The shift to digital: The impact of COVID-19 on real estate

How we’re shifting to digital

The pandemic has affected the global real estate industry into a new paradigm, resulting in numerous changes that we as real estate professionals must be aware of.

Prior to the event “The shift to digital: The impact of COVID-19 on real estate” hosted by Property Flow on March 16th, 2022.

A live event dedicated to re-establishing an ecosystem for real estate agents and firms, in collaboration with our partners: Dot Property, DDProperty, Thai Housing Market, Property Scout, and Kaidee.

Without a doubt, the pandemic has had an influence on the digital world. This shift has influenced how real estate professionals will need to adapt in order to remain competitive in the coming years.

Hear from expert panelists about the future of the real estate market, the trends to be aware of, and how to prepare for them so that you can stay ahead of the game rather than being harmed by it.

The following are some of the questions that were discussed in the panel.

How has COVID shifted the market, and how did it impact on people who are currently looking for a property?

Property Scout – Salita Kamnerdsiri: There has been some shift in the company’s perception of what clients want. Categorizing from product, pricing and digital transformation.

• Product – From looking for one bedroom or studio apartments, many have started searching for one bigger one bedroom or a two bedroom property, or even a house (preferably outside the city more now, because it’s cheaper).
• Pricing – Clients seek the best property value, which does not necessarily imply the lowest price. That is, while customers were willing to pay 20,000 baht for a 35 sqm room, they now prefer 40sqm space for the same price in S central along with other special packages from the agency. However, clients began bargaining on room prices more frequently during the pandemic, and most bargaining prices went up to at least 15%-20% discounts. Some were even up to 50% and all inclusive.
• Digital transformation.

Dot Property – James Claassen: Prior to Covid, people were still interested in condo living, with large numbers of people buying units in the city.

The majority of traffic and interest is directed toward high-end housing. They are now considering moving to houses outside of the city while continuing to work in the city.

Most companies allow remote working from home, many families relocate to houses with gardens in order to feel less isolated while also providing more space for their children to grow up in.

Interest was also shifted towards coastal regions, outside of bangkok. Especially at the beginning of the pandemic, though not many have gone through with it.

Kaidee Property – Mohammad Hossein Rafatnejad: Based on the transaction-side experience over the last 18 months.

More of the trends may be shifting toward lower-cost units. People are still interested in streaming condos, which are priced between three and five million baht. It’s still selling well, despite the fact that it’s a little more difficult to sell.

However, the sale is expected to fall further over the next few years because of the economic crisis. Which hopefully will recover itself.

DD Property – Ryan Thong: The supply has shot up by two hundred – three hundred percent in terms of the number of listings on the property. Rent has been trending lower in comparison to sales prices. The market for townhouses is currently stable.

International parties’ interest in high end properties has significantly decreased. Many people choose to end their current lease (and forfeit their deposit) and move to another condo with lower rental listing price.

Thailand Housing Market – Mike Schuett: In terms of technology, we are attempting to find better solutions for agents. What we’ve seen in the last 12 to 18 months is a decrease in physical showings.

We’re currently working on software features that will assist our agents, such as virtual tours and 3D tours to place on the website, featuring more units. Because fewer people don’t physically show up to view the property due to fear of COVID, clear images should be provided for a better user experience.

70 percent traffic comes from social media such as Facebook and Instagram. This has been going on throughout the pandemic.

It was never so easy creating an account, uploading listings, etc. However, we have had a lot of new single agents in the market.

Property Flow – Jostein Aksnes (moderator): The key takeaway here is that there’s a lot of good deals to be made for condos. People are moving out to the suburbs to stay away from COVID for a better quality of life.

Future real estate strategies

The strategy in the next few years is taking agents commissions. Basically on the expense of agent growth, they are now going to take a bigger platform agent towards more transactions.

How do you guys see this now? One thing is the business model but also how does this affect the agents moving forward and how to ensure that we are not categorizing the agents that are paying your bills?

Dot Property – James Claassen: It’s not something that we’re moving into in the near future, but in my personal opinion, property portals eventually have to move into a second piece of the commission (meaning taking a portion of the transaction.)

I think that’s where all the property portals will go eventually. They’ll get by holding the percentage or a portion of the percentage on commission for the transaction where it’ll finally take place. But in order to achieve that you need full transparency in the market.

You need honesty and visibility from the agents (both on rental side and sales).

However, we still don’t have that in the market here in Thailand at the moment and I think it’s very far away from having full transparency visibility. Until you can achieve such a point, we include a CRM system with the portal attached to it where you can monitor transactions from entry to completion.

Subscription is the way to go, it’s the only way that you’re going to make any sort of revenue, keeping your business flowing. As well as keeping your marketing efforts up in order to provide a valuable service to the agents at the end of the day.

Kaidee Property – Mohammad Hossein Rafatnejad: There are three different business units.

