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Showing posts with label My Marketing Plan. Show all posts
Monday, February 25, 2019
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Sunday, March 15, 2015
Marketing Plan for a Realtor
Q.
A newly qualified estate agent is interested to start up a realty service. Can you help him with a marketing plan?
A.
Below is a verbatim from National Association of Realtors.
6 Factors that Affect Your Marketing Plan
Before you begin developing a new marketing plan, consider how each of these external forces influences your choice of marketing direction and media.
1. Demographics - How will the composition of your market change and what opportunities or hurdles will this create? How will population and housing demand evolve?
2. Current and projected economic conditions - How will inflation, employment, taxes, and other economic factors effect supply, demand, and pricing?
3. Size, growth potential, and prosperity of the market - Will the size of your market continue to support current business and/or allow the opportunity for business growth? What are the growth options for housing availability in your market? Is there vacant land available? Are there geographic limitations on growth (a mountain range)? Are there zoning, use fees, and other restrictions that might fuel or limit growth?
4. Market potential - Strengths and weakness of major competitors. How can you capitalize on a competitor’s weakness?
5. Market share - What percentage of current transactions in your market are handled by your company and what factors could change that percentage either positively or negatively?
6. Present customer composition - How do factors such education, buying frequency, age, income level, occupations and hobbies affect the level of future demand among existing customers?
A newly qualified estate agent is interested to start up a realty service. Can you help him with a marketing plan?
A.
Below is a verbatim from National Association of Realtors.
6 Factors that Affect Your Marketing Plan
Before you begin developing a new marketing plan, consider how each of these external forces influences your choice of marketing direction and media.
1. Demographics - How will the composition of your market change and what opportunities or hurdles will this create? How will population and housing demand evolve?
2. Current and projected economic conditions - How will inflation, employment, taxes, and other economic factors effect supply, demand, and pricing?
3. Size, growth potential, and prosperity of the market - Will the size of your market continue to support current business and/or allow the opportunity for business growth? What are the growth options for housing availability in your market? Is there vacant land available? Are there geographic limitations on growth (a mountain range)? Are there zoning, use fees, and other restrictions that might fuel or limit growth?
4. Market potential - Strengths and weakness of major competitors. How can you capitalize on a competitor’s weakness?
5. Market share - What percentage of current transactions in your market are handled by your company and what factors could change that percentage either positively or negatively?
6. Present customer composition - How do factors such education, buying frequency, age, income level, occupations and hobbies affect the level of future demand among existing customers?
Ref:
National Association of Realtors, available at
http://realtormag.realtor.org/tool-kit/brokerage-marketing/article/6-factors-affect-your-marketing-plan
Marketing Plan for a Realtor Part 0 - Executive Summary
Q.
Can you provide a detailed marketing plan for a Realtor?
A.
Can you provide a detailed marketing plan for a Realtor?
A.
Following is a sample of Marketing Plan for a Realtor.
Marketing Plan for justLetak!Property 2017-2020
Part 0 - Executive Summary
justLetak!Property is a Regional Property Realtor with the vision of Improving Living and Property Investment of Average Men on the Street. The firm's mission statement is "Property for Everyone, Everywhere".
The way forward for realty in a young growing nation like Malaysia- especially in suburbs of the country is land utility. Demographic pattern of Malaysia shows the potential explosive growth of the middle age group now to the next 30 years (2010-2040). These age groups constitute the population of highest earning potential and thus, the cumulative savings which could be used for investment in real estate. Realty practice primarily depends on land as land development will provide property supplies, and thus stock for realtor to sell.
Averagely, as a young growing economy, Malaysia still has ample supply of land. From supply analysis, this constitutes the potential for primary market, largely controlled by housing developers. However, the supplies will also be for secondary subsale as people upgrade and start owning more investments in real estate. Although real estate has been speculated and controlled in the hand of a few, this scenario will gradually expand to more stocks and more options for property investors.
The aspiration of the firm is to go down to every corner of the country, to educate the people on the ground with regards to property investment. At the same time, it is to foster a nationwide network of data with regards to property value and its availability for investors throughout. As the demand supply equilibrium of the property market is very much dependent on the demand side (Hamid, 2007), analysis of past transactions and values indicates that demand creation is key to success in Estate Agency Practice.
Estate agency practice will soon evolve into a multi-discipline practice with added values from the increased professionalism of the real property market. The number of practising estate agents will surely grow with improved services and use of ICT. Increasing government intervention and ethical standards will enhance transparencies and investors' confidence. There will be pressure on the existing agency firms to innovate to cope with the increasing competition and new entrance of multi-disciplinary practices. A consortium of professionals will thus evolve to offer a broad spectrum of services, encompassing finance, investment, valuation, marketing and property management.
In line with the creation of demand, the industry will foster knowledge base building and enhancement of ability of investors in analyzing investment and buying decisions. Estate agents who are into high-tech, high knowledge based selling will be ahead of the competition as the property industry becomes more risky and convoluted with regulations and innovative products. Such scenario will garner energy towards group practices, and stand alone estate agents will be streamlined to join force to offer better value added services.
Lastly, electronic media and ICT will have indispensable role in the success of property business. Developers would likely promote their products with the help of specialized broad based Estate Agency firms, saving cost from their own sales force. Agents will work with their clients on a long term basis rather than 'once in a life time' deal currently seen. There will be more property traders who are in for investment or speculation rather than purchase for own use.
This scenario is supported by the increasing population of rich working middle age group in the next 20 to 30 years (till 2040) as shown by the demographic pattern of Malaysia. The target groups will be high income technocrats like doctors, teachers, and executive professionals who will continue investing and carry on life long property investment.
Estate agency firms would likely work on a national level as investors are more fluid. Thus, knowledge and professional management is key to greater customer acceptance. This is pertinent to the fact that repeat investors are attracted to successful and sustainable formula of a firm and its innovation on a long term. Inevitably, this is only achievable with a network of well trained agents and negotiators.
Another new trend in the estate agency practice is the incorporation of ancillary services e.g. valuation, property management (collection of rentals) and handling of the strata titles property. Additional education and certification would be required to equip the future agent for this multi-discipline work. This competition will foster evolution of the agent, and well managed network, training and marketing would be key to success of a firm.
Hence, the strategies of justLetak!Property are:
1. To create sustainable network by training negotiator and junior agents in the peripheral regions of 'hot spots' where value and transaction number are high (TEAM BUILDING)
2. To equip the network with value added services so as to maintain and retain potential high-performance and sub-specialized agents for a long term relationship (QUALITY DATA)
3. To develop a system of ICT to communicate with GEN Y (30-35 years old) clients in long term for sustainable network of customers (TECHNOLOGY)
The control and monitoring of progress by the firm is a gradual process. In line with the strategies of mobilizing ICT network. A system of training will be based on the Estate Agent Examination by LPPEH, coupled with the Marketing Plan to each an every individual network agent.
Milestones like LPPEH Examination Outcome and qualifying of Estate Agent license will be indicative of major progresses in the firm. Eventual monitoring will be from the sales and commissions registered with the launch of this firm. Until then, the control mechanism will be very much based on LPPEH examination.
The immediate milestone is the qualifying of the principle agent in late 2017 and achieving a total 10 REA in 2020. By then, the market size for Estate Agency Practice would have increased to RM100 billion assuming an annual growth rate of 5% in the property industry.
Target in 2020
The firm's aggressive target is a market share of RM1.4 billion or 1.4% of the total business, corresponding to RM560k annual commission for each REA/PEA/REN.
However, if the market is still dominated by REN, a conservative target of RM370 million or 0.37% of total business, corresponding to RM148k annual commission for each REA/PEA/REN.
Continue to Part 1 here.
Ref:
Abdul Hamid Mar Iman, 2007. Property Supply and Demand. Pernerbit UTM. Page 27.
