Credo Real Estate Looks To Spread Its Wings

Source : The Business Times, April 10, 2008

Six-year-old outfit ventures into auction, eyes fund management

CREDO Real Estate, the No 1 collective sales broker last year with $2.17 billion of deals, plans to branch into new areas of business - including auctions, residential project marketing, valuation and even property funds management.

Managing director Karamjit Singh told BT: 'This lull in the en bloc sales market is giving us an opportunity to work on new initiatives. Last year, there were opportunities that came our way but we had to decline them because it was difficult to take time off to pursue them.'

Mr Singh: Lull in the en bloc market gives Credo a chance to work on new initiatives and also reflect, re-strategise, regroup and 'meet people'

'It was also very hard to entice good people to join us because they themselves were also very busy. So now's a good time to reflect, re-strategise, regroup and most importantly, to meet people,' he added.

Despite the quieter en bloc sales market today, brokering collective sales will still be the mainstay of Credo's business for now, although the firm is now very selective in taking new appointments.

In fact, the property consultancy firm is using the current slowdown to study the possibility of getting ISO 9000 certification for its en bloc sales business - possibly a first here.

'We're in discussion with an ISO consultant. Getting the certification will give added assurance to clients,' Mr Singh said. 'It means ensuring a certain minimum standard of output, process management and consistency so the en bloc sales part of the business can be run more efficiently and on a structured basis, as we expand into new areas.'

Credo currently has 16 staff and will be marking its sixth year of business next week. Mr Singh, 36, worked at Colliers and Jones Lang LaSalle before setting up Credo in 2002, which he runs today with fellow executive directors Tan Hong Boon and Yong Choon Fah.

The firm plans to enter the new businesses over the next 12 months, but much would hinge on finding the right people.

'We're still meeting people, going through the processes and making sure we find the right person in terms of energy, integrity and ability to be a team player,' said Mr Singh.

'We're not rushing into it. The benefit of getting the right person in our set-up is that we're able to provide a platform for him or her to own part of the company by joining us as an executive director while the company is still small.'

The first new business to get off the ground is auctions.

Credo recently appointed Irinn Lee, formerly the No 2 at DTZ's auction department, and plans to conduct its first auction around June or July.

To set itself apart from existing property auction heavyweights, Credo will not be auctioning individual shop units and apartments. Instead, the focus will be on development sites, good class bungalows and other investment sales deals, riding on the company's traditional strength as a land specialist.

Development sites could also include smallish en bloc sales involving a few adjoining landed homes.

'Our idea is to grow the Singapore auctions market instead of just grabbing the market share of existing players. Our auction house aims to be Singapore's only land auctioneer,' Mr Singh said.

Credo is also thinking of providing auction and tender services to smaller en bloc sales agents who may lack the expertise to do so - given that the revised en bloc legislation requires every site to be launched for sale by public tender or auction.

'Auction is the best way of selling a property where transparency is paramount - for instance, where multiple parties or members are involved, as in the case of a large family, religious organisation or clan association,' Mr Singh said.

He describes the proposed funds management business as a 'radical set-up' compared with the other new businesses.

He said: 'What we've in mind is to start off with a local focus. It could be a Singapore property development or investment fund, with a view to eventually branch out to Asian emerging markets.

'This will have to be a separate set-up from Credo. We can't compromise on conflict-of-interest issues. For instance, our funds will abstain from buying properties marketed by Credo.

'We'll need a team of professionals - in raising funds, shareholder management, sourcing and marketing of projects, designing, construction management. There's a shortage of investment sales specialists with localised knowledge who are in the funds management business. The idea is to sniff out opportunities. There's always a certain level of market imperfection that we could look to capitalise on.'

For its proposed valuations business, Credo hopes to zoom in on land valuations rather than do bread-and-butter mortgage valuations. Again, en bloc sales are creating a niche opportunity for valuations that Credo hopes to tap.

'Under the new en bloc rules, there's a requirement for valuation at every close of tender. Increasingly too, owners in en bloc projects are choosing valuation as the main method, or one of the factors in the formula, for apportionment of sales proceeds,' Mr Singh said.

And venturing into residential project marketing 'dovetails closely with what we're doing - selling land parcels to developers'.

'When the developers are ready to launch their new projects on these sites, we can extend our services and help them by marketing the project and offloading it for them,' Mr Singh said.