• Transactional type: We work on new condos and get the deal from developer directly. We help agents with affiliate model. In the MPG group, big chunk of ourselves is coming from affiliates. In countries like Pakistan, Morocco and Bangladesh all of our agents are getting traffic and leads from portals. As well as receiving other good news from our exclusive projects.
• Classified listing: We never touch the secondary markets on the sales side, which is for agents and rents. For the developer marketing side, we are currently generating leads for developers, we never list them as a listing in our portals. Which means we don’t share the lead share of agents within the showing of all three parts. We are very careful about not using our agencies.

DDProperty – Ryan Thong: It is forbidden to talk about moving into agency agents business, selling properties. Reason for that being is that it is a portal, where all the agents and agencies place their mistakes.

If the portal itself sells or rents properties on the road or they have a kind of subdivision, which creates potential biases.

Agents are now trying to get higher, better performance, more exposure for the listings. On the other hand, when trying to place into the same market/same part, that creates biases.

Meaning agents will not trust listing their property problem because the subdivision could adjust, take any of those things and then release them as their own.

This is something that has been discussed previously in the years before, it was shut down by our senior management.

We have seen some other portals do this before, we simply believe that this is something we need to control since it’s a threat to every agent. If you spend more of you get more experiential, with the future distance.

Thailand Housing Market – Mike Schuett: Our business medel is completely different. If I may speak freely, I don’t believe in charging for accounts.

Everything we’re providing is complementary and unlimited. So the agents regarded as a broker agent themselves is able to upload as many listings as they want.

They’re also able to receive as many leads as they want. So there is no taking cuts or transactions. However, we are providing certain software features which is enhancing the business, meaning creating brand awareness for your agency or by making the workflow easier by social sharing features, APIs, etc.

Following up to Mike Schuett responses, from James Classen – ISO model, it’s something that has been seen coming for quite some time, decades even. Agents or people are trying to go into this 17 model, by getting rid of the agents.

This method has been tested before, some works in some cases but it has never been fully successful. So there’s always going to be space for an agent. I also didn’t think in the past couple of years with the COVID and all.

The ISO model didn’t kick off or work as well as people thought it would. A lot of them struggled, they lost a lot of money and you can see with the solar model in the states, that they struggled immensely with their isolated panels.

Property Scout – Salita Kamnerdsiri: Our company is not property councils and we are not trying to be one as well. So speaking as an agency, and after hearing your thoughts, the last statement is actually true.

There are many available rooms in the market, enough for everyone that aren’t in an agency or on public portals.

How much do you think the commission is generated in Thailand per year? – Billions of dollars/baht per year.

We are all here for the same reasons and purposes, so it’s important to share and help one another rather then compete with each other to make this ecosystem work again. So when hearing some of the points that we have discussed, don’t be afraid.

Just focus on what you are doing right. Whether it’s to be the leading transactional property agency in Thailand then later moving out towards Southeast Asia if you wish.

New business models in real estate

Are you worried about these new business models? Would you say that tech enabled agencies. Agencies that are transactional businesses that are going towards lead generation and getting ready to get on leads at MLP dependent on the ports. How do you see this kind of payouts?

DDProperty – Ryan Thong: Because of the danger of COVID, most people have turne to virtual tours and virtual events. When a client is satisfied with what they see online, they will then request an in-person tour with the assigned agent.

Follow up question from Jostein – Was there an increase in number of impressions, number of behaviors, and inquiries for properties in these views. Is it significant, or is it worth it spending 100 dollars?

• Depending on the price of the property, if you’re trying to sell a 1 million baht property, it’s not worth it. But for a property that’s worth 5-10 million baht, it helps the agent manage the whole time, because you want serious buyers who have viewed your offers, and agree with the arrangements. For virtual events, not many usually show up to view.

Dot Property – James Claassen: The big concern with these players is the amount of money that they’re going to pay us for subscriptions, because they’ve got…. If you’re a good quality agent and you deliver a good service to the buyers, your renters or sellers. There will always be space for you in the market.

They’ll always get a portion of the commission. In terms of taking a part of market share as portals, I don’t think so. With decades of experience in generating leads and with the current situation with DB as well.

Big organizations behind them that have massively been successful, highly-skilled individuals, generating leads and traffic. For generating traffic on the sites in order to optimize the website, optimize the listings, increase consumer engagement and generate quality leads to the agents, I’m not so worried.

Kaidee Property – Mohammad Hossein Rafatnejad:There isn’t any fine line between agencies and portals. This is the lead business. So anyone who can get the leads in 7 minutes, as an agency you’re going to check, what’s your cost per lead?

What’s your cost per visit? What’s your cost per transaction? Then you’re going to compare it, working with all of us, including Facebook.

They’re going to make leads from their own portal. In the end, if a company is able to generate leads, they’re going to survive. If any agency gets to a level that they can create their own lead, then they probably don’t need the others.

They’ll only do so if the want to have a bigger share.
Based on our group experience, we always started with classified because on that side you get the organic traffic. We have countries with 80-85% organic traffic.

If you want to invest that much money on generating lead that’s going to be a huge amount of investment. This is why on transaction side, coming back to agency world. It’s always easy at the beginning, but it’ll require more money to continue building the traffic, bringing leads and finally doing the transaction

• Numbers – In February, not classified sites included. Based on transaction developer marketing and speaking, we generated more than 20,000 leads. Creating all these leads is not easy to do, it takes a lot of marketing efforts, experience and huge investment. So for anyone who’s ready to do such an investment, they can probably be agency portal with twenty-one.