Marketing Plan for justLetak!Property 2017-2020
Part 0 - Executive Summary
justLetak!Property is a Regional Property Realtor with the vision of Improving Living and Property Investment of Average Men on the Street. The firm's mission statement is "Property for Everyone, Everywhere".
The way forward for realty in a young growing nation like Malaysia- especially in suburbs of the country is land utility. Demographic pattern of Malaysia shows the potential explosive growth of the middle age group now to the next 30 years (2010-2040). These age groups constitute the population of highest earning potential and thus, the cumulative savings which could be used for investment in real estate. Realty practice primarily depends on land as land development will provide property supplies, and thus stock for realtor to sell.
Averagely, as a young growing economy, Malaysia still has ample supply of land. From supply analysis, this constitutes the potential for primary market, largely controlled by housing developers. However, the supplies will also be for secondary subsale as people upgrade and start owning more investments in real estate. Although real estate has been speculated and controlled in the hand of a few, this scenario will gradually expand to more stocks and more options for property investors.
The aspiration of the firm is to go down to every corner of the country, to educate the people on the ground with regards to property investment. At the same time, it is to foster a nationwide network of data with regards to property value and its availability for investors throughout. As the demand supply equilibrium of the property market is very much dependent on the demand side (Hamid, 2007), analysis of past transactions and values indicates that demand creation is key to success in Estate Agency Practice.
Estate agency practice will soon evolve into a multi-discipline practice with added values from the increased professionalism of the real property market. The number of practising estate agents will surely grow with improved services and use of ICT. Increasing government intervention and ethical standards will enhance transparencies and investors' confidence. There will be pressure on the existing agency firms to innovate to cope with the increasing competition and new entrance of multi-disciplinary practices. A consortium of professionals will thus evolve to offer a broad spectrum of services, encompassing finance, investment, valuation, marketing and property management.
In line with the creation of demand, the industry will foster knowledge base building and enhancement of ability of investors in analyzing investment and buying decisions. Estate agents who are into high-tech, high knowledge based selling will be ahead of the competition as the property industry becomes more risky and convoluted with regulations and innovative products. Such scenario will garner energy towards group practices, and stand alone estate agents will be streamlined to join force to offer better value added services.
Lastly, electronic media and ICT will have indispensable role in the success of property business. Developers would likely promote their products with the help of specialized broad based Estate Agency firms, saving cost from their own sales force. Agents will work with their clients on a long term basis rather than 'once in a life time' deal currently seen. There will be more property traders who are in for investment or speculation rather than purchase for own use.
This scenario is supported by the increasing population of rich working middle age group in the next 20 to 30 years (till 2040) as shown by the demographic pattern of Malaysia. The target groups will be high income technocrats like doctors, teachers, and executive professionals who will continue investing and carry on life long property investment.
Estate agency firms would likely work on a national level as investors are more fluid. Thus, knowledge and professional management is key to greater customer acceptance. This is pertinent to the fact that repeat investors are attracted to successful and sustainable formula of a firm and its innovation on a long term. Inevitably, this is only achievable with a network of well trained agents and negotiators.
Another new trend in the estate agency practice is the incorporation of ancillary services e.g. valuation, property management (collection of rentals) and handling of the strata titles property. Additional education and certification would be required to equip the future agent for this multi-discipline work. This competition will foster evolution of the agent, and well managed network, training and marketing would be key to success of a firm.
Hence, the strategies of justLetak!Property are:
1. To create sustainable network by training negotiator and junior agents in the peripheral regions of 'hot spots' where value and transaction number are high (TEAM BUILDING)
2. To equip the network with value added services so as to maintain and retain potential high-performance and sub-specialized agents for a long term relationship (QUALITY DATA)
3. To develop a system of ICT to communicate with GEN Y (30-35 years old) clients in long term for sustainable network of customers (TECHNOLOGY)
The control and monitoring of progress by the firm is a gradual process. In line with the strategies of mobilizing ICT network. A system of training will be based on the Estate Agent Examination by LPPEH, coupled with the Marketing Plan to each an every individual network agent.
Milestones like LPPEH Examination Outcome and qualifying of Estate Agent license will be indicative of major progresses in the firm. Eventual monitoring will be from the sales and commissions registered with the launch of this firm. Until then, the control mechanism will be very much based on LPPEH examination.
The immediate milestone is the qualifying of the principle agent in late 2017 and achieving a total 10 REA in 2020. By then, the market size for Estate Agency Practice would have increased to RM100 billion assuming an annual growth rate of 5% in the property industry.
Target in 2020
The firm's aggressive target is a market share of RM1.4 billion or 1.4% of the total business, corresponding to RM560k annual commission for each REA/PEA/REN.
However, if the market is still dominated by REN, a conservative target of RM370 million or 0.37% of total business, corresponding to RM148k annual commission for each REA/PEA/REN.
Continue to Part 1 here.
Ref:
Abdul Hamid Mar Iman, 2007. Property Supply and Demand. Pernerbit UTM. Page 27.
Marketing Plan for a Realtor Part 1 - Introduction
Go back to Part 0.
Introduction to Property Market Analysis - Demography
Sarawak and Sabah are two state of Malaysia where land is in abundance. People in these two states are opening up to new technologies (broadband is reaching 3G to most of the townships). Furthermore, urbanization is slowly and surely taking over the capital cities and key townships. The young generation (GEN Y) are now maturing into work force, either seeking employment in the cities (KL, Singapore, HongKong etc) or remain in the State but moving to Kuching and Kota Kinabalu instead of staying back in small towns. They will return to their home towns and influence their elders with regards to the perception of the property market, be it investment or own use.
In short, demographic changes is rapidly underway, and urbanization will influence the cities and the suburbs towards the perception of property investment. On one part, the demand for own use, and on the other part (which is more premium) the demand for investing into properties.
The GEN Y provides the never ever ending demand for properties. Take for example, based on the number of SPM candidates - 2014 the figure is at 455,839 (whole Msia) and 37,488 (Swk) and 32,197 (Sbh).
A conservative estimate of 10% of the market would be 3,500 houses per year if only 10% of them are getting married and starting their family. This has not include the population one year before or after which are likely to be married too! A very conservative guesstimate would be 3,500 x 3 = 10,500 houses in demand at any one time! An average of 4 years' data is analyzed below in Figure 1.
Similarly, UPSR candidate numbers are not far from this, Figure 2 below shows the number of candidates who sat for UPSR over a 4 year period from 2008 - 2011.
Cross checking with the data from the 2010 Population Census, see Figure 3,
the age group 15-19 years old from the 2010 population census was 1.4 mio male and 1.3 mio female. This is a combined 2.7mio over 5 years. Hence, the average population is around 540,000 per age group.
This figure is near to the yearly total student population sitting for UPSR or SPM. Thus, the figure is accurate for our consideration.
Future age distribution is been projected as below.
The discussion on the age distribution pattern will be done in Part 3 - Demand here.
Supply and demand analysis is commonly carried out by developer and investor to guide them on their portfolios.
Demographic analysis on numbers of SPM students may be indicative of the demand pressure. However, other factors like locality and socioeconomic status or purchasing power of the population are as important if not more so. Imagine a huge poor population like in Africa or India during the early years, they could not afford food, what more talk about housing. They had to stay in slumps. In the countryside, they built their own huts, and demand for constructed housing was either too few, or unimaginable. It was of course never any thoughts of high rise apartments or condominiums.
On one side it is easier to estimate supply because it is tangible (Hamid, 2007). That means developers can come out with plans and maps of development projects, whereas demand is difficult to estimate because there are too many assumptions. From the supply side, there are three (3) main types of property supply (Hamid, 2007), namely planned supply, incoming supply and existing inventory.
On the other side of demand, it is harder to estimate (Hamid, 2007). Firstly, one never know with certainty how buyers would respond to a new development. Nobody really knows what exactly the buyers consider in making decisions pertaining to buying, renting or patronizing a newly proposed property project. No one knows the competition would be like against a new project in the future. In other words, there is a lot of uncertainty and unknown demand outcomes to the developer or investor.
