PropNex extends market lead on steady demand

Beyond Singapore, where it has a strong position, the firm also has a growing foothold in Malaysia, Indonesia, Vietnam

Mon, Jul 08, 2019


SPANNING almost five decades, Mohamed Ismail Gafoor's obsession with real estate began with a childhood mired in poverty, one strewn with tales of how homelessness drove his grandmother and uncles to the brink of destruction.

"Growing up, my father told us how he and his siblings survived without a roof over their heads - they tried to seek shelter with relatives but were chased out, and at one point, my grandmother even brought him and his siblings to the river to commit suicide," recalled Mr Ismail, co-founder, executive chairman and chief executive officer of SGX-listed real estate services group PropNex Ltd.

Mr Ismail himself grew up in a one-room public housing rental flat with four other siblings, sleeping on a mattress on the floor and waking up at the crack of dawn to help deliver newspapers before heading to school. His afternoons were mostly spent helping his father in the family's provision shop.

"My parents never owned their own home till late in their lives. That's why I believe everyone who can afford it should take an interest in understanding and owning real estate," he said.

A passion for the brick-and-mortar eventually spurred Mr Ismail to leave a 13-year career with the Singapore Armed Forces in 1995, with the aim of building "something entrepreneurial".

A year later, together with his wife, he established real estate agency Nooris Consultants, a name coined from a combination of the first syllables of their names - Nooraini and Ismail.

Within two years of inception, Nooris Consultants grew to become the biggest Malay-Muslim real estate agency in Singapore, but Mr Ismail figured he ought to dream bigger. "We realised the market we were serving was too niche, and we should expand our horizons."

Size also mattered. "When you're small, you will not be able to reap economies of scale," he added.

Pole position

So in July 2000, Nooris Consultants merged with four other partner companies, and the Property Network of Excellence - or PropNex - was born.

Listed on the SGX mainboard in July 2018, PropNex has a current market capitalisation of about S$200 million. As Singapore's largest listed real estate agency with more than 7,900 sales professionals, its key business segments include real estate brokerage, training, property management, as well as real estate consultancy.

In the year-to-date, PropNex shares have generated a total return of 19.4 per cent, outperforming total returns of 12.1 per cent and 12.6 per cent for the benchmark Straits Times Index and broader FTSE ST All-Share Index respectively.

The group holds leading positions in the real estate industry. In FY2018, PropNex handled 42.4 per cent of total units transacted in the primary private residential market, 34.2 per cent of total units transacted in the private residential resale market, and 50.3 per cent of total units transacted in the HDB resale market, data from Frost & Sullivan showed.

Beyond the city-state, it has a growing foothold in Malaysia, Indonesia and Vietnam, with a combined overseas presence of more than 1,400 sales professionals across 18 offices. That's not all - the group intends to expand its geographical reach every year, focusing on key Asean markets. "We aim to open a new regional office each year if possible, by finding the right partner," Mr Ismail said.

More than middlemen

To differentiate itself from competitors, PropNex focuses on educating and empowering both its sales staff and customers, Mr Ismail said. Its proprietary training programmes, which equip its salesforce with relevant know-how to navigate the real estate market, have seen participation from more than 30,000 attendees to-date.

PropNex continually repackages and refreshes its development curricula. It offers customised training for staff, such as targeting different market segments and zones, including a "Lux" team that specialises in high-end residential projects.

"We aim to train our salespeople to be more than just middlemen - grooming them into consultants, so they can play instrumental roles in helping the customer develop a good understanding of the market, as he journeys from asset accumulation and enhancement towards a better retirement," Mr Ismail noted.

The group is also forging ahead by riding the waves of digital disruption. It employs online platforms, data analytics and proprietary technology systems to help its salespeople boost value-added services to their customers. These include a co-broker app that external agents can log into to track various stages of a property deal so as to reduce paperwork, as well as one that allows buyers to browse current real estate listings.

"Rather than fear technology, we harness it to our advantage," he added.

This principle dovetails with the group's relentless pursuit of continuous improvement. "There's no such thing as 'we have arrived', or we have learnt everything there is to learn," Mr Ismail said.

"We can never rest on our laurels because there will be new challenges ahead."

Resilient market

A case in point is the domestic property market, which is still grappling with oversupply after the government implemented its latest round of cooling measures - including higher buyer stamp duties and tighter loan limits - last July.

"Although we saw weaker home sales in the first quarter of the year due to a sustained impact from last year's cooling measures, the Singapore residential market remains resilient," Mr Ismail noted.

"Foreign investors, who continue to view Singapore as a haven for property investments, remain very keen to take up new units because of the attractive prices."

The domestic en bloc or collective sale market - created between 2017 and 2018 - remains huge, with a large number of owners looking for replacement homes. Robust demand from HDB upgraders - as their flats reach the five-year minimum occupation period - is also expected, he added.

"That's why we've seen such a strong rebound in sales volumes in March, which indicates that buyers and investors are feeling more confident about entering the market again."

No middle ground

Likewise, the strength of PropNex's brand and its market leadership position - thanks to the group's unwavering focus on people - bodes well for the future.

In 2000, PropNex was the first in the industry to implement a dual-career path for its sales professionals - a commission scheme that gives team leaders a share of the company's profits. This model was subsequently adopted by industry peers.

Six years later, it introduced a pension plan for team leaders to enhance and protect their welfare, and in 2013, rolled out a spouse protection scheme, where in the event of a team leader's death, his family would be taken care of until the year when the deceased would have turned 60 years old.

Another touchstone is adherence to a professional code of ethics. In 2008, PropNex required all its agents to buy professional indemnity insurance for themselves, which protects the rights of their customers in the event of professional negligence, omissions or breaches of duty.

The move was ahead of its time and costly - PropNex had to terminate 2,800 out of over 7,000 agents because they refused to take up the insurance.

"That was the right thing to do at the time, so we did it," Mr Ismail recalled.

It was only in 2010 that the industry regulator - the Council for Estate Agencies, a statutory board formed under the Ministry of National Development - made it mandatory for all estate agents and salespersons to be covered by professional indemnity insurance.

"I'm not someone who prays to money, and money can blind you," he noted.

"If you pray to money, you will cut corners, and if you cut corners, you will not be guided by your core values.

"There's no middle ground in PropNex - either you love to work for us or you won't survive here," he added.

This is an excerpt from SGX's Kopi-C: The Company Brew, a regular column featuring C-level executives of SGX-listed companies. Previous editions can be found on SGX's website www.sgx.com/research.