JLL recently bought a 20% stake in PropNex International - the project marketing arm of PropNex Realty; one of the largest locally grown property agency in Singapore.
With this arrangement, JLL has instant access to about 5,500 agents to market it's project as well as to the mass-market projects marketed by PropNex Realty.
PropNex in turn has access a recognised global brand to market it's Singapore projects to an international audience.
BETTER TO RECRUIT MORE OR BUY AN AGENCY WITH MANY AGENTS?
1. Singapore,
1st
Oct
2014
BETTER
TO
RECRUIT
MORE
OR
BUY
AN
AGENCY
WITH
MANY
AGENTS?
JLL
buying
a
20%
stake
in
PropNex
International
(project
arm
of
PropNex
Realty)
has
been
one
of
the
biggest
news
this
year
in
Singapore’s
property
industry,
though
a
few
other
smaller
players
have
also
consolidated
their
business
recently.
Why
would
JLL,
a
global
property
consultancy
firm
with
offices
in
almost
every
corner
of
the
earth
buy
a
stake
in
PropNex
-‐
a
locally
grown
property
agency?
The
reasons
are
many.
To
start
with
JLL
has
deep
pockets
and
has
been
on
the
buying
spree
globally
for
several
years
growing
their
business.
In
Singapore,
over
the
years
they’ve
bought
over
Property
Edge,
DST
International,
Credo
Real
Estate
and
Halcyon
Real
Estate.
So
buying
into
PropNex
international
is
nothing
new,
except
this
was
a
20%
stake
and
not
an
outright
buy.
Why?
These
are
two
companies
with
different
culture,
background
and
at
opposite
end
of
the
spectrum.
JLL
is
a
global
brand
marketing
high-‐end
commercial,
residential
and
have
many
other
divisions
from
auctions,
hotel,
leasing
etc
whereas
PropNex
has
one
of
the
largest
agency
force
with
over
5,500
agents
and
a
leader
in
Singapore
in
the
mass-‐market
property
business.
The
cooling
measures
in
Singapore
since
last
couple
of
years
has
taken
a
big
hit
on
the
high-‐end
market
and
have
seen
considerable
slow
down
in
the
luxury
segment
whereas
the
mass
market
has
grown
over
250
per
cent
for
new
homes
in
suburban
areas.
High
End
Luxury
Vs
Mass
Market
So
buying
a
stake
in
PropNex
International,
JLL
has
ventured
into
the
mass-‐
market
business
overnight
in
an
arena,
which
it
was
not
a
participant
previously.
However,
the
main
reason
may
lie
on
JLL’s
inability
to
recruit
new
agents,
which
have
stagnated
to
below
couple
of
hundreds.
With
more
projects
from
developers
to
sell,
JLL
does
not
have
enough
full
time
commission
agents
who
aggressively
market
them.
Buying
a
stake
in
PropNex
2. allows
JLL
access
to
a
pool
of
over
5,500
agents
overnight
which
it
would
have
struggled
to
recruit
otherwise.
PropNex
has
on
the
other
hand
has
gained
a
recognized
global
brand
to
leverage
and
push
it’s
local
projects
overseas
which
otherwise
would
not
have
been
possible
in
the
past.
Size
Matters
At
the
end
of
the
day,
it’s
a
number
game.
X
number
of
Projects
+
Y
number
of
Agents
marketing
gives
you
sizeable
revenue
and
income.
“Y”
in
this
case
represents
a
strength
of
nearly
5,800
agents
combined
with
JLL
associates,
which
makes
PropNex
the
second
largest
agency
in
Singapore
It
does
not
take
a
rocket
scientist
to
figure
out
the
reasons
on
buying
outright
or
a
stake
in
a
company,
whichever
way
you
look
at
it;
it’s
a
win-‐win
formula
for
both
companies.
There’re
challenges
that
lie
ahead
for
both
organizations
with
the
integration
of
the
business
due
to
different
culture
and
style,
only
time
will
tell
if
and
how
they’ll
work.
Lessons
Learnt
For
any
company,
sales
and
generating
revenue
are
the
backbone
of
their
business,
which
is
vital
to
their
bottom-‐line.
Sales
staffs
in
general
are
either
on
very
low
basic
pay
and
paid
commissions
based
on
performance
or
on
full
commission
without
any
basic.
Unlike
many
other
industries,
most
real
estate
agents
are
on
full
commission
with
no
basic
pay.
Ask
any
recruiter,
they
will
tell
you
the
challenges
facing
when
trying
to
sign
new
agents
to
sell
your
projects
or
properties.
It
is
indeed
a
daunting
task,
therefore
buying
a
competitor,
be
it
a
stake
or
an
outright
buy
makes
sense
if
you
have
deep
pockets.
Other
industries
may
take
a
leaf
from
this
as
well
otherwise,
there’s
an
alternative
that
has
become
the
norm
in
business
these
days,
and
it’s
called
“Outsource”.
I’ll
write
on
this
subject
another
time.
nasser@aboobakar.com