Thus, most property demand is based on bird's eye estimates. From analysis of past trends, certain secondary data can probably indicate increasing demand in certain property type. However, whatever accurate it may be, it is still an estimate as conditions may have altered as time passes by. A trend of property with large door and windows might be outdated now, as well as a locality previously command a premium might now be deserted due to reasons like congestion or rampant theft problem.
Owing to this assumptions, it is very much limited to general trend as if the market is moving upwards for apartments because of affordability, and bungalows and luxury land is moving downwards due to economic slowdown. Inflation and loan availability are also factors which can affect property demand.
Due to assumptions above, the analysis would base on current available properties, potential new developments published by National Property Information Center (NAPIC) under the JPPH.
Analysis of Property Market
This section is about different aspects of property market. Analysis covers:
Part 2 Supply
Part 3 Demand
Part 4 Historical analysis*
Part 5 competitive analysis
These various analyses are posted on later parts.
*value transacted and frequency of transactions.
Continue to Part 2 here.
Ref:
Abdul Hamid Mar Iman. 2007. Property Supply and Demand. Penerbit UTM. Page 25-41.
The Sun Daily. 03.11.2014. 455,839 candidates sit for SPM today. Available at,
http://www.thesundaily.my/news/1216096
Borneo Post. Antonia Chiam. 04.03.2015. 15 in Sarawak score straight A+ in 2014 SPM examination. Available at,
http://www.theborneopost.com/2015/03/04/15-in-sarawak-score-straight-a-in-2014-spm-examination/
Daily Express.04.03.2015. SPM: Fewer students scoring all As. Available at,
http://www.dailyexpress.com.my/news.cfm?NewsID=97561
Population Census 2010 , available at
http://www.statistics.gov.my/portal/index.php?option=com_content&id=1215
Population Projection Malaysia, 2010-2040. Chart 2; page 3. Available at,
Introduction to Property Market Analysis - Demography
Sarawak and Sabah are two state of Malaysia where land is in abundance. People in these two states are opening up to new technologies (broadband is reaching 3G to most of the townships). Furthermore, urbanization is slowly and surely taking over the capital cities and key townships. The young generation (GEN Y) are now maturing into work force, either seeking employment in the cities (KL, Singapore, HongKong etc) or remain in the State but moving to Kuching and Kota Kinabalu instead of staying back in small towns. They will return to their home towns and influence their elders with regards to the perception of the property market, be it investment or own use.
In short, demographic changes is rapidly underway, and urbanization will influence the cities and the suburbs towards the perception of property investment. On one part, the demand for own use, and on the other part (which is more premium) the demand for investing into properties.
The GEN Y provides the never ever ending demand for properties. Take for example, based on the number of SPM candidates - 2014 the figure is at 455,839 (whole Msia) and 37,488 (Swk) and 32,197 (Sbh).
A conservative estimate of 10% of the market would be 3,500 houses per year if only 10% of them are getting married and starting their family. This has not include the population one year before or after which are likely to be married too! A very conservative guesstimate would be 3,500 x 3 = 10,500 houses in demand at any one time! An average of 4 years' data is analyzed below in Figure 1.
Figure 1
Similarly, UPSR candidate numbers are not far from this, Figure 2 below shows the number of candidates who sat for UPSR over a 4 year period from 2008 - 2011.
Figure 2
Therefore, from the analysis of UPSR and SPM candidate numbers, we know that about half a million of students will leave the schools to seek for work every year. They will be in preparation to own a property in the near future - 3-5 years (an assumption to be studied). This means that an estimated new household of 250,000 a year. Even taking a mere 10% of this figure, the demand for housing in Malaysia is around 25,000 a year!
Cross checking with the data from the 2010 Population Census, see Figure 3,
Figure 3
the age group 15-19 years old from the 2010 population census was 1.4 mio male and 1.3 mio female. This is a combined 2.7mio over 5 years. Hence, the average population is around 540,000 per age group.
This figure is near to the yearly total student population sitting for UPSR or SPM. Thus, the figure is accurate for our consideration.
Future age distribution is been projected as below.
The discussion on the age distribution pattern will be done in Part 3 - Demand here.
Supply and demand analysis is commonly carried out by developer and investor to guide them on their portfolios.
Demographic analysis on numbers of SPM students may be indicative of the demand pressure. However, other factors like locality and socioeconomic status or purchasing power of the population are as important if not more so. Imagine a huge poor population like in Africa or India during the early years, they could not afford food, what more talk about housing. They had to stay in slumps. In the countryside, they built their own huts, and demand for constructed housing was either too few, or unimaginable. It was of course never any thoughts of high rise apartments or condominiums.
On one side it is easier to estimate supply because it is tangible (Hamid, 2007). That means developers can come out with plans and maps of development projects, whereas demand is difficult to estimate because there are too many assumptions. From the supply side, there are three (3) main types of property supply (Hamid, 2007), namely planned supply, incoming supply and existing inventory.
On the other side of demand, it is harder to estimate (Hamid, 2007). Firstly, one never know with certainty how buyers would respond to a new development. Nobody really knows what exactly the buyers consider in making decisions pertaining to buying, renting or patronizing a newly proposed property project. No one knows the competition would be like against a new project in the future. In other words, there is a lot of uncertainty and unknown demand outcomes to the developer or investor.
Thus, most property demand is based on bird's eye estimates. From analysis of past trends, certain secondary data can probably indicate increasing demand in certain property type. However, whatever accurate it may be, it is still an estimate as conditions may have altered as time passes by. A trend of property with large door and windows might be outdated now, as well as a locality previously command a premium might now be deserted due to reasons like congestion or rampant theft problem.
Owing to this assumptions, it is very much limited to general trend as if the market is moving upwards for apartments because of affordability, and bungalows and luxury land is moving downwards due to economic slowdown. Inflation and loan availability are also factors which can affect property demand.
Due to assumptions above, the analysis would base on current available properties, potential new developments published by National Property Information Center (NAPIC) under the JPPH.
This section is about different aspects of property market. Analysis covers:
Part 2 Supply
Part 3 Demand
Part 4 Historical analysis*
Part 5 competitive analysis
These various analyses are posted on later parts.
*value transacted and frequency of transactions.
Continue to Part 2 here.
Ref:
Abdul Hamid Mar Iman. 2007. Property Supply and Demand. Penerbit UTM. Page 25-41.
The Sun Daily. 03.11.2014. 455,839 candidates sit for SPM today. Available at,
http://www.thesundaily.my/news/1216096
Borneo Post. Antonia Chiam. 04.03.2015. 15 in Sarawak score straight A+ in 2014 SPM examination. Available at,
http://www.theborneopost.com/2015/03/04/15-in-sarawak-score-straight-a-in-2014-spm-examination/
Daily Express.04.03.2015. SPM: Fewer students scoring all As. Available at,
http://www.dailyexpress.com.my/news.cfm?NewsID=97561
Population Census 2010 , available at
http://www.statistics.gov.my/portal/index.php?option=com_content&id=1215
Population Projection Malaysia, 2010-2040. Chart 2; page 3. Available at,
http://www.statistics.gov.my/portal/download_Population/files/population_projections/Population_Projection_2010-2040.pdf
Marketing Plan for a Realtor Part 2 - Supply
Go back to Part 1, Part 0.
Analysis of Property Market - Supply
In Malaysia, the only dependable source of information on property supply is NAPIC which publishes information on a quarterly basis (Hamid, 2007).
Various terminology of supply is explained below:
Planned Supply - Units with approved building plans but have not started construction + Newly planned units.
Incoming Supply - Units from previous quarter reports + Units under construction in review + Units completed without CF/TCF.
Existing Inventory - Stocks of properties currently vacant to be occupied. It is accumulated number of units from the previous quarters plus units in the review quarter. These are units that have been issued with CF/TCF prior to the review period plus units completed and issued with CF/TCF within the review period.
