."
Gafoor agrees. "If our vision of 15,000 salespersons materialises in 2025, it will be a 20% growth in terms of the sales force, which means a 20% growth in terms of our reach and market share."
PropNex's 1H2023 revenue was down 22.9% y-o-y to $364.28 million from $472.33 million in 1H2022. Profit was 18.8% lower at $22.95 million.
Project marketing, PropNex's most significant source of revenue, contributed to $113.5 million (31%) of its overall business. It was down 38.1% from 1H2022, which clocked $183.4 million in revenue. According to Gafoor, 1H2023 revenue from project marketing was lower due to fewer launches in the first three months of the year.
New project launches only picked up from April, says Gafoor. “Bear in mind that the revenue from new project launches will only get recognised eight to 12 weeks later,” he adds.
While developers’ sales have been lacklustre in some projects, they must sell out all the units within five years to be eligible for the additional buyer’s stamp duty (ABSD) remission of 35%. "So developers will either have to cut prices or increase agents' commission," says Gafoor.
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Being Singapore's largest real estate agency with over 12,000 agents, PropNex is better positioned to achieve higher project sales. Hence, it has been appointed in almost all new residential project launches.
It has also been able to secure other types of sales. A Hong Kong developer with 60 apartments at The Bencoolen recently decided to divest the units. The developer had held the apartments in the 94-unit apartment block on Bencoolen Street in the city area for over a decade. Even though three joint marketing agencies were appointed, PropNex sold 52 of the 60 units, says Gafoor.
Another was the sale of 48 strata-titled, semi-detached houses at Eleven @ Holland. These were mortgagee sales, with unit prices ranging from $3.714 million to $4.406 million or about $1,000 psf. All the units were snapped up within 36 hours, relates Gafoor.
Following the success of Eleven @ Holland, Clydesbuilt Capital, the developer of Lornie 18, appointed PropNex to sell six units there. Clydesbuilt has held six of the 18 units at Lornie 18 for rental income since the project's completion in 2008. PropNex offered the freehold, strata-titled houses for sale at around $6 million each or about $1,300 psf. To date, four of the six have been taken up.
"The strength of PropNex is that we can pitch, secure a deal, assemble a team, come up with a sales script on the value proposition, do research, outreach and then close the deals," says Gafoor. "This was not our modus operandi before."
Hong Leong Holdings has also recently appointed PropNex to handle the leasing of the Hong Leong Building at 16 Raffles Quay. The building has 485,000 sq ft of net lettable space across a 45-storey office tower and basement retail space. Having secured Hong Leong Building, PropNex now has a "business space" segment, which it can market to other developers with commercial buildings for lease.
These are some of the new initiatives PropNex took on recently, adds Gafoor.
Since opening its office in Melbourne, Australia, this April, PropNex has also brought to Singapore projects such as Melbourne Square apartments at Southbank by Malaysian developer OSK Property and a project by Australian developer Yarrabank Developments.
"We feel there is a push factor with Singapore investors finding it hard to buy a second or subsequent property in Singapore because of the cooling measures," says Gafoor. "With the favourable exchange rate between the Singapore and Australian dollar, and Australia being a mature market, Singaporeans can buy a property in the Melbourne CBD for $500,000."
The 10 rounds of property cooling measures in Singapore since 2011 have also made buying a home more challenging, notes Fong. The latest set of cooling measures was in late April, which saw a hike in ABSD for Singaporeans and permanent residents buying their second and subsequent properties. Foreigners buying residential property saw ABSD double to 60%.
Technological advancement has also disrupted the conventional home-buying process, says Fong. "Today, speed and real-time data are critical in closing a deal." Hence, he believes there is a need for "continuous learning among sales agents" to achieve the level of professionalism needed to advise and protect customers' interests. "This is one core area that our new team will focus on," he adds.