PropNex, ERA dominate in HDB resale and leasing transactions

The two agencies' pole positions in the HDB resale brokerage business also generate ample leads for new private home sales, enabling them to gain an advantage there as well: IREUS

Aug 19, 2021

PROPERTY agents from PropNex Realty and ERA Realty Network have brokered about 70 per cent of resale transactions of Housing and Development Board (HDB) flats every year since 2017.

In the residential leasing segment, both agencies - Singapore's largest two based on the number of salespersons - likewise accounted for the bulk of the deals, going by data from the Council for Estate Agencies (CEA).

The Institute of Real Estate and Urban Studies (IREUS) noted that PropNex's and ERA's pole positions in the HDB resale brokerage business also generate ample leads for new private home sales, enabling them to gain an advantage there as well.

"The two agencies have leveraged their hegemony in the public housing resale market, to secure a head start for their project marketing teams, especially in the upgrader market in the Outside Central Region," said Lee Nai Jia, deputy director of IREUS at the National University of Singapore.

In the first half of 2021, PropNex agents were involved in 39 per cent of the HDB resale transactions recorded by CEA, while ERA agents brokered nearly 30 per cent. Their respective shares of the market had stayed largely consistent from 2017 to 2020.

Meanwhile, salespersons from the third to fifth largest agencies facilitated a combined 19 per cent of the HDB resale volume on average each year, over the same period. Beyond the top 10 rankings, each agency captured only a minuscule proportion, ranging from zero to 0.4 per cent.

PropNex and ERA housed more than half of the 30,399 real estate agents in Singapore as at Jan 1, 2021.

For prospective buyers and sellers of HDB resale flats, the two firms' dominance could translate into well-trained and experienced agents who are able to market properties effectively, Dr Lee said.

Competition among individual agents, even within the same agency, will also reduce the chances of commissions creeping up. "However, buyers and sellers may find salespersons from the two agencies sharing similar narratives, making it harder for consumers to obtain a second opinion," he noted.

Both firms have been able to build "significant informational advantages" over their competitors, Dr Lee said.

For instance, their access to a large number of deals and massive networks of prospective buyers and sellers have produced timely market intelligence.

"While HDB offers sales data after each transaction is done, these agencies can gauge consumer sentiment even as their associates are negotiating deals," he explained.

What may help level the playing field are platforms such as OneMap, the URA Space map portal and property listing websites, which offer substantial information and networking resources.

But despite such data democratisation, the top two agencies have maintained their leadership in the HDB resale market, owing to competitive commissions and their strong track records that in turn reinforce their branding, Dr Lee said.

"For smaller players, the cost to break into this market will be high, and without economies of scale, commission revenue from brokering resale flats may not be sufficient for them to break even," he added. "Therefore, some of the other agencies may find it more worthwhile to focus on other real estate segments."

When it comes to the leasing of HDB flats and non-landed private residential properties, a similar skew can be seen, albeit with a tad more competition. The five biggest agencies dominate in these rental markets.

Last year, PropNex and ERA brokered a combined 59 per cent of the 30,869 leasing transactions of HDB flats that were facilitated by agents. OrangeTee & Tie ranked third with 18 per cent, followed by SRI and Huttons Asia with 3 per cent each.

For non-landed private homes, including executive condominiums, ERA facilitated the most leasing transactions, bringing in nearly 31 per cent of 2020's total volume. OrangeTee & Tie took second place with 25 per cent; SRI and Huttons came next, with about 5 per cent each, followed by PropNex at 4 per cent.

In the landed housing segment, ERA, PropNex and OrangeTee & Tie brokered a combined 65 per cent of the number of leasing deals last year.

Dr Lee said that the agency scene tends to be more competitive for homes that fetch higher rents, as those work out to higher commission amounts.

The cost to put up listings on platforms are the same for all types of residential properties, while the time and effort expended are also similar. "Given this, smaller agencies are likely to gravitate towards higher-end properties, as the costs to break into the mass market will be prohibitive without sufficient scale," Dr Lee pointed out.