From JPPH website, under the Residential Property Stock Table, information on residential property stock is available for comparison.
From the Table 1.1 of Q2 & Q3 Residential Property Stock Table, a section is extracted here.
The annual supply of various properties are in the range of 4.8 mio units. Let us assume:
Conversely, you may say property is over supply due to inability of people to own properties. In other words, it is not that there is no supply, but people cannot afford to buy properties.
This situation gets worse over the years, and old stocks piled up while new stocks which are even more unaffordable, are being built. Soon, stock pile became an issue, but due to inflation and inability to obtain loan, property becomes over supplied.
Hence, the market report showed a few important phenomena, they are:
In summary, the analysis of supply and demand of the current Malaysian Property Market shows over supply of residential properties. As market will be slower over the next few years due to existing inventory, demand side is the factor to determine the success of the realtor. Realty should therefore focused on creating more demand from untapped segment of the population in order to match the property to the affordable population segment.
It is no doubt said by Hamid (2007) that "The Main Goal of property market is to create demand supported by purchasing power but the knowledge about supply is equally important to understand the basic market forces and processes" on summary in page 27.
Continue to Part 3 here.
Ref:
Abdul Hamid Mar Iman, 2007. Property Supply and Demand. Pernerbit UTM. Page 16-28.
NAPIC Residential Property Stock Table Q3 2014, Table 1.1, available at
http://napic.jpph.gov.my/portal/web/guest/publication?p_p_id=ViewPublishings_WAR_ViewPublishingsportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_count=1&_ViewPublishings_WAR_ViewPublishingsportlet_action=renderFileListingScreen&reportId=1609&publishingId=433&pageno=1&from=listing
file:///F:/Research%20Market%20Size/1419310835220JadualStokHartaKediamanQ32014.pdf
Analysis of Property Market - Supply
In Malaysia, the only dependable source of information on property supply is NAPIC which publishes information on a quarterly basis (Hamid, 2007).
Various terminology of supply is explained below:
Planned Supply - Units with approved building plans but have not started construction + Newly planned units.
Incoming Supply - Units from previous quarter reports + Units under construction in review + Units completed without CF/TCF.
Existing Inventory - Stocks of properties currently vacant to be occupied. It is accumulated number of units from the previous quarters plus units in the review quarter. These are units that have been issued with CF/TCF prior to the review period plus units completed and issued with CF/TCF within the review period.
Existing Inventory
^
|
Completion
^
|
Incoming Supply
^
|
Under Construction
^
|
Start
^
|
Planned Supply
^
|
New Planned Supply
Figure 1.9 Stages of property supply (Extracted from Page 22, Hamid, 2007)
From JPPH website, under the Residential Property Stock Table, information on residential property stock is available for comparison.
From the Table 1.1 of Q2 & Q3 Residential Property Stock Table, a section is extracted here.
The annual supply of various properties are in the range of 4.8 mio units. Let us assume:
- The market for a Realtor is dependent on the Property Stock;
- The supply is in equilibrium with the demand - hence price is at a non-fluctuating level;
- The loan availability is not curtailed;
- The general property trend is non speculative;
- There is no restriction to sell (no RPGT consideration).
In order to reflect the enormous gap between supply and SPM school children maturing every year, some extravagant assumption is made. For instance, existing Stock of 4.8 mio units is matched to a 0.25 mio of yearly demand for housing from the earlier figure in Part 1. This can last 19.2 years before the supply runs out!
Conversely, you may say property is over supply due to inability of people to own properties. In other words, it is not that there is no supply, but people cannot afford to buy properties.
This situation gets worse over the years, and old stocks piled up while new stocks which are even more unaffordable, are being built. Soon, stock pile became an issue, but due to inflation and inability to obtain loan, property becomes over supplied.
Hence, the market report showed a few important phenomena, they are:
- Realtor has a challenge to match those affordable to the existing property stock.
- The key is not about supply, it is about how to convince the buyer to take up the surplus in the property market.
- There is enough options to be held as investment - owning more, pick and choose.
- That demand pressure will increase as GenY increases - demography of age-group 15-19 is growing, and thus bigger purchasing power as this age-group reaches 25-30.
In summary, the analysis of supply and demand of the current Malaysian Property Market shows over supply of residential properties. As market will be slower over the next few years due to existing inventory, demand side is the factor to determine the success of the realtor. Realty should therefore focused on creating more demand from untapped segment of the population in order to match the property to the affordable population segment.
It is no doubt said by Hamid (2007) that "The Main Goal of property market is to create demand supported by purchasing power but the knowledge about supply is equally important to understand the basic market forces and processes" on summary in page 27.
Continue to Part 3 here.
Ref:
Abdul Hamid Mar Iman, 2007. Property Supply and Demand. Pernerbit UTM. Page 16-28.
NAPIC Residential Property Stock Table Q3 2014, Table 1.1, available at
http://napic.jpph.gov.my/portal/web/guest/publication?p_p_id=ViewPublishings_WAR_ViewPublishingsportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_count=1&_ViewPublishings_WAR_ViewPublishingsportlet_action=renderFileListingScreen&reportId=1609&publishingId=433&pageno=1&from=listing
file:///F:/Research%20Market%20Size/1419310835220JadualStokHartaKediamanQ32014.pdf
Marketing Plan for a Realtor Part 3 - Demand
Go back to Part 2 or Part 1, Part 0.
Analysis of Property Market - Demand
This section is about local market demand for properties.
Earlier post on Demand in Property Market is referred here.
Past year 2013 Q4 Valuation D09 Hotel vs Shoplot Investment Option ; and
Economic-based Analysis, Competitor Analysis and ROI for Retail Shop vs Hotel
According to Hamid, 2007, estimating property demand is far more complex than estimating the supply. There is no report from National Property Information Centre (NAPIC) on demand.
An analogy is provided here. Determining demand for property is like determining a demand for a man (or woman) in a matchmaking. For example, a single man wants to get married. He is the Supply. The Matchmaker is the agency that will look for him his bride. However, the demand for his 'Supply' can be a complex matter. It can be availability of single women in the vicinity, their expectation, their likes and dislikes, age-group and despite the willingness for the man to accommodate any woman, the demand for him is really uncertain, and varies between one woman to another.
Thus, similar to the above scenario, the demand for property is affected by myriad of factors. Major variables involved are extracted from Table 1.6 page 26 (Hamid, 2007) below:
Inferential Analysis (Global Demand Analysis) : Population, employment, income, number of households, house price, changes in the number of households, net removal or demolition of units from the housing inventory, actual vacancies, average number of units vacant, actual housing units under construction, average number of units under construction.
Market Survey-based Analysis : Size of local population, net migration, direct generation, spill-over, demand from alien buyers, employment, age structure, buying interest, income level, housing propensity to spend, property market concentration, and property price.
Model-based Estimation : Physical, locational, economy and market variables such as land size, floor size, type of property, age of building, building conditions, site position, location, neighbourhood quality, project size, and property price.
In my opinion, these variables can be divided into two major groups:
1. Economic factors that is seasonal.
2. Demographic factors that is constant for a longer period of time.
Economic factors
The general economic performance of the country would reflect the wealth of the nation. The richer the nation, the better the people in their respective economic activities. With business activities, people gain employment, with higher income, and thus increased in purchasing power which can contribute to their higher standard of living. All these would foster property market as people are able to save and buy property as for investment or own use.
Demographic factors
Population pattern can affect demand for housing. Inevitably, young nation with Gen Y baby boomers would require housing when they start their families. This is like in America after the Second World War. Young families are the work force, they drove the economic activities. Thereafter, they themselves are consumers of the food chain, housing, services and entertainment. Similarly, Malaysia is undergoing this change.
