SINGAPORE — Two homegrown property brokerage firms — PropNex Realty and Dennis Wee Group (DWG) — are merging to create Singapore’s largest real estate agency with a combined salesforce of about 7,000 people.

PropNex and DWG announced the merger on Monday (June 12). Both companies said that “there is no dollar value attached” to the merger. DWG’s 1,071 agents will be placed with PropNex, which currently has 5,855 agents.

The merger comes amid the tough economic environment and challenging times for the real estate sector, said Mr Ismail Gafoor, CEO at PropNex. More small- and mid-sized agencies are likely to team up with the bigger players in the coming years, he said. PropNex is exploring options with two other companies, but declined to give further details.

The industry is going through a period of consolidation and there is only space for “two or three big real estate agencies in the country”, noted Mr Ismail. 

As the real estate market in Singapore is relatively “small and fragmented”, companies must create a niche for themselves, he added.

With 6,243 agents, ERA Realty is now the second-largest real estate agency, followed by Huttons Asia with 3,107 agents and OrangeTee’s 2,646 agents.

Last year, PropNex transacted around 40 per cent of all private, resale and public housing deals in Singapore, and almost 50 per cent of all luxury homes deals.

Dr Dennis Wee, chairman of DWG, said that PropNex and DWG “share a culture that is aligned”. 

Pledging to build on the shared local expertise of the homegrown brands, he said the two companies would be a “formidable force” in the real estate industry. 

PropNex Realty will take over DWG’s existing 23,000 square foot office at Toa Payoh as part of the agency’s expansion to “provide ample facilities and support for its salespersons”.

“PropNex Realty will provide greater opportunities and long-term growth for our salespersons,” said Dr Wee, who will take on the role of senior strategic partner at PropNex.

The transition is expected to be completed by the end of next month. DWG said it will separately focus on its other diversified real estate businesses including valuations, project marketing, investment sales and international investments. 

Meanwhile, PropNex said it will grow its regional network. Founded by Mr Ismail in 2000, the company partnered with Jones Lang LaSalle in 2014 to expand its international presence and extend its reach into the high-end residential segment. 

“Our strategy is to set base at one regional market every year. We set up operations last year in Indonesia, where we now have 1,000 agents. Our next step would be to grow in Vietnam,” Mr Ismail said.

Analysts say the industry consolidation is led by the nascent recovery in the property market.

“The property market, especially residential property market, is poised for a strong, substantive recovery ... Hence, it is opportune for mergers and acquisitions that result in not just economies of scale, but also good synergy among merging partners,” said Mr Ong Kah Seng, director of R’ST Research.

With the return of collective sales — like Rio Casa, Eunosville and 

1 Draycott Park — which fetched higher-than-expected prices, the demand for en-bloc deals is poised to grow. 

Mr Ong said homegrown established property businesses are especially well-placed to chase after such opportunities. 

“Job cuts are inevitable as with any consolidations but it will be very slight in numbers, as the market is recovering and there are more potential opportunities to chase.”