SINGAPORE - APAC Realty, which operates a real estate brokerage under the ERA brand, has entered into a joint venture (JV) agreement with two Chinese firms in a bid to penetrate the China market.
The two companies are Hainan Zhong Zhi Sheng He Real Estate Investment Consulting Co, and Bei Guo Tou (Shanghai) Equity Investment and Fund Management Co.
The new JV - ERA Hainan Real Estate Marketing Co - will conduct brokerage businesses, and establish training and licensing for property agents in Hainan.
"The full range of real estate agency service is similar to those offered in Singapore, such as brokerage services covering new sales, resales and leasing in the residential and commercial sectors," APAC Realty said on Wednesday (Aug 29).
APAC Realty and Zhong Zhi Sheng He Real Estate Investment will each own a 40 per cent stake in the new venture, with Bei Guo Tou (Shanghai) taking on the remaining 20 per cent.
The registered share capital of the joint venture is 20 million yuan, or about $4 million, APAC Realty said.
As part of the deal, all existing project-sale businesses from Zhong Zhi Sheng He Real Estate Investment will be transferred to the new company.
APAC Realty's new venture comes even as the Chinese government has imposed controls across the country to rein in escalating property prices.
According to the latest property cooling measures, those who wish to buy units in Hainan must provide proof of at least one family member paying taxes, or social security for five years there.
In the central mountainous region, non-local buyers are unable to purchase any property. And non-Hainan residents aiming to buy homes in any other part of the province must provide proof of at least one family member paying taxes or social security, for at least two years.
Said chief executive of APAC Realty, Jack Chua: "The transactions might be affected in the near term. However, we believe the recent measures will help ensure a sustainable transaction volume, and price appreciation in light of the government's plan to establish a free trade zone in Hainan by 2020, which will see more international and regional investments in the province's economy."
Separately, APAC Realty also said that ERA's agents may apply to open a franchise office in any Chinese city, and run a firm with support from ERA management.
Most recently on Aug 7, APAC Realty posted a second-quarter net profit of $7.69 million, down 9.3 per cent from $8.49 million a year ago.
As at 3.20pm on Wednesday, the counter was trading at 58.5 Singapore cents apiece, up 0.5 cent.
Zhong Zhi Sheng He Real Estate Investment was established in 2015, and is in the business of real estate consultancy and marketing services.
Bei Guo Tou Equity Investment and Fund Management Co is a private company incorporated in China in 2013. It has a registered share capital of 40 million yuan, and specialises in equity investment and asset management, business consultancy, and management services.