Thailand Housing Market – Mike Schuett: Agency cares about the return of investments. How much does it cost me to get a client?

The rise of digital agents

Looking at the digital agent now, what is not preventing anything from actually taking the step out, and getting rid of your accuracy files. How do you bring the business online? What is preventing Thailand from going to the digital age? Because it’s about emerging markets on how the industry works, open listings, duplicated listings etc.

Dot Property – James Claassen: First you must weigh up your resources and budget. If you think you can do the marketing to generate the lead by managing it yourself without needing any help from the portals, it might be costly. Because you need extra people, some overheads will take away your time from selling.

A few of the agencies have gotten it right but bear in mind the pause will spend millions on marketing. We ensure that we generate leads to the agencies. Where the agent then just pays the fee, subscription or any other way. Generates leads anyway without having to put in the effort of understanding digital marketing and becoming a digital marketing specialist themself.

Partner with one of the portals but also get a CRM system. Coming from South Africa, where I work, there were only two competing property portals. I’ve worked there for 10 years, and there were nine CRMs software providers competing for business.

We own one of them, meaning we have our own industry system, and I would highly recommend Thailand agents to get a system as well. It’s the easiest way to manage your listings, sellers, office, finances, and expenses, everything.

As well as fees towards portals. Same with DD Property that’s also acquired a couple more portals in the business in Thailand, we did the same. Without a profit system, you get access to six property portals in Thailand. Increases the exposure of your listings and the chance of generating sellable contact with…

DDProperty – Ryan Thong: For an agency, it’s always good to start a CRM system rather than just using excel structure. Our sales team uses a CRM system, keeping track of the sales and propositions, so on. Any technology that can help your agency improve efficiency, or allows you to keep track of your agent’s and business performances, then you should try to invest in the system.

International market changes

With the COVID situation we have less buyers coming in from China. There’s a change in the international market. What’s your advice for the agents in 2022? Is the market back on track or will the market recover? How do you get back on track? How do you promote winning?

Property Scout – Salita Kamnerdsiri: My advice for all the agents would be, to really focus on what you’re doing. If you have a lot of properties that your company needs to work with. Having the right technology tool is important in order to effectively support you, such as CRM.

We too, use CRM in order to follow up with our clients, what is the next step that we need to take with this deal. We have one of our partners here as well with us, the host, who provides the following, Property Flow.

With the market constantly shifting due to COVID which makes it difficult to predict what could happen. At Property Scout, we found in October 2019 till the end of 2020. We had to have a meeting every week in order to adjust and shift a few of our plans. It was quite hectic at the time, for everyone.

If you are an agent, I would advise you to stay in a niche market first. Start by building your portfolio of your specific price range and area first, then once you cover these two you can jump into other areas. Once you arrive in the leads, the only product that you have is not just assets. The product you have is service.

So you have to really maintain your high-level of service, and providing excellent service. Sometimes it’s good to take a step back and take an overlook on what you are doing right now, the service that you’re actually providing to your clients.

For us, client is not only turning buyer. It’s turning buyers, landlord owner, seller, property models, developers and co-brokers, these are all our clients. So if you’re dealing with a client, you need to have a better understanding of their pain points, how are you going to provide a solution to solve their problem focusing on each of its pain points. This is how you grow.

Dot Property – James Claassen: Keep an eye out if you’re an agent that deals with new developers. What are the developers doing? This will kind of show you what trends are emerging and will continue to emerge in the future. So if you pay attention, the last couple of months about the PR news that developers have been releasing. They’re moving into low-rise condos outside of Bangkok.

The announcement of their project launches in and around Bangkok region and on the outskirts. Keeping an eye on your developer will help you pivot your business if you’re struggling to close any transactions at the moment.

If the developers are saying that they’re going to release condo units in the middle of Bangkok, great, continue what you’re doing.

But now that they’re shifting their focus to more of the consumer livable, low rise units (not necessarily building for the low cost mass units for investment). If there’s an opportunity to partner with some of these developers who’re involved with low rise units that they’re launching, it might be good to consider.

Kaidee Property – Mohammad Hossein Rafatnejad: On the property side, the recovery rate will probably take longer than other sectors. This year we believe it’s going to still be a local market, an international market we should’ve expected that was coming.

On the agent side, one of the main issues everyone mentioned is that, because there are so many listings, the chances of finding you in the market online is low. Someone should consider taking the risk here and react differently in the marketing, meaning taking a different approach in order to always guarantee sales or rent.

On this day you need to have exclusive deals and something that the others don’t have. Combining good strategy, marketing and an effectiveness on the sale side can really bring you success.

Thailand Housing Market – Mike Schuett: CM is a must have, otherwise you won’t be able to follow easily with your leads. Unfortunately, we have noticed that almost 70% of the leads we’re providing to our agents are not even being answered, resulting in unsatisfied clients. Clients which pay for the agents.

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