From the age-group 15-29 (2010) there is an explosion of population. This is much more than the older age-group of 30-44 (2010) - see graph below. This resembles the active working population in the next 10 years as we reach 2020. By then, the 15 becomes 25, and 29 becomes 39. With this major chunk of younger age-group maturing into middle age, their purchasing power will definitely increase as they start their families. Owing to this, there is a tremendous appetite for housing in the next 5 years (2016-2020).
Future: Population Projection 2010-2040
Department of Statistics, Malaysia on 18th Jan, 2013 had published online for download a projection of population pattern from 2010 census to 2040. Extract below:
The above Chart 2, found in page 3 of the Population Project Malaysia 2010-2040 is very crucial for the demand analysis.
As earlier on discussed, the 2010 report showed a 'baby boomer' 15-29 year age-group. This age-group will progress to older age (45-59) after 30 years (2010+30=2040).
The younger age-group that subsequently replaces them appears to be similar or only slightly increased. The phenomena of baby booming is no more apparently significant as before (probably 30 years ago). This can be due to better quality of life (both parents working) and higher socioeconomic status. As people are having smaller family unit and women become major workforce, the big family unit of the past will gradually disminish. Therefore, the triangular shape of the graph would gradually become 'kite' wau bulan shaped or mid-aged population will be more than babies or elderly. Type of housing will also move towards apartment and studio living.
Before the population starts to become an aging population, the society will be rich with most people working, or having worked for 10 or 20 years. These population will have acquired saving and wealth and are of high socioeconomic status - educated and specialized. Thus, they are able to invest in properties and take up the surplus, deploying the knowledge and versatility that their fore-parents never had.
In view of this demographic trend, Malaysia will experience an up trend on property demand for at least the next 10 to 20 years (from 2010 data). In fact, this is the best time to capture the market share as market is growing and land are still in abundance. Estate agency practice (as this Marketing Plan is for) is becoming regulated with enforcement of various laws. Thus, it will be an opportunity for all registered agencies, tapping into the vast potential of the growing property market.
This part requires further analysis in Part 4 - historical transactions. As Estate Agency Practice is a multi-million dollar business, there are challenges and competition that would affect an estate agent. The analysis of such challenges and competition is the topic of the next two sections.
Continue to Part 4 here.
Ref:
Abdul Hamid Mar Iman. 2007. Property Supply and Demand. Penerbit UTM. Page 25-41.
Population distribution and basic demographic characteristics 2010. Chart 8; page 6. Available at,
http://www.statistics.gov.my/portal/download_Population/files/census2010/Taburan_Penduduk_dan_Ciri-ciri_Asas_Demografi.pdf
Population Projection Malaysia, 2010-2040. Chart 2; page 3. Available at,
http://www.statistics.gov.my/portal/download_Population/files/population_projections/Population_Projection_2010-2040.pdf
Analysis of Property Market - Demand
This section is about local market demand for properties.
Earlier post on Demand in Property Market is referred here.
Past year 2013 Q4 Valuation D09 Hotel vs Shoplot Investment Option ; and
Economic-based Analysis, Competitor Analysis and ROI for Retail Shop vs Hotel
According to Hamid, 2007, estimating property demand is far more complex than estimating the supply. There is no report from National Property Information Centre (NAPIC) on demand.
An analogy is provided here. Determining demand for property is like determining a demand for a man (or woman) in a matchmaking. For example, a single man wants to get married. He is the Supply. The Matchmaker is the agency that will look for him his bride. However, the demand for his 'Supply' can be a complex matter. It can be availability of single women in the vicinity, their expectation, their likes and dislikes, age-group and despite the willingness for the man to accommodate any woman, the demand for him is really uncertain, and varies between one woman to another.
Thus, similar to the above scenario, the demand for property is affected by myriad of factors. Major variables involved are extracted from Table 1.6 page 26 (Hamid, 2007) below:
Inferential Analysis (Global Demand Analysis) : Population, employment, income, number of households, house price, changes in the number of households, net removal or demolition of units from the housing inventory, actual vacancies, average number of units vacant, actual housing units under construction, average number of units under construction.
Market Survey-based Analysis : Size of local population, net migration, direct generation, spill-over, demand from alien buyers, employment, age structure, buying interest, income level, housing propensity to spend, property market concentration, and property price.
Model-based Estimation : Physical, locational, economy and market variables such as land size, floor size, type of property, age of building, building conditions, site position, location, neighbourhood quality, project size, and property price.
In my opinion, these variables can be divided into two major groups:
1. Economic factors that is seasonal.
2. Demographic factors that is constant for a longer period of time.
Economic factors
The general economic performance of the country would reflect the wealth of the nation. The richer the nation, the better the people in their respective economic activities. With business activities, people gain employment, with higher income, and thus increased in purchasing power which can contribute to their higher standard of living. All these would foster property market as people are able to save and buy property as for investment or own use.
Demographic factors
Population pattern can affect demand for housing. Inevitably, young nation with Gen Y baby boomers would require housing when they start their families. This is like in America after the Second World War. Young families are the work force, they drove the economic activities. Thereafter, they themselves are consumers of the food chain, housing, services and entertainment. Similarly, Malaysia is undergoing this change.
From the age-group 15-29 (2010) there is an explosion of population. This is much more than the older age-group of 30-44 (2010) - see graph below. This resembles the active working population in the next 10 years as we reach 2020. By then, the 15 becomes 25, and 29 becomes 39. With this major chunk of younger age-group maturing into middle age, their purchasing power will definitely increase as they start their families. Owing to this, there is a tremendous appetite for housing in the next 5 years (2016-2020).
Future: Population Projection 2010-2040
Department of Statistics, Malaysia on 18th Jan, 2013 had published online for download a projection of population pattern from 2010 census to 2040. Extract below:
The above Chart 2, found in page 3 of the Population Project Malaysia 2010-2040 is very crucial for the demand analysis.
As earlier on discussed, the 2010 report showed a 'baby boomer' 15-29 year age-group. This age-group will progress to older age (45-59) after 30 years (2010+30=2040).
The younger age-group that subsequently replaces them appears to be similar or only slightly increased. The phenomena of baby booming is no more apparently significant as before (probably 30 years ago). This can be due to better quality of life (both parents working) and higher socioeconomic status. As people are having smaller family unit and women become major workforce, the big family unit of the past will gradually disminish. Therefore, the triangular shape of the graph would gradually become 'kite' wau bulan shaped or mid-aged population will be more than babies or elderly. Type of housing will also move towards apartment and studio living.
Before the population starts to become an aging population, the society will be rich with most people working, or having worked for 10 or 20 years. These population will have acquired saving and wealth and are of high socioeconomic status - educated and specialized. Thus, they are able to invest in properties and take up the surplus, deploying the knowledge and versatility that their fore-parents never had.
In view of this demographic trend, Malaysia will experience an up trend on property demand for at least the next 10 to 20 years (from 2010 data). In fact, this is the best time to capture the market share as market is growing and land are still in abundance. Estate agency practice (as this Marketing Plan is for) is becoming regulated with enforcement of various laws. Thus, it will be an opportunity for all registered agencies, tapping into the vast potential of the growing property market.
This part requires further analysis in Part 4 - historical transactions. As Estate Agency Practice is a multi-million dollar business, there are challenges and competition that would affect an estate agent. The analysis of such challenges and competition is the topic of the next two sections.
Continue to Part 4 here.
Ref:
Abdul Hamid Mar Iman. 2007. Property Supply and Demand. Penerbit UTM. Page 25-41.
Population distribution and basic demographic characteristics 2010. Chart 8; page 6. Available at,
http://www.statistics.gov.my/portal/download_Population/files/census2010/Taburan_Penduduk_dan_Ciri-ciri_Asas_Demografi.pdf
Population Projection Malaysia, 2010-2040. Chart 2; page 3. Available at,
http://www.statistics.gov.my/portal/download_Population/files/population_projections/Population_Projection_2010-2040.pdf
Marketing Plan for a Realtor Part 4 - Historical Transactions
Go back to Part 3, Part 2 or Part 1, Part 0.
