PropNex: From ‘nobodies’ to biggest realtor in 20 years

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/ EdgeProp Singapore
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August 7, 2020 10:00 AM SGT
SINGAPORE (EDGEPROP) - Over the weekend of July 25–26, PropNex launched its first ever Virtual Property Expo. The event featured over 1,000 listings of units in new projects, resale private homes, HDB flats and landed property. More than 30,000 viewers logged in that weekend. “It was made possible as we embraced Zoom and Live on Facebook,” says Ismail Gafoor, CEO of PropNex.
PropNex agents attending virtual training and webinars - EDGEPROP Singapore - EDGEPROP SINGAPORE
PropNex agents attending virtual training and webinars, and Ismail Gafoor (top right and bottom left) speaking during the Virtual Expo (Photos: PropNex)
The 10-week “circuit breaker” period — Singapore’s own version of lockdown to curb the community spread of Covid-19 — forced PropNex to accelerate its embrace of technology. “At first, the sales people couldn’t believe that a consumer would pay $1 million or more for a property without stepping foot into a showflat,” he adds. “We did a lot of training on how to present property virtually; and we held educational webinars where our sales agents could invite their clients to attend, which became the industry norm.”
During circuit breaker, Singapore residents were forced to stay home and work from home. In turn, they became accustomed to online activities. These included gaming, online shopping and signing up for webinars such as investment forums. Some started exploring online property investment opportunities and the bolder ones even considered buying a new home after touring a virtual showflat.
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‘Multi-fold increase’ in virtual sales

Although the first fortnight of the circuit breaker saw just 16 new homes sold per week; by the fourth week, sales had jumped to 40 units; and more than doubled to 96 units by the eighth week. When the 11th week came around, sales hit 112 units. Hence, there was a “multi-fold” increase in new home transactions over the 11 weeks, notes Gafoor. In total, PropNex agents sold 660 units during the circuit breaker. This represents 56.2% of sales from new project launches during that period (See chart below).
PropNex New Launches Sales Performance - EDGEPROP Singapore - EDGEPROP SINGAPORE
Source: PropNex AGM slideshow, June 26, 2020
With 8,675 agents as at July 30, PropNex has cemented its position as the single largest real estate agency in Singapore. “Our desire is to hit 9,000 agents by the end of this year,” says Gafoor. However, he foresees some dropping out before the next licence renewal as “not everyone will succeed, even if we want everyone to”, he adds. The number of agents could revert back to today’s level by early next year, he points out. “But it’s our desire to continue to grow our company and eventually to hit 10,000 agents.”
This July, PropNex celebrated its 20th anniversary. “In a way, our story mirrors that of Singapore’s,” says Gafoor. “When we first started, we were nobodies, and we really struggled. People were betting then that PropNex would not last. But we were driven by one desire — to achieve economies of scale so we could add value to our people. In hindsight, it was partly driven by envy of the bigger international property firms too.”
A retired colonel with the Singapore Armed Forces, Gafoor left soldiering in 1995 and ventured into real estate with his wife. The couple started Nooris Consultants (a combination of Ismail and his wife, Nooraini’s names) in 1996. Within four years, it was the biggest Muslim real estate agency with 250 agents and about $10 million in annual revenue.
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“But it was still a small firm, and our agents found it hard to compete with the bigger players,” says Gafoor. “We wanted to add value to our agents, and to do so, we needed to have economies of scale. So we decided to band together with other like-minded partners.”
Ismail Gafoor, CEO of PropNex - EDGEPROP Singapore - EDGEPROP SINGAPORE
Gafoor: When we first started, we were nobodies, and we really struggled. People were betting then that PropNex would not last. But we were driven by one desire — to achieve economies of scale so we could add value to our people (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Partnerships, fallouts and merger

That led to the creation of PropNex or “Property Network for Excellence” in July 2000, as a partnership made up of five real estate agencies including Nooris Consultants. Together, they had about 3,000 agents. At that time, it operated more as a franchise agreement that was renewable every two years.
They even moved into a shared office of 10,000 sq ft at Novena Square, instead of maintaining their respective offices. “But all the partners continued to carry calling cards with two names — PropNex and our own firm,” recounts Gafoor.
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Six months later, cracks began to show due to differences in the vision of the different partners. In 2002, the biggest partner left, taking with him over 1,000 of his agents. “I was so fixated with achieving economies of scale, I didn’t make an effort to understand the core values of the different partners,” Gafoor relates.
Gafoor decided to address the remaining three partners and propose that they merge under one entity, namely, PropNex. Before doing so, he gave each of them a copy of the book, “Who moved my cheese?” by Dr Spencer Jones, which talks about dealing with change. “Before, we were competing with each other for sales agents,” he says. “But by merging, we will be working together to grow our company. And once we got the foundation and core values of PropNex right in 2004, we built the business from there to what we are today.”
OUE Twin Peaks - EDGEPROP Singapore - EDGEPROP SINGAPORE
PropNex's breakthrough project in the luxury segment was OUE Twin Peaks, when the luxury team sold the most number of units when the project ws launched in 2016 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Breaking into project launches, luxury segment

