News: Developers offer fatter commissions for less ideal units

Aug 13, 2019

In a bid to move harder to sell units, such as those with less attractive facing or ground-floor units, some developers incentivise property agents by offering higher commissions. 

Developers may also give out incentives or a cash bonus once the choice units are sold, reported The Business Times.

“It has been mostly the boutique to mid-sized developers who pay out higher-than-normal commissions for the unsold inventory in their high-end basket of projects,” said Alan Cheong, executive director for research & consultancy at Savills.

“In today’s market, agents expect developers to pay a minimum of 2.3 per cent commission for them to be motivated to clear any project…And for a boutique project, to get the visibility up, the commissions must be higher than 2.3 per cent.”

In some cases, commissions could even go up to three to four percent.

Cheong noted that commissions rose to about 1.5 percent last year following July’s cooling measures and have continued to increase this year. This comes as initial month launch sales rate dropped from 22 percent in the second half of 2018 to 12 percent in the first half of 2019.

“It makes more sense to offer agents higher commissions as opposed to cutting prices across the board. This could also lead to a price war with other developers, which is a lose-lose situation,” said Nicholas Mak, head of research and consultancy at ERA Realty.

SL Capital’s Sky Everton is said to be offering commissions of up to three percent, while commissions for the Affinity at Serangoon, which is developed by an Oxley-led consortium, is up to 3.7 percent.

Logan Property is offering commissions of 1.8 percent for The Florence Residences, and additional cash incentives that could range from $5,000 to $20,000 for certain units.

One consultant, however, noted that projects which are expected to receive strong demand may offer commissions of less than two percent.

Commissions for Frasers Property’s luxury development Rivière is said to be 1.8 percent, while City Development Limited and TID is offering commissions of around 0.9 percent for EC Piermont Grand.

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Fiona Ho, Digital Content Manager at PropertyGuru, edited this story. To contact her about this or other stories, email fiona@propertyguru.com.sg

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