Analysis of Property Market - Historical Transactions
This section is about sales performance in transaction number and value over 2013 and 2014 (projected).
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From the 2014 Annual Property Market Report, the total transaction for the year 2014 was 384,060. The various sub-sectors were:
Further divided into major States, the transaction figures are as below:
%2BJPPH%2B4%2Bstates%2B2013-2014.png)
The above analysis suggests that transactions during 2014 for the top three States (Selangor, Johor and Perak) constituted 47.6% of the whole nation. That is nearly half of the whole country!
In terms of transaction numbers, Sarawak ranked No.4 after Selangor, Johor and Perak. However, in value, Sarawak ranked No.7. This is an interesting phenomenon. Please see Discussion section for argument on this.
Analysis on Transaction Values (Figures from JPPH NAPIC)
The top three States in value (Selangor, Johor and KL) constituted 64% of the total country. These are the "Hot Spots" of the Property Industry.
Hence, if you want to handle big client, these are the states! These are areas of big commission pay out!
At a glance:
Findings
There are three scenarios:
1. The transaction volume grew and value also grew - Selangor, Johor, KL, Penang, Ng S. These are the "Hot Spots"
2. The transaction volume dropped but value grew - Perak, Sarawak & Pahang
3. The transaction volume dropped and value also dropped - Sabah
From the above categories, it seems that the heavy weights (big value big transactions) withstood the slow down very well. Whereas, the light weights (small value small transactions) showed a dip.
Discussion
Conclusion
This chapter of the Marketing Plan is rather complicated with multiple facets of the performance figures. As we analyze the two most important parameters of property market - 1. trading activities or transaction number, and 2. value of transaction, we realize that they do not always move in tandem.
The trading activity would be an important factor for consideration in estate agency practice because it is this activity that will provide commission payment. No activity means no business! Top 4 regions are Selangor, Johor, Perak and Sarawak.
Value of transaction is also very important to the estate agent because of commission calculation. It is paid as a percentage of the value transacted. Thus, top 4 regions for consideration are Selangor, KL, Johor and Penang.
Value of transaction can be due to types of property. Especially in major cities, value transaction is tremendously influenced by commercial properties and offices.
In one sentence, marketing strategy of an estate agency firm should be driven by both transaction number and value. Hence, Selangor, Johor and Penang would be three major areas where any real estate agency firm should concentrate its focus and energy on.
Continue to Part 5 here.
Ref:
JPPH NAPIC Annual Property Market Report, 2014 available at,
http://napic.jpph.gov.my/portal/web/guest/publication?p_p_id=ViewPublishings_WAR_ViewPublishingsportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_count=1&_ViewPublishings_WAR_ViewPublishingsportlet_action=renderReportPeriodScreen&publishingId=445&pageno=1&language=
Analysis of Property Market - Historical Transactions
This section is about sales performance in transaction number and value over 2013 and 2014 (projected).
Analysis on Transaction Numbers (Figures from JPPH NAPIC)
%2BJPPH.png){kind=spacer}
From the 2014 Annual Property Market Report, the total transaction for the year 2014 was 384,060. The various sub-sectors were:
- Residential - 247,251
- Commercial - 35,528
- Industrial - 8,100
- Agricultural - 72,104 (Mainly corporation involving in plantation business)
- Development land - 21,040
From the sub categories analysis, we understands that Estate Agents are more productive if they were to concentrate in Residential and Commercial properties, rather than the less frequent transacted categories like Industrial, Agriculture (mainly by big plantation business which is government linked) or Development Land (which requires private-public coordination and approval, etc).
%2BJPPH%2B4%2Bstates%2B2013-2014.png){kind=spacer}
In terms of transaction numbers, Sarawak ranked No.4 after Selangor, Johor and Perak. However, in value, Sarawak ranked No.7. This is an interesting phenomenon. Please see Discussion section for argument on this.
Analysis on Transaction Values (Figures from JPPH NAPIC)
Hence, if you want to handle big client, these are the states! These are areas of big commission pay out!
At a glance:
There are three scenarios:
1. The transaction volume grew and value also grew - Selangor, Johor, KL, Penang, Ng S. These are the "Hot Spots"
2. The transaction volume dropped but value grew - Perak, Sarawak & Pahang
3. The transaction volume dropped and value also dropped - Sabah
From the above categories, it seems that the heavy weights (big value big transactions) withstood the slow down very well. Whereas, the light weights (small value small transactions) showed a dip.
Discussion
- The trading activity corresponds with performance of the real estate, hence increased in transaction would likely fuel better value. (Similar concept like share trading) These are the "Hot Spots" regions.
- Although there may be slow down of transaction, value can still increase. This may be because of inflation and scarcity of property at certain area, thus prices maintained. The slow down can be due to measures introduced to curb overheating.
- Urban regions (dense) would see heavier trading and but not necessarily higher growth in value. Negeri Sembilan had biggest growth (25%) in value but not growth (only 6%) in transaction compared to Selangor (19%) or Johor (11%). This are potential future growth areas as people are pushing up the value.
- Even negative growth on transaction may have increase in value like Perak (1%), Sarawak (7%) and Pahang (7%). This can be due to recent increase in property prices.
- Although Sarawak ranked No.4 in transaction numbers, it only ranked No.7 in value. This can be due to lower property prices as it is very much a closed-door immigration state.
- Conversely, KL ranked No.8 in transaction number, but ranked No.3 in value. This can be due to high value of property transacted in KL - commercial and offices rather than residential.
Conclusion
This chapter of the Marketing Plan is rather complicated with multiple facets of the performance figures. As we analyze the two most important parameters of property market - 1. trading activities or transaction number, and 2. value of transaction, we realize that they do not always move in tandem.
The trading activity would be an important factor for consideration in estate agency practice because it is this activity that will provide commission payment. No activity means no business! Top 4 regions are Selangor, Johor, Perak and Sarawak.
Value of transaction is also very important to the estate agent because of commission calculation. It is paid as a percentage of the value transacted. Thus, top 4 regions for consideration are Selangor, KL, Johor and Penang.
Value of transaction can be due to types of property. Especially in major cities, value transaction is tremendously influenced by commercial properties and offices.
In one sentence, marketing strategy of an estate agency firm should be driven by both transaction number and value. Hence, Selangor, Johor and Penang would be three major areas where any real estate agency firm should concentrate its focus and energy on.
Continue to Part 5 here.
Ref:
http://napic.jpph.gov.my/portal/web/guest/publication?p_p_id=ViewPublishings_WAR_ViewPublishingsportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_count=1&_ViewPublishings_WAR_ViewPublishingsportlet_action=renderReportPeriodScreen&publishingId=445&pageno=1&language=
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:
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:
From the above summary and earlier analysis, we can be quite certain that in the near future:
Competitors profile (future agents)
Who will be a future agent?
Malaysia Property Inc. Market in Brief. Available at,
http://www.malaysiapropertyinc.com/market-in-brief.htm
- 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)
- 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.
- 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.
- 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.
- 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.
- 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.
- 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?
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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).
- 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.
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.htmlMalaysia Property Inc. Market in Brief. Available at,
http://www.malaysiapropertyinc.com/market-in-brief.htm
Marketing Plan for a Realtor Part 6 - Strategies and Action Plans
Go back to Part 5, Part 4, Part 3, Part 2 or Part 1, Part 0.
Marketing Plan - Strategies and Action Plans
Core purpose of a Realtor is to either match a buyer to a seller or a seller to a buyer. It is a business of match-making.
However, in modern day, this purpose is painted with the graphics of VALUE, be it a bigger PROFIT for the Seller or bigger DISCOUNT for the Buyer. Therefore, the key issue here is 'VALUE'.
VALUE can be in two basic forms - Monetary Value or Beneficial Value.
