ERA Realty targets China market in expansion abroad

Mr Chua feels a relisting could be timely as ERA was able to close more transactions last year while bolstering its agent strength.
Mr Chua feels a relisting could be timely as ERA was able to close more transactions last year while bolstering its agent strength.ST PHOTO: DESMOND WEE

Agency aims to make its entry by next year; also hopes to relist on local bourse to lift profile

Singapore's largest real estate agency, ERA Realty, has its sights set on the competitive Chinese market, and a return to the local bourse, said chief executive Jack Chua.

He said in an interview with The Straits Times yesterday that the company aims to enter China by the second half of next year.

"We are working on a plan now. China is a big market - if you want to go in, you must be very careful," he said, adding that the firm is looking for the right partner.

"Finding a master franchise partner is like finding a wife. If they can't follow the plans, you will have a headache," joked Mr Chua.

ERA already has a presence in the region, with its strongest franchises in Indonesia and Japan, but it wants to expand to markets such as Vietnam, Myanmar and Cambodia.

GOING IN WITH CAUTION

We are working on a plan now. China is a big market - if you want to go in, you must be very careful.

'' MR JACK CHUA, chief executive of ERA Realty, on finding the right partner for a successful entry.

The Singapore-headquartered firm, which holds the franchise for 18 countries in the Asia-Pacific, also has plans to relist on the Singapore Exchange (SGX). "Back in 2013, we gave ourselves three to five years to reach this objective. We are progressing on this issue," said Mr Chua.

The listing would enhance the company's image, as well as allow agents to be part-owners if they participate, he said.

ERA was listed on SGX through its holding company Hersing Realty in 1998. It was delisted in 2013 and sold for about $130 million by former parent Hersing Corp to private equity fund Northstar.

The time could be ripe for ERA to pursue a listing, as it closed more deals and grew its network of agents last year, despite the bearish property market. Over the year, it closed slightly fewer than 53,000 transactions, worth $19 billion combined. This translates into 21.5 per cent growth in transaction volume, surpassing the 6.7 per cent growth in total property deals last year.

ERA declined to disclose revenue and profit figures, but data from the Accounting and Corporate Regulatory Authority showed revenue grew 7 per cent in 2015 to $225.4 million though pre-tax profit fell over 30 per cent to $9.93 million.

Mr Chua said revenue rose 25 per cent last year as agent strength grew, from more than 5,000 in 2015 to about 6,100 today.

ERA has come a long way from the 20-agent firm he joined in 1990. The Public Service Commission scholar said he worked as both agent and manager in his early days there.

He grew the firm through his management prowess, such as by convincing developers to allow property agents into show-flats, which had not been done before. His business sense led Northstar to ensure that his return to lead the firm was a condition of the purchase.

The slower market gives ERA the chance to capture even more market share, said Mr Chua. It has about 40-50 per cent of the property sales market, and it will work on growing its share of the rental market, estimated at 30 per cent.

Mr Chua said the surprise tweaks on March 10 to property cooling measures had "not much direct impact", but he was optimistic about this year, saying the move had improved sentiment. He is confident that transactions this year will surpass last year's by 10-20 per cent.

"I hope the Government can do something about the additional buyer's stamp duty. Maybe they can look at an adjustment, as buying a second property is an investment, and a new kind of savings for people, many of whom aspire to own a second property," he said.

A version of this article appeared in the print edition of The Straits Times on March 17, 2017, with the headline 'ERA Realty targets China market in expansion abroad'. Print Edition | Subscribe