Wednesday, December 1, 2021

How much did the top property agent in Singapore earn 2020 - 2021?

Following the announcement by the Council for Estate Agents (CEA) that they have published a complete record of all residential property transactions facilitated in the past 24 months by property agents in Singapore, i just had to fulfil my curiosity to know how much they are making. 

This is not just an issue of being a 'kaypoh' which i won't deny but yours truly did consider being a property agent many many years back. You see, from my adolescent eyes back then, i have observed that property agents drive nice cars. Usually their cars are continental ones and i can't be faulted for thinking that a property agent career is a one worth considering right?

Until i went for my first NS reservist and had a conversation with a property agent who drove a Audi TT back then who told me that their managers " persuaded " their downlines to drive flashy cars because a salesperson in debt is a hungry one. 

From the CEA data from the years 2020 and 2021, the transactions by the top property agent are as follows. 

2021 has not ended, so transactions in 2021 are up to October, inclusive.

I don't know how this salesperson did it but its amazing. 

There are a total of 607 transactions in 22 months. This means on average,  there are 27.6 transactions in a month. 

Basically, this salesperson is closing a deal every day. Respect.
The data from CEA is only for residential properties and it does not contain data for commercial properties, so the number of property transacted may actually be higher.

In Singapore, there is no fixed rules for commission rates. But for HDB and private properties, the industry practice for commissions are generally different. For HDB resale, the buyer has to pay 1% while the seller has to pay 2% in commissions. For private property, only the seller has to pay 2% commissions. The commission may also have to be shared if there is co-broking involved. 

For simplicity and to be conservative, the commission rates will be assumed 1%. For rental, the industry practice is 0.5 months for 1 year of rental which will be used for the calculation. 

Due to the very varied prices of property, let's further assume that the average HDB transacted cost $600,000. The average condominium and apartment transacted cost $1.2 million and the average landed property cost $3 million. 

Accordingly, let's assume the rental for HDB is $2000 per month. Based on the CEA data, this property agent does whole room HDB rentals only.
The rental for condominium and apartment cost $3500 per month and the rental for landed cost $8000 per month.

These figures above, in my opinion, are very very conservative. 

This makes the one month revenue to be $1.73 million. If one is to take into consideration the number of lock downs and covid restrictions for 2020 and 2021, this figure is even more supreme.
Of course, their actual earnings are much lower after considering marketing fees, petrol and so on.

Before you jump on the property agent band wagon after salivating at the earnings above, it would be better to delve deeper and check if it is indeed a rosy rosy as for the agent above who made 607 transactions.

There are a total of 19,742 agents that transacted in these 22 months in the CEA data. Transactions in the data also include one room rentals which the alpha agent above did not do. 

The alpha agent did 607 transactions in 22 months but the median number of transactions sold by property agents are 6, which may include one room rentals as some of the transactions. 

All is not what it seems.

Saturday, November 27, 2021

Mapletree Logistics Acquisition of China and Vietnam Properties - Effect of Income Support

I think it is important for people to take note of income support for reits and things may not look as rosy as it seems based on the headline figures.

For example in 2018, it was reported that  Keppel reduced its rental support for Keppel Reit and its DPU fell.

The recent headlines about Mapletree Logistics Trust acquiring 13 China properties and 3 Vietnam properties through issuing rights must have gotten little attention due to many new Reits having IPOs lately, Daiwa House Logistics and Digital Realty.

Headline figures for the China and Vietnam properties paint a very rosy picture of a forecasted rise in DPU, post acquisition of 1.2% .

Sounds good right?

But take note that this includes rental support for 1 year post acquisition by the sponsor.

Stripping out the rental support, the DPU remains unchanged.

Not all rental supports are bad and in theory, the reason for such a practice is to stabilize  the rental income of new properties before they reach their "potential" .

But one can see the potential for exploitation. 

This "potential" may never materialize but only serve to inflate the acquisition price, causing shareholder value destruction.

Only time will tell. 

Investing is having faith too.