MY-RealProperty is a Regional Property Realtor with the vision of Improving Living and Property Investment of Average Men on the Street. The firm's mission statement is "Property for Everyone, Everywhere".
Thus, it is a mission of the firm to realize the VALUE of property through the creation of demand for investment among the GEN Y (30-35) and follow through till their middle age (50-55) in a 20 years productive working life.
Demographic pattern of Malaysia shows the potential explosive growth of the middle age group now to the next 30 years (2010-2040). As a nation transforming from agricultural economy, Malaysia has ample supply of land. Future supplies will foster secondary subsale as people upgrade and start owning more investments in real estate. This resembles a big reservoir of supplies for the firm to match with the demand for property.
As more estate agents qualify for profession, demand of better services and government intervention will streamline agents into high-performance agents and sub-specialized agents. There will be pressure on the existing agency firms to innovate to cope with the increasing competition, and new entrance of multi-disciplinary practices. This will yield what we call "future agents".
Future Agents:
Both types of agents will exhibit knowledge base selling and enhance investors' choice in investment and buying decisions. Estate agents who are into high-tech, high knowledge based selling will be ahead of the competition. On the other hand, new trend in the estate agency practice will incorporate ancillary services e.g. valuation, property management (collection of rentals) and handling of the strata titles property in the practice. Future multi-discipline firm may even combine various investment products like mutual fund, REIT, insurance, etc to deliver a one-stop supermarket for investors.
Owing to the complexity of the investment/property market, additional education and certification would be required to equip the future agent for this multi-discipline work. This competition will foster evolution of the agent, and well managed network, training and marketing would be key to success of a firm. Agents will work with their clients on a long term basis rather than 'once in a life time' deal currently seen.
Lastly, electronic media and ICT will have indispensable role in the success of property business. Developers would likely promote their products with the help of specialized broad based firms, saving cost from their own sales force.
Estate agency firms would likely work on a national level as investors are more fluid. Thus, knowledge and professional management is key to wider customer acceptance in line with the education level and socio-economic infrastructure of the nation. This is pertinent to the fact that repeat investors are attracted to successful and sustainable formula of a firm and its innovation on a long term. Inevitably, this is only achievable with a network of well trained agents and negotiators.
Hence, the strategies of My-RealProperty are:
1. To create sustainable network by training negotiator and junior agents in the peripheral regions of 'hot spots' where value and transaction number are high.
Action Plans: These are potential areas for future growth where sustainability is key to success. Key areas are Selangor, Johor and Penang-Perak where junior agents are to be selected in all these townships and nurture to become principal agents in the future. This strategy is to retain talents and achieve 'mass' and economics of scale. Network is key to communication and best VALUE for clients. Immediate plan is to complete the Estate Agent Examinations and guide future agents who are keen to come together with long term plans, to build a sustainable network.
2. To equip the network with value added services so as to maintain and retain potential high-performance and sub-specialized agents for a long term relationship.
Action Plans: A one-stop real estate and investment supermarket. To embark on ancillary services like conducting AGM (ICSA) for stratified properties, maintaining a good system of records for rental collection by landlords, long term follow up for clients - a data base of clients and properties. Ancillary services like providing contacts for renovation, plumbing works, etc. to clients.
3. To develop a system of ICT to communicate with GEN Y (30-35 years old) clients in long term for sustainable network of customers.
Action Plans: To deploy innovative ICT methods to maintain a group of potential clients on a long term basis for continuous value enhancement and portfolio building. Repeat sales and creation of value are key to efficiency (not to waste time on 'once a life time order'). Highly knowledgeable clients like professionals (doctors, technocrats and teachers) are key target audience. This will serve as a repository for future buyers and investors.
Market Share to achieve:
An assumption of the total number of Real Estate Agents in Malaysia in 2020 is made, and a percentage of this number is taken as market share.
Historical number 2013 - 1,797 (REA)
Current numbers 2015 - 1,862 (REA), 505 (PEA) addition of 65 REA in 2 years.
Forecast numbers 2020 (REA) - 2,407. (see table below)
Forecast numbers 2020 (PEA) - 1,100 (Doubling in 5 years)
Total workforce of REA and PEA = 3,507 (3,500).................................... (1)
However, there will be a large number of REN in the field. These numbers will maintain for a period of time as they are not interested in passing the examination, but just in for the money.
Let us estimate their number to be 10,000.
Total REA, PEA and REN = 13,500............................................................ (2)
My-RealProperty Workforce:
Historical number 2013 - 0
Current numbers 2015 - 0
Forecast numbers 2020 (REA) - 10
Forecast numbers 2020 (PEA/REN) - 40 (ratio 1:4)
Total workforce of REA and PEA = 50........................................................ (3)
Percentage of total (Aggressive) = 50/3,500 = 1.4% ...........................using (1)
Percentage of total (Conservative) = 50/13,500 = 0.37% ...................using (2)
Total Property Market Value in Malaysia:
Historial 2013 - RM152 billion
Current 2014 - RM163 billion
Forecast 2020 - RM208 billion
Forecast 2020 - 50% Real Estate Agent - RM104 billion (RM100 billion round-down)
Assumption 1. Market Share (Aggressive)
Total Workforce percentage of 1.4% (refer 4 above) should have a market share of:
RM100 billion x 1.4% = RM1.4 billion (RM1,400,000,000)
Commission payout - RM1.4 billion x 2% = RM28 million (RM560k per head).
Assumption 2. Market Share (Conservative)
Total Workforce percentage of 0.37% (refer 5 above) should have a market share of:
RM100 billion x 0.37% = RM370 million (RM370,000,000)
Commission payout - RM370 million x 2% = RM7.4 million (RM148k per head).
Average take back commission per REA/PEA/REN is between:
Continue to Part 7 here.
Ref:
Own account with reference to earlier posts.
Marketing Plan - Strategies and Action Plans
Core purpose of a Realtor is to either match a buyer to a seller or a seller to a buyer. It is a business of match-making.
However, in modern day, this purpose is painted with the graphics of VALUE, be it a bigger PROFIT for the Seller or bigger DISCOUNT for the Buyer. Therefore, the key issue here is 'VALUE'.
VALUE can be in two basic forms - Monetary Value or Beneficial Value.
- Monetary Value - very direct and immediate - Ringgit Malaysia.
- Beneficial Value - more complex, and may not be realized immediately. These are like Investment Upsides, Convenience of Living, Ambient, Style or 'Forced Saving'.
- frequency of transaction, and
- value of transaction
MY-RealProperty is a Regional Property Realtor with the vision of Improving Living and Property Investment of Average Men on the Street. The firm's mission statement is "Property for Everyone, Everywhere".
Thus, it is a mission of the firm to realize the VALUE of property through the creation of demand for investment among the GEN Y (30-35) and follow through till their middle age (50-55) in a 20 years productive working life.
Demographic pattern of Malaysia shows the potential explosive growth of the middle age group now to the next 30 years (2010-2040). As a nation transforming from agricultural economy, Malaysia has ample supply of land. Future supplies will foster secondary subsale as people upgrade and start owning more investments in real estate. This resembles a big reservoir of supplies for the firm to match with the demand for property.
As more estate agents qualify for profession, demand of better services and government intervention will streamline agents into high-performance agents and sub-specialized agents. There will be pressure on the existing agency firms to innovate to cope with the increasing competition, and new entrance of multi-disciplinary practices. This will yield what we call "future agents".
Future Agents:
- The high-performance agents are specialized by geographical regions, whereas
- the sub-specialized agents are those with expertise in special product types.
Both types of agents will exhibit knowledge base selling and enhance investors' choice in investment and buying decisions. Estate agents who are into high-tech, high knowledge based selling will be ahead of the competition. On the other hand, new trend in the estate agency practice will incorporate ancillary services e.g. valuation, property management (collection of rentals) and handling of the strata titles property in the practice. Future multi-discipline firm may even combine various investment products like mutual fund, REIT, insurance, etc to deliver a one-stop supermarket for investors.
