Even as developers bid bullishly for land, the challenging local property market has caused real estate firms to find strength in numbers.
On Monday, two of the largest here, PropNex Realty and Dennis Wee Group, unveiled a merger to capitalise on economies of scale.
Dennis Wee Group's 1,071 sales agents will come under PropNex as a group retaining the DWG name.
The move will turn PropNex, the long-time No. 2 agency, into the largest with nearly 7,000 agents. When the deal is completed, PropNex is expected to overtake ERA Realty, which has 6,243 agents.
A memorandum of understanding was inked on Monday, but PropNex chief executive Ismail Gafoor surprised the market by saying there is no dollar value pegged to the deal.
DWG founder Dennis Wee said he is offloading his agency business, as his company is focusing on property development, investment and valuation.
The lack of a dollar value could reflect the challenges of the property brokerage business. The number of agencies and property agents have fallen by between 5 per cent and 10 per cent since 2015.
As profit margins thin - DWG made less than 10 per cent of its profits on its brokerage business - agencies need to draw on economies of scale.
Larger firms can offer better support to agents, while agents gain a wider network of buyers and sellers to tap. A larger agent pool also helps agencies secure rights to market projects from developers.
It is unclear exactly how many agents PropNex will gain from the merger, although it expects at least 80 per cent to stay with the firm.
Some market watchers think more consolidation is inevitable, given the size of the Singapore pie.
If the property market does not improve, smaller agencies will find it worthwhile to join larger firms.
But optimistic bidding for land by developers suggests they expect an upturn. If so, it would spell more business to go around and consolidation may not be so appealing. The word on the ground is that many property agents are weighing their options seriously in the light of this mega-merger.
Lee Xin En