http://www.straitstimes.com/archive/...creen-20130808

Property agencies on investors' radar screen

In latest deal, ERA is snapped up by private equity firm Northstar

Published on Aug 08, 2013

By Melissa Tan


INVESTMENT companies are snapping up large chunks of Singapore real estate brokerages as the outlook for the local property market remains rosy despite recent cooling measures.

In a deal finalised yesterday, ERA will be bought out by Singapore-based private equity firm Northstar Group, which is acquiring Singapore's largest real estate agency from Hersing executive chairman Harry Chua.

While Northstar did not disclose a price tag for ERA, market sources have put it at between $120 million and $140 million.

Northstar plans to list ERA on the Singapore Exchange (SGX) in the next two to three years.

The ERA buyout follows two other deals this year that underline the clamour among investment companies to grab a bite of the active property market in Singapore.

In March, a 66 per cent stake in Catalist-listed real estate broker HSR was acquired for around $13.7 million by Phileo Capital, a family investment firm controlled by UPP Holdings chairman Tong Kooi Ong.

Home-grown agency C&H Group's founder Albert Lu also sold an 80 per cent stake in the firm to Chinese investment company Wen Way Investments in January, Mr Lu told The Straits Times yesterday.

He declined to disclose the sum paid. Mr Lu, 63, said that he will stay on as key executive officer until the end of 2015.

Market watchers said that investment companies and funds are interested in Singapore real estate brokerages because of the high levels of property transaction activity here.

The continued rise in property prices also bodes well for brokerage commissions, noted Chris International director Chris Koh.

Bucking the trend, PropNex - the second-largest player in Singapore's real estate brokerage industry - has rebuffed approaches from both local and overseas investment firms to acquire a stake in it.

PropNex chief executive Mohamed Ismail, 50, said: "A buyout has never been on the cards... I'm not even open to selling a minority stake."

He added that he plans to expand PropNex overseas.

ERA has around 5,200 agents while PropNex has around 5,100.

Despite the ownership changes at several local brokerages, industry players said this is unlikely to have any major impact on property buyers and sellers.

But it could lead to keener competition for sales and manpower among brokerages, they said.

"It'll mainly be life as usual but competition will be keen going forward especially with the injection of extra funds at ERA. We are beefing up our IT infrastructure," said executive director Thomas Tan of real estate agency Remax yesterday.

Hersing chief executive Jack Chua, who will lead ERA after Northstar's buyout, told The Straits Times in an interview at Hersing Hub on Tuesday that he plans to ramp up training and IT upgrading at ERA.

Mr Chua, who has developed a reputation as ERA's primary dealmaker, said he also wants to grow ERA's business in the commercial and industrial property segment.

He said that Northstar is unlikely to impose cost-cutting at ERA.

Mr Chua and other senior executives at Hersing will take up a 20 to 30 per cent combined stake in ERA, he said, of which he will hold slightly "less than half".

He added that he was "still cheerful" about Singapore's property market despite several rounds of cooling measures.

Hersing executive chairman Harry Chua, who is unrelated to Mr Jack Chua, said in a statement yesterday: "I am happy that Jack will continue to lead ERA... With the sale, now I can focus my time and energy on Hersing's other businesses." Hersing runs the Singapore franchise of Hong Kong dim sum chain Tim Ho Wan.

Northstar is also in the process of acquiring the Asia-Pacific master franchise for ERA covering 18 countries in the region.

[email protected]