Newbie Simply Sakal bags management contract for 843-unit Siglap condo

It plans to disrupt the old-fashioned, labour-intensive management-service sector by leaning on technology for prompt, timely response to estate management issues

Thu, Aug 06, 2020 - 5:50 AM
UPDATED Thu, Aug 06, 2020 - 11:33 AM

Siow Li Sen

https://www.businesstimes.com.sg/rea...t-siglap-condo


The 843-unit Seaside Residence condominium in Siglap, developed by Frasers Property Singapore, is Sakal's latest contract. Before this, Sakal's biggest contract was for the managing of a 73-unit condo.
BT FILE PHOTO


SAKAL Real Estate Partners, a relative newbie in the residential management-services industry, has clinched a mega contract - one for managing a condominium with over 800 units.

This new client is the brand-new 843-unit Seaside Residences in Siglap, which is getting its temporary occupation permit (TOP) later this year.

Before this, the biggest contract in the 27-month old firm's portfolio was a 73-unit condo.

Steven Ming, its managing partner and co-founder, said the Covid-19 circuit breaker has had a blanket effect on all businesses, but Sakal has been able to mitigate potential disruptions by leaning on technology and by being nimble.

"We continue to engage potential clients through the use of video-conferencing tools. It soon became apparent to the clients we spoke with that building an ecosystem that reduces the traditional reliance on labour on the ground is both needful and makes a lot of financial sense," he said.

Clients have become more selective when engaging managing agents (MAs) amid the pandemic, and are now placing greater emphasis on the speed and quality of response to emergency and business-continuity protocols, he said.

Beyond the competition with rival firms during the tendering process, managing agents (MAs) are now expected to show potential clients the additional value they can bring to the table, he said.

The company's executive director, Kenneth Chong, said that during the circuit breaker, new rulings and restrictions such as the closing of condo swimming pools kicked in, and MAs have had to react to these in timely fashion.

He said that while MAs generally communicate well with the residents of the developments, there have also been lapses, such as when contracts for cleaning and refuse disposal are not renewed on time, or when repairs to driveways are not followed up - and this is because there have been no meetings between the MA and the residents' management committees.

Sakal aims to get a handle on these estate-management issues by using technology, said Mr Ming.

"We return the cost savings through productivity gain to our clients. On average, our clients have had a cost reduction of around 25 per cent in their overall MA expenditure through working with us," he said.

Sakal got into the business when it bought Aces Assets Management for a six-figure sum, in an acquisition that included Aces' existing estate management contracts and its operations team.

The 25-year-old Aces, rebranded as Simply Sakal, was managing 10 residential buildings such as The Hermitage, a 40-unit condo in the Newton area, and The Papillon, which has 73 units in Balestier Road.

Sakal has also clinched a commercial mall contract, Junction 9 in Yishun, its second such contract in the mall segment.

This added workload has necessitated a doubling of the company's headcount to 20, from fewer than 10 in March.

Simply Sakal is still hiring, and expects to have about 40 staff by year end.

The firm also expects its current revenues to triple within one quarter, said Mr Ming.

In an interview with The Business Times in March, the firm's founders said they intended to shake up the residential-property management-services industry - an old-fashioned business - by going high-tech.

It is a labour-intensive industry, with a lot of the work manual in nature and often marred by complaints from disgruntled clients, they said, which made it ripe for technological disruption.

The business of property management is low-margin one, but it does provide strong recurring income.

"We aim to manage one in four private households in Singapore and intend to achieve that through both organic and acquisitive growth," said Mr Ming.

The sector in Singapore is fragmented, and no player has more than a 10 per cent market share.

There are more than 4,500 management corporation strata titles (MCSTs) in Singapore across residential, commercial and industrial properties, making for about 450,000 strata units. Private residential properties account for over 200,000 units.

An MCST is the managing body of a condominium or strata property which appoints the managing agent to help run the estate.

Sakal has also done some real estate deals. Since its inception, it has has sealed about S$700 million in transactions. Notable deals include the sale of Robinson Centre for S$340 million to a private fund managed by ARA Asset Management, and the S$54 million sale of 48 to 56 Peck Seah Street to an offshore investor.

But this year, the Sakal partners are going to focus on property management, given the state of the economy.

Mr Chong managed a portfolio of residential projects, including several 1,000-unit ones in his six years with Savills Property Management before joining Sakal.