SINGAPORE: Homegrown property service firms are venturing overseas in pursuit of new growth in the region, unfazed by new waves of infections amid the COVID-19 pandemic.
It is also a move that will give buyers in Singapore greater access to overseas properties and better technology, said the firms.
Local property technology – or proptech – firm PropertyGuru is set to make its largest acquisition in its 14-year history, after agreeing to acquire all of the shares of REA Group’s operating entities in Malaysia and Thailand.
The move marks a doubling down of efforts in these markets, which it entered years ago. PropertyGuru currently also has assets in Vietnam and Indonesia.
Last month, property agency PropNex also expanded to Cambodia, its fourth overseas market, after Indonesia, Malaysia and Vietnam.
In the thick of the pandemic last September, homegrown property service firm Ohmyhome also entered the Philippines. It currently also operates in Malaysia.
WHY ARE THEY EXPANDING?
Gaining new ground in overseas territories is necessary to achieve their ambitions of becoming regional players, said the firms, adding that ASEAN countries are hotbeds of opportunity and activity.
PropNex’s CEO Ismail Gafoor noted that even during the pandemic, Malaysians were the second-largest group of foreign buyers of local properties, while many high net worth individuals from Indonesia “always like to have a foothold” in Singapore. Vietnam is also a booming economy with a large, young population, he said.
By establishing a presence in Cambodia, the brand is in five ASEAN countries, whose total populations exceed 420 million.
“We do not want to be just confined to Singapore, with our 5 million population, but we want to be a regional presence … Not only limited to ASEAN, but that's our starting point,” said Mr Ismail.
For Ohmyhome, an expansion to the Philippines was made for similar reasons.
“Manila actually has seen a rise in condominium property prices in the last three years. We're seeing 12.4 per cent growth per year and the number of transactions has also been very strong,” said Ms Rhonda Wong, co-founder and CEO of the firm.
In addition, because the initial expenses of building the platform's technology have already been made, each expansion gets less costly, she said.
“With every country we (enter), it's really evolved by replicating most of the features, and then having some features that are localised to suit the market.”
For PropertyGuru, the upcoming acquisition of the Thai and Malaysian assets will be complementary to its existing businesses, said the firm’s CEO, Mr Hari Krishnan.
For instance, it will own iProperty Malaysia, the largest property data platform in Malaysia, which it has long competed with, said Mr Hari.
The group will also own Thai platforms that are focused on new property developments, while its own platforms focus on resales and rentals.
“It allows us to focus our investments as one group … By bringing together these companies in Malaysia and Thailand, we're able to focus much more on the customer - creating the most value for the real estate industry, and less so on just competing with each other.”
WHAT ABOUT COVID-19?
The expansion into more overseas markets comes amid the protracted COVID-19 pandemic and the uncertain global economic outlook.
Mr Hari acknowledged that the real estate sector is facing many challenges due to the pandemic, adding that “if you step outside Singapore, it only gets worse”.
But he said businesses that have emerged stronger from past crises owe their success to investing wisely and “doing the right thing at a challenging time”.
It certainly helped that the company was “financially, in very good shape” when the pandemic struck, said Mr Hari.
PropNex’s Mr Ismail said the same, noting that it had raised “a fair amount of money” following its initial public offering in 2018.
The pandemic even gave them more confidence to expand, he said.
“(There’s been) a paradigm shift in people adapting and adopting technology, virtual training - and a lot more IT platforms are being used in the real estate business, compared to pre-pandemic.
“So that’s given us a huge amount of confidence … All the more the pandemic made it such that what they need is a good IT platform … And PropNex has that system and process to aid them in their growth as well,” he said.
HOW WILL THIS BENEFIT SINGAPOREANS?
Local buyers stand to gain from these expansions too – mainly by getting easier access to overseas properties, said the firms.
Professor Sing Tien Foo, Director of the Institute of Real Estate and Urban Studies, said: “Proptech portals could allow (Singaporean buyers) to be able to search and view overseas properties, and if they prefer to deal with a real estate brokerage, brokerage services like PropNex’s overseas office will be relevant.”
But firms must ensure their overseas outfits preserve their reputations for service, and help “eliminate information asymmetry problems”, especially by screening out “inferior quality investments”, said Prof Sing.
In the same vein, local property owners could benefit from more interest from foreign buyers, he added.
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“The overseas presence could also be used as a channel to reach out to potential investors in overseas market, who are interested to invest in Singapore’s housing markets. The overseas channel could overcome the travel restrictions imposed during the pandemic,” said Prof Sing.
Another benefit is that firms may experiment with technology in overseas markets and bring it back to Singapore.
For instance, PropertyGuru’s Mr Hari noted that the firm “did a lot of optimisation” around a fintech product assessing creditworthiness in Malaysia in 2018, before bringing it to Singapore last year.
The Singapore version of the platform also has immersive content elements that were borne out of experiments with Thai audiences, he noted.
Ohmyhome’s Ms Wong agreed that overseas ventures can make technology “more robust and more comprehensive”.
She said the firm is working with new types of property data overseas – involving elements such as crime rates, incidents of natural disaster and weather mapping, for instance.
They are also working with provincial banks to help communities with “very little access to financing” secure mortgages, said Ms Wong.
In addition, overseas expansions could drive growth for the motherships, generating more jobs, including in Singapore, noted PropertyGuru’s Mr Hari.
PropNex’s Mr Ismail added that as a publicly-listed firm, Singaporean shareholders would benefit if the company’s overseas arms were also to do well.
Meanwhile, the firms are working towards other ambitions.
For PropNex, Mr Ismail said three more countries are on its radar - Thailand, the Philippines and Myanmar.
“We have met some potential partners but we are still in the process, nothing is firmed up yet. Because (it will take time to) identify the right team, right partner with the right values as well as the right desire to grow.”
Ohmyhome’s Ms Wong said the team’s priority is to grow in its current markets, while also offering more services within the property management chain. For instance, it recently started offering renovation and interior design as part of its suite of services.
But she is not ruling out venturing to another territory: “If being useful to our customers means being in another country … that's something that we will definitely consider.”
For PropertyGuru, Mr Hari said the company’s overall vision is to increase access to sophisticated real estate data that will be useful not just for consumers and agents, but also for property developers, banks and valuers.
Creating a common data set will also boost transparency and trust in the sector. “We are an advanced economy in so many ways, but we're not an advanced economy when it comes to proptech. I think PropertyGuru wants to get us there,” said Mr Hari.