Four property agencies join forces to take on giants
THE slowing property market has nudged four mid-sized property agencies - SLP International, OrangeTee, HSR International and Dennis Wee Realty - to form an alliance which will rival the two largest players in the market, ERA Realty and PropNex Realty.
The alliance, called Project Alliance Group (PAG), came into effect yesterday.
It will focus on marketing local residential projects - a sector which is becoming a "numbers game", said Steven Tan, managing director of OrangeTee, because developers now tend to go for bigger agencies with more sales staff and thus greater buyer reach.
Following the alliance, the four agencies will have a strength of almost 6,000 agents combined, overshooting ERA's 5,700 and PropNex's 5,600.
Information on some 20 to 25 current and future (about to be launched) projects will be added to a pool which sales staff from all four agencies will have access to. Training will be conducted for the agents before they co-market the projects.
Anne Tong, chief executive officer of HSR International, said that, banded together, the four firms will be better able to address the "shrinking pool of buyers" in the market.
"In the past, developers were quite comfortable to do exclusives with one agency, or joint marketing with two agencies, but with the market becoming so challenging, it is getting more difficult to reach out to the correct buyers.
"This alliance will benefit developers because each agency has strengths in different market segments. Developers using PAG for their project launches will have access to a wider network of potential home buyers - a crucial factor to the success of project launches in today's market."
To be sure, this is not a merger; each agency will continue to exist in its own right.
Mr Tan likened it to the Star Alliance, the world's largest global airline alliance: "Each entity still operates under its own brand, but the alliance helps us to tap into each other's networks, combine our resources, and widen our scope of clients."
However, ERA and PropNex are not worried, citing problems that often accompany alliances.
PropNex chief Mohamed Ismail believes that the trio of ERA, PropNex and Huttons will remain the favoured marketing agencies, given their track records.
"Mid-sized agencies find it difficult to penetrate the market because of this existing preference," he explained.
He also foresees teething problems with regard to reporting to different key executive officers and ensuring fair distribution of work. He would know - PropNex was formed from the merger of five smaller real-estate firms years ago and three of the partners have since left or disposed of their stakes, following differences.
One developer wondered whether four agencies proposing one marketing strategy would be like too many cooks preparing the broth.
While he admits that he does look at size when engaging an agency, he would in fact also consider a smaller outfit which has access to a desired group of clientele.
"The ability to market a project successfully, not the size, is the most important criterion," he added.
THE BUSINESS TIMES