Marketing Plan for a Realtor Part 5 - Competitors

Go back to Part 4, Part 3, Part 2 or Part 1, Part 0.

Analysis of Property Market - Competitor Analysis

This section is about sales performance and competitors of the Estate Agency Practice.

Bovea in collaboration with the Malaysian Institute of Agents Malaysia (MIEA), the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) and the Royal Institution of Surveyors Malaysia (RISM) had embarked on a registration exercise since last October to help negotiators to register by attending a one-day training course. During the launch event, Deputy Finance Minister Datuk Ahmad Maslan said:

“In 2013, the total transacted value of properties reached RM152 billion with over 381,130 transactions. It is estimated that 60% of the total transacted value of approximately RM91 billion was concluded by registered real estate firms and brokers who are illegal,” 

“It is of great concern that brokers have mushroomed in the market and this does not augur well for the protection of the general public at large. To date, there are 1,797 registered estate agents with 959 firms employing some 10,000 RENs. The government recognises that the real estate agents are professionals and they are there to protect the interest of the public at large,” said the minister.

“Beginning June 2014, every registered negotiator is required to wear the tag during the course of doing business,” said Lim. “The tag contains a specially assigned REN number and quick response code, which can be verified against a database on any quick response code reader or mobile application. It also carries some security features to avoid imitation.”

These figures are further confirmed with the online register of LPPEH below:

(Figure shown in LPPEH website on 06.03.2015)

There are a few points for 2013 that need to be summarized here:

• The transaction value was RM152,000 million or 152 billion (2014 - RM162 billion)
• The number of transaction was 381,130 (2014 - 384,080)
• 60% of the transaction is by agents, ie RM91,000 million.
• Total REA and REN (latest in LPPEH is 1862 + 8671 = 10,533).
• A lot had never registered as REN although opened for registration.

From the above summary and earlier analysis, we can be quite certain that in the near future:

• Estate Agency Market size is about RM100 billion of sales.
• Estate Agency Work Force (Registered + Negotiators) is about 10,000 to 11,000.
• Although the industry has slowed down due to various measures to curb overheating, prices of property transacted had maintained.
• More agents will join the work force, and less freelance brokers will be in the practice.
• More projects will be launched by Agents rather than developers themselves. This is due to more professional management of Agencies and reduced of cost of sales management by developers.
• Creating demand is more important than delivery of supplies.
• Internet will have a revolutionary influence on estate agency practice.
• More regulation and enforcement will be introduced into the real estate business to protect the public and increase transparency of transactions. This also ensure better collection of taxes by the government.
• The competition of real estate business will be more investment driven rather than for own use. This is partly fueled by the increasing speculative buy by property investors.
• Buyer age group will gradually increase to 30-35 years old as they need longer savings and getting married later, hence demand for housing also at a later time.
• This age group forms the biggest reservoir of buyers as they are investor cum users. In 20-25 years, this group will be the richest group with saving and property investments. They will sell when they reach the age to realize the gains 50-55 years old.
• Significant purchasing age window would be 30-55 as this group would either buy or sell. They form the biggest 'fish' for the Agents' nets.
• Agents will compete for this 'fish' and strategies would be required to hunt and keep these fishes.

Competitors profile (future agents)

1. Young and educated professionals are turning into Estate Agency Practice because of potential good earnings. Many of them are law graduates, double degree majors, and people with master degrees. 
2. They are in for a longer term than the random brokers. Hence, sustainable competitive advantage is important to maintain leadership, this is development of core competence.
3. The Estate Agent Examination will be more regulated and harder to pass as more agents are qualified in the practice. This means there will be a plateau of new agents and competition will be tough as the numbers build up.
4. A potential self-regulating of members with 10,000 estate agents and 10,000 negotiators. Hence, there will be another 800 estate agents coming into the work force. However, the gradual process will likely take 10 years.
5. Current specialization in agency practice will evolve into multi-discipline practice of Estate Agency and Valuation, JMC of strata properties as the law and regulation of property becomes highly complicated and risky. Risky as in high cost of entry and maintenance of presence, like continual advertising, website maintenance and road shows.
6. As tapping into demand is the key to success, the future agent will be more in creating demand than selling the supply. Supply is anyway in surplus for most areas.

Who will be a future agent?

1. In such manner, future agent will position their knowledge in finance and investment, internet marketing rather than core matters of soliciting for client and cold calling. His approach will be creating value in investing and maintaining that position for the client so that long term appreciation is realized.
2. Agencies will concentrate in educating the negotiators/junior agents on matters that will sustain long term investors, and attract investor of the same risk appetite so as to achieve 'group purchase' among some investor groups.
3. Agencies will work closely with investor groups and developers to achieve a value for investment, amidst the speculative nature of the property market. A variety of portfolios will be the approach most Agent will work on as a model to hedge against the risk.
4. In doing so, the agent himself is also an avid investor. This is different from the old time broker who are in for a quick buck.
5. New frontiers will be challenged. Future agents will need to garner new blood as the existing market among seasoned buyers and investors is too soon saturated. New blood here means new incoming investors, or untapped population groups like professionals, like doctors, teachers, and government work force. 
6. Therefore, the media to reach them has to be continuous and sustainable over a long period of time and maintain such long term relationship with them. It is no more just cold-calling and leaving of name cards or one deal in a lifetime thing.
7. A combination of knowledge of Estate Agents with unit trust, insurance, and even bankers would be together as a consortium of agents to satisfy the more complex needs of future investors.
8. As the property types become more complex with laws and regulations, estate agents will evolve into specialized 'service providers', e.g. as Property Manager (to pursue further valuer licensing requirement) or engaged as managers of Joint Management Corporation under ACT 663 – Building and Common Property (Maintenance and Management) 2007, or involved in the AGM of the Strata Titles Properties as Secretary (ICSA).
9. New tools of ICT and Internet will definitely play a bigger role in the service of Estate Agents. Hence, future agent will incorporate ICT into the planning and execution of estate agency practice. Listing in the social media and matching the right investor to the right property will be key winning factor to success of the property promotion.

Continue to Part 6 here.

Ref:

The Edge Property 27 June, 2014. New identification tags to curb fraudulent property sales. Available at,

http://www.theedgeproperty.com/news-a-views/12795-new-identification-tags-to-curb-fraudulent-property-sales.html
Malaysia Property Inc. Market in Brief. Available at,
http://www.malaysiapropertyinc.com/market-in-brief.htm