In the early years, PropNex focused on the HDB and private resale market. But Gafoor’s ambition was to break into marketing developers’ new project launches, which were still dominated by the big international property consultancies at that time.
That led to the creation of PropNex International in 2007 to focus on developers’ project sales. It made some headway in representing projects in the suburbs or Outside Central (OCR) region and the mid-tier segments in the city fringe areas or Rest of Central Region (RCR). However, developers still preferred the prestige of the international property firms when it came to marketing luxury projects in the Core Central Region (CCR) owing to their reach to the global high net worth individuals.
What tipped the scales was JLL’s announcement in August 2014 that it was taking a 20% stake in PropNex International. This gave PropNex a leg up in the marketing of both local and overseas projects. Further reinforcing the relationship, JLL and PropNex started a team specialising in the luxury residential market in January 2016. The team was made up of 200 select agents from PropNex and another 50 to 60 agents from JLL. That led to the creation of PropNex’s luxury team headed by Dominic Lee.
Their breakthrough project in the luxury segment was OUE Twin Peaks, which was launched in April 2016, with an offer of a deferred payment scheme, the first for a completed project. PropNex agents sold the most units in the project, which drew the attention of other developers.
At Wing Tai's The M - EDGEPROP Singapore - EDGEPROP SINGAPORE
At Wing Tai's The M, PropNex sold 179 (45.8%) out of 391 units sold as at May 10 (Photo: Wing Tai)

Game of scale

As the residential project marketing business became one of scale, a wave of M&As took place in 2017–2018, which changed the pecking order among the top 10 agencies. This was led by PropNex’s merger with Dennis Wee Group in June 2017, which saw 7,000 agents coming under the combined entity, establishing its position as the agency with the biggest sales force. Two months later in August 2017, the agency arms of Edmund Tie and OrangeTee merged to create the third biggest agency in terms of number of agents. Then in September 2018, CBRE Realty Associates and ERA Realty Network joined forces, strengthening the latter’s position as the second biggest marketing agency.
Today, PropNex has been appointed the joint marketing agency for at least 16 of about 30 projects scheduled for launch from April 2020 to 2021. This represents 6,980 of a total of 10,048 units for launch, or 69.5%, of the new project launch market.
Given the size of its sales force today, PropNex also sold the most number of units in the 10 best-selling projects in 1Q2020. For instance, at The M, the 522-unit private condo by Wing Tai Holdings, which was launched on Feb 22, 2020, PropNex sold 179 (45.8%) out of 391 units taken up as at May 10. At Treasure at Tampines, the biggest condo in Singapore to date with 2,203 units and launched on March 23, 2019, PropNex moved 710 units (69.5%) of the total sold. Of these 710 units sold by PropNex, 319 (64%) were sold this year, as at May 10.
At Treasure at Tampines - EDGEPROP Singapore - EDGEPROP SINGAPORE
At Treasure at Tampines, the biggest condo in Singapore to date with 2,203 units and launched on March 23, 2019, PropNex moved 710 units (69.5%) of the total sold (Photo: PropNex)

Public listing and expanding virtual market share

Listing PropNex on the Singapore Exchange in July 2018 was another important milestone for the company. In 1QFY2020 ended March, the firm reported earnings of $8.2 million on the back of $135.6 million in revenue. As at end March, cash and cash equivalent amounted to $89.8 million. As a result, PropNex announced on April 6 that it was rolling out a $30-million plan to help its agents during the circuit breaker period.
“Being a listed company has positioned us strongly, and allowed us to put aside $30 million to support our agents,” says Gafoor. “Being listed also means greater corporate governance, and many of our leaders and staff are stockholders too.”
Gafoor is, of course, PropNex’s biggest shareholder. Last month, he had acquired an additional 400,000 shares in the company at 52.5 cents each. This increased his deemed interest in the company to 64.68%.
However, he believes the virtual space is where PropNex can continue to grow its market share. With that in mind, PropNex is already planning the next Virtual Expo, scheduled for Oct 10–11.
Check out the latest listings near OUE Twin Peaks, The M and Treasure at Tampines
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