Owing to the complexity of the investment/property market, additional education and certification would be required to equip the future agent for this multi-discipline work. This competition will foster evolution of the agent, and well managed network, training and marketing would be key to success of a firm. Agents will work with their clients on a long term basis rather than 'once in a life time' deal currently seen.
Lastly, electronic media and ICT will have indispensable role in the success of property business. Developers would likely promote their products with the help of specialized broad based firms, saving cost from their own sales force.
Estate agency firms would likely work on a national level as investors are more fluid. Thus, knowledge and professional management is key to wider customer acceptance in line with the education level and socio-economic infrastructure of the nation. This is pertinent to the fact that repeat investors are attracted to successful and sustainable formula of a firm and its innovation on a long term. Inevitably, this is only achievable with a network of well trained agents and negotiators.
Hence, the strategies of My-RealProperty are:
1. To create sustainable network by training negotiator and junior agents in the peripheral regions of 'hot spots' where value and transaction number are high.
Action Plans: These are potential areas for future growth where sustainability is key to success. Key areas are Selangor, Johor and Penang-Perak where junior agents are to be selected in all these townships and nurture to become principal agents in the future. This strategy is to retain talents and achieve 'mass' and economics of scale. Network is key to communication and best VALUE for clients. Immediate plan is to complete the Estate Agent Examinations and guide future agents who are keen to come together with long term plans, to build a sustainable network.
2. To equip the network with value added services so as to maintain and retain potential high-performance and sub-specialized agents for a long term relationship.
Action Plans: A one-stop real estate and investment supermarket. To embark on ancillary services like conducting AGM (ICSA) for stratified properties, maintaining a good system of records for rental collection by landlords, long term follow up for clients - a data base of clients and properties. Ancillary services like providing contacts for renovation, plumbing works, etc. to clients.
3. To develop a system of ICT to communicate with GEN Y (30-35 years old) clients in long term for sustainable network of customers.
Action Plans: To deploy innovative ICT methods to maintain a group of potential clients on a long term basis for continuous value enhancement and portfolio building. Repeat sales and creation of value are key to efficiency (not to waste time on 'once a life time order'). Highly knowledgeable clients like professionals (doctors, technocrats and teachers) are key target audience. This will serve as a repository for future buyers and investors.
Market Share to achieve:
An assumption of the total number of Real Estate Agents in Malaysia in 2020 is made, and a percentage of this number is taken as market share.
Historical number 2013 - 1,797 (REA)
Current numbers 2015 - 1,862 (REA), 505 (PEA) addition of 65 REA in 2 years.
Forecast numbers 2020 (REA) - 2,407. (see table below)
Forecast numbers 2020 (PEA) - 1,100 (Doubling in 5 years)
Total workforce of REA and PEA = 3,507 (3,500).................................... (1)
However, there will be a large number of REN in the field. These numbers will maintain for a period of time as they are not interested in passing the examination, but just in for the money.
Let us estimate their number to be 10,000.
Total REA, PEA and REN = 13,500............................................................ (2)
My-RealProperty Workforce:
Historical number 2013 - 0
Current numbers 2015 - 0
Forecast numbers 2020 (REA) - 10
Forecast numbers 2020 (PEA/REN) - 40 (ratio 1:4)
Total workforce of REA and PEA = 50........................................................ (3)
Percentage of total (Aggressive) = 50/3,500 = 1.4% ...........................using (1)
Percentage of total (Conservative) = 50/13,500 = 0.37% ...................using (2)
Total Property Market Value in Malaysia:
Historial 2013 - RM152 billion
Current 2014 - RM163 billion
Forecast 2020 - RM208 billion
Forecast 2020 - 50% Real Estate Agent - RM104 billion (RM100 billion round-down)
Assumption 1. Market Share (Aggressive)
Total Workforce percentage of 1.4% (refer 4 above) should have a market share of:
RM100 billion x 1.4% = RM1.4 billion (RM1,400,000,000)
Commission payout - RM1.4 billion x 2% = RM28 million (RM560k per head).
Assumption 2. Market Share (Conservative)
Total Workforce percentage of 0.37% (refer 5 above) should have a market share of:
RM100 billion x 0.37% = RM370 million (RM370,000,000)
Commission payout - RM370 million x 2% = RM7.4 million (RM148k per head).
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Average take back commission per REA/PEA/REN is between:
RM148,000 to RM560,000 per year.
Continue to Part 7 here.
Ref:
Own account with reference to earlier posts.
Marketing Plan for a Realtor Part 7 - Control and Implementation
Go back to Part 6, Part 5, Part 4, Part 3, Part 2 or Part 1, Part 0.
Marketing Plan - Implementation and Control
The control and monitoring of progress by the firm is a gradual process. In line with the strategies of mobilizing ICT in networking and operation of estate agency practice, key achievements would be the take up rate of associates and client numbers.
However, before the launch of the firm, a system of training will be based on the Estate Agent Examination by LPPEH, coupled with the Marketing Plan to each an every individual network agent.
Initial implementation - Recruitment is carried out by Blogger.com where past year questions are uploaded for the benefits of those studying for the LPPEH Estate Agents Examination. Progress is monitored online with the Q&A method. These recruits are called 'associates'.
Control - Milestones like Examination results and those who have passed the Estate Agent Exam (PEA) and TCP (REA license) will be indicative of major progresses in the firm. Based on self-interest and determination, they will be elevated to the level of Associate Principal Agents in the respective 'Hot Spots' to carry out the strategies of this firm.
Eventual monitoring will be from the sales and commissions with the launch of this firm. Until then, the control mechanism will be very much based on progress of the LPPEH Estate Agent Examination.
Now, the firm's immediate milestone is to qualify a principle agent in late 2017. This will mark the formation of My-RealProperty. By 2020 the firm should ideally have:
Market Share to hit is:
THE END.
Ref:
Own account with reference to earlier posts.
Marketing Plan - Implementation and Control
The control and monitoring of progress by the firm is a gradual process. In line with the strategies of mobilizing ICT in networking and operation of estate agency practice, key achievements would be the take up rate of associates and client numbers.
However, before the launch of the firm, a system of training will be based on the Estate Agent Examination by LPPEH, coupled with the Marketing Plan to each an every individual network agent.
Initial implementation - Recruitment is carried out by Blogger.com where past year questions are uploaded for the benefits of those studying for the LPPEH Estate Agents Examination. Progress is monitored online with the Q&A method. These recruits are called 'associates'.
Control - Milestones like Examination results and those who have passed the Estate Agent Exam (PEA) and TCP (REA license) will be indicative of major progresses in the firm. Based on self-interest and determination, they will be elevated to the level of Associate Principal Agents in the respective 'Hot Spots' to carry out the strategies of this firm.
Eventual monitoring will be from the sales and commissions with the launch of this firm. Until then, the control mechanism will be very much based on progress of the LPPEH Estate Agent Examination.
Now, the firm's immediate milestone is to qualify a principle agent in late 2017. This will mark the formation of My-RealProperty. By 2020 the firm should ideally have:
- Principal Agent - (1 place)
- Deputy Principal Agents - (2 places - 1 Commercial, 1 Residential)
- Research and Marketing (1 place)
- Associate Principal agents (1 in each hot spot - 5 areas: Selangor x2, North, South, EM)
- Training (5 places - by Associate Principal Agents)
- ICT executive (1 place)
- Total head count of the firm - 10+1 (one being IT executive).
- 40 PEA and REN.
Market Share to hit is:
- Aggressive RM1.4 billion or 1.4% of total Estate Agency value of RM100 billion;
- corresponding to RM560k annual commission per REA/PEA/REN.
- Conservative RM0.37 billion or 0.37% of total Estate Agency value of RM100 billion;
- corresponding to RM148k annual commission per REA/PEA/REN.
THE END.
Ref:
Own account with reference to earlier posts.
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