Categories
Real Estate Knowledge

The Way We Search For Properties Is About To Change | Here’s Why

Purchasing property can often turn into a hair-wringing exercise:

  • What should I buy?
  • Where do I look?
  • Whom should I trust?

Investors have had to face these worries time and again. But the way that we find real estate information, both locally and overseas, might be about to change drastically. If you’re looking for properties, this crucial shift could bring you innumerable benefits. Let us explain.

On Oct 28th, 2021, the Consumer Council (an independent statutory authority whose role is to enhance consumer welfare and empower consumers) released a report titled “Purchase of Properties Outside Hong Kong – A Study on Enhancing Consumer Protection”. It has created a wave of discussions within the industry. 

You can read the entire report here.

To summarise:

Since the 90s, local property agents have been licensed under the Estate Agents Ordinance (EAO), whereas “Properties Outside Hong Kong” (“POH”) agents are exempted from licensing. This means that overseas properties can be sold by both licensed and unlicensed agents. Over the last few years, POH-related complaints have increased significantly, citing inaccurate and misleading property advertisements. Between 2018 and 2019, the Consumer Council received 27 and 37 complaints. The number rose to 56 by 2020, and has even skyrocketed to 106 in the first eight months of 2021!

Some tricks to deceive home buyers are the following:

  • The exaggeration of returns and unit size
  • The publishing of fallacious property addresses in advertisements, 
  • Missing important documents, 
  • Agents not even knowing how to read the language of their advertising material,
  • Refunds that can be almost impossible to get back

In light of this, the report states 5 recommendations to protect Hong Kong consumers. In essence, the situation has urged the Consumer Council to call for an increase in regulations on POH agents, including licensing, and tighter control of advertisement information.

As a whole, we are overjoyed that the Consumer Council has raised the urgency of having a code of conduct in the real estate industry. This is one of the main reasons behind why we built Denzity in the first place! But while regulating the real estate industry might be needed, it should not be the first line of defence. More regulations may risk stifling the industry, as highly competitive as it already is. Undoubtedly, many big firms would eventually adapt, but smaller companies would be adversely affected – as the barrier of entry for new and small players is raised.

Instead, we need to look towards PropTech and Digitization! Here is why.

Before the pandemic, the traditional effective method of attracting homebuyers was to set up property exhibitions, providing a one-stop solution for real estate agents to introduce properties and try closing deals in person. Evidently, minimal technology has been a staple of the industry.

Post pandemic, the traditional model has been affected dramatically and property exhibition attendance has dropped by 15% yearly – from more than 1650 exhibitions in 2019 to around 1400 exhibitions by the end of 2021! Everything has digitally migrated and the biggest problem investors and homebuyers face today is how hard it is to find real estate information. Aggravatingly, the bare minimum you can expect to find tends to be fragmented and unreliable. This not only creates the perfect environment for scams and malpractices to fester but severely undermines the customer experience, reflecting poorly on the entire industry itself.

The root cause is this – there is no centralized source for accessing trusted information and expert opinions.

This dynamic has clearly shifted:

Digital marketing has become more crucial for real estate companies to attract potential investors. 77% of investors prefer real estate companies with an online presence to vet their expertise, and 73% of owners prefer agencies that have high digital marketing capabilities. 

While other industries have a trust-building ecosystem online (such as Openrice for restaurants and Trivago for air travel) to help users navigate the market, community building has the potential to become an important fact-finding tool within the property market. 

We must support companies that share the value of delivering trusted sources and holding themselves accountable. All stakeholders involved should be supporting digital and PropTech efforts to create clear channels of information sharing, where investors and homebuyers have the ability to respond to shady practices and poor customer service – such that it becomes harder for bad actors in the industry to escape scrutiny, automatically punishing misconduct with a “time-out” from the market!

So, where do we stand now?

Already, more than 80% of real estate companies have increased their digital marketing budgets by 50%. The last three years have also seen over 100 startups in Hong Kong step into the PropTech space. But there is still a long way to go. While the figure may be growing fast, only 150 out of 3,888 licensed real estate companies in Hong Kong have an online presence. 

We can no longer ignore the power of technology – it can be the solution that ends industry malpractice and misinformation. Meanwhile, regulation can be a secondary safety net, to catch any cases that fall through.

Our Take-Away:

As real estate professionals ourselves, we share the same frustrations as others in the industry. This issue was the exact reason Denzity was founded and what drives us forward! Investors and homebuyers should feel empowered and educated, with easy access to a larger variety of options and information when it comes to finding properties online.

We want to work with credible companies that take the responsibility of putting forth their best information and engage sincerely with the community. If you are part of the industry and feel the same as we do, reach out to us. Let’s discuss how we can help and build an ecosystem that’s efficient, investor-friendly and reliable.

Contact Us here !

Blog: https://www.denzity.io/blog
LinkedIn: https://www.linkedin.com/company/denzity
Facebook: https://www.facebook.com/Denzity.io
Instagram: https://www.instagram.com/denzity.io/

Our community has something to say:

“Our team at CBRE Asia Pacific is so glad that the Consumer Council is paying attention to the overseas residential market in Hong Kong and is calling for regulation. It ensures that buyers are protected when making important decisions such as where to invest their money.

As a fully licensed EAA business, CBRE Asia Pacific ensures all necessary due diligence is acquired on any development we bring to the market and we pride ourselves on working with best in class developers. Conducting proper due diligence and providing accurate insights is crucial in our role in the industry. We look forward to discussing more with other leaders in the industry on how we can build a better framework to benefit society at large.”

Ludo Downey

Head of International Residential Sales

CBRE Asia Pacific

“At Asia Bankers Club, we always strive to ensure the accuracy of information we give out in regards to our projects to protect, to the best of our abilities, the interest of our buyers. As real estate professionals and investors ourselves, we understand our buyers’ needs therefore we perform due diligence for all of our projects. This proposed legal change is welcomed as we recognise the importance of a comprehensive service from selling to delivering our projects.”

Kelvin Wu 

Executive Director 

Asia Bankers Club

“As a professional real estate agent, I agree that overseas property agents should be under an examination and licensing system. However, I’m also concerned the existing “Estate Agents Ordinance” may not cover all situations, since property sales abroad involve various countries. It would be difficult to establish a standard set of regulations in Hong Kong. I foresee issues arising in relation to regulation, training and licensing.  This matter would benefit from consultation with different shareholders.”

Manci Man

Co-Owner & Managing Director

Century 21 Goodwin International