As some of you in Singapore may have read, it was announced on 8th Feb 2018, that the Singapore government is taking steps to tech-up the real estate industry by, amongst other things, digitalise real estate transactions, through facilitating electronic contracts, payments and industry-wide document submission. A road-map has been drawn out with task forces already set and formed.
The objective is simple: to future-proof the industry, provide data-sharing between agencies and remove the tedium of administrative tasks, at least from the property agents, so that they can focus on more value-added activities for their clients, uplifting the service level and becoming less of a “tour guide” business. This is indeed a great move in the right direction.
Rating of Agents Across the Board
Property agencies such as OrangeTee & Tie had launched their very own real estate salesperson rating system with the objective of providing transparency of their own salespersons’ service standards from client reviews and ratings. While it is a good move for the government to take this on a nationwide level, it will be important to note that not all real estate salespersons skill sets and specialisations are equal.
Like how Grab segments their rides based on consumer preferences, the same needs to applied for a nationwide real estate salesperson rating system. For example, a real estate salesperson specialising in public housing (i.e. HDB in Singapore), may not be as well-equipped with the knowledge and skills to handle a private landed property sales transaction as a salesperson specialising in private landed properties. The rating system may need to take into account such nuances during implementation.
At the end of the day, it’s about providing a fairer playing field for the salespersons while consumers have the transparency of selecting the salesperson that best fits their needs. Perhaps a separate qualification is required for each property type to deepen the respective salespersons’ knowledge and expertise.
The Legal Framework: Electronic Transactions Act & Home-Sharing
Digitalising real estate transactions would also mean that the age-old exclusion of real estate in the Electronic Transactions Act (ETA) in Singapore is about to change. Briefly, the ETA excludes real estate transactions that results in a transfer of interest of a property. Liberalising this will be exciting as it will include a myriad of possibilities for the future of real estate in Singapore. Blockchain-based proptech applications and their ability to redefine the industry come immediately into mind. Our company, Averspace has been transacting digital rental contracts for just over a year and we welcome this change and flexibility to further deepen our value proposition.
Business models such as home-sharing are also being re-examined by the government with a public consultation targeting release before April this year. This is timely as occupancy and rental rates of rental apartments in Singapore have been lackluster for a while. Besides, based on our observation, the yield on a typical well-managed AirBnB property tends to be higher. It therefore makes good sense that the government establishes frameworks around this given that its also another potential means of tax revenue – hence the e-commerce tax which is currently still being studied.
Crystal Ball Gazing
Recently, I had the pleasure of conducting guest lectures at the School of Design and Environment at National University of Singapore and Ngee Ann Polytechnic. It was both a rewarding and insightful experience with these young and curious minds as they question the role of technology while we stretch their imagination on its possibilities. During the lectures, we also conducted a simple survey across an accumulated 500 student attendees, which we thought had pretty interesting results:
- About 50% of the students who responded expect digital real estate transactions to be mainstream within 3 – 5 years.
- 66% of the respondents will transact their property by themselves through digital means.
It seems that digitalisation of real estate transactions and services is here to stay with self-help transactions forming the main bulk. We may just see a “Darwinian-like” environment for the current 28,000 real estate salespersons in Singapore in the coming years.
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