DEADLINES loom for local students armed with freshly minted GCE A-Level results to apply for places at local universities. Is studying real estate worth considering?

An academic once told me that some parents objected to their offspring pursuing studies in real estate because they did not want their children to become property agents. My thought balloon was: Why not be a property agent, as some agents are earning much more than many of their peers?

Market leaders in the property agency business here did well last year. Compared to a year ago, PropNex saw revenue up 87 per cent to S$957 million and net profit up 106 per cent to S$60 million in 2021. Year on year, APAC Realty logged a 115 per cent jump in earnings to S$35 million as revenue rose 87 per cent to S$740 million in 2021.

Years back, I worked in investment banking, which has similarities to the property agency business. In the former, one helps clients raise capital or make corporate acquisitions, while in the latter, one helps clients trade real estate. In either business, one takes a slice of the transaction sum when a deal closes – and can do rather well financially.

National University of Singapore offers a Bachelor of Science (Real Estate) degree programme while Singapore Management University offers a real estate track for business management students who major in finance. Real estate programmes can help students learn about the interface between the spatial features and financial attributes of real estate.

The above skill sets appear to be relevant in the property business.

In property development, project conceptualisation is a key success factor. Securing sites from government land sales here is a transparent process. Given the competition for sites, profit margin from property development tends to be low. If the positioning and configuration of units in a housing project are right, sales can be faster hence boosting the internal rate of return. If the position, design and mix of components of an integrated development work, the project’s gross development value (GDV) rises.

Develop in an unproven location or bring a new concept to market, and profit becomes juicy or disappears depending on whether the idea works.

The other key skill in property today involves finance. This includes managing capital expenditure, putting in place the right capital structure, capital allocation, securing funding and scenario planning. The growth of a vibrant real estate fund management sector here coupled with rising GDVs of projects has likely upped the need for cutting edge financial skills.

Industry leaders

A study of major property groups reveals many leaders with spatial or financial backgrounds.

On the spatial side, Liam Wee Sin, group chief executive of UOL Group, has a degree in architecture, while GuocoLand’s chief executive officer (CEO) Cheng Hsing Yao holds degrees in architecture and design studies. Philip Ng, who heads the privately-held Far East Organization, holds degrees in civil engineering and city planning. CapitaLand Investment’s (CLI) group CEO Lee Chee Koon holds degrees in mechanical engineering.

On the finance side, the group CEOs of Mapletree Investment, Hiew Yoon Khong and City Developments (CDL), Sherman Kwek, have work experience in finance. The former holds degrees in economics while the latter holds a degree in business administration majoring in finance and marketing. Jonathan Eu, CEO of Singapore Land Group, is an economics degree holder, while the CEO of CapitaLand Development, Jason Leow, is a chartered accountant.

Some groups have a mix of talents from spatial and finance backgrounds in their top ranks. Mapletree’s chairman Edmund Cheng holds degrees in engineering and architecture, while CLI’s chairman Miguel Ko holds degrees in economics and business administration and is a certified public accountant.

But there are leaders who hail from more non-traditional academic backgrounds. CDL’s executive chairman Kwek Leng Beng holds a law degree. Ching Chiat Kwong, executive chairman and ceo of Oxley Holdings, graduated with a Bachelor of Arts degree and a Bachelor of Social Sciences (Honours) degree.

A useful degree

Choosing what to study in university can be daunting as digitalisation and the rise of artificial intelligence are disrupting the world of work. On reflection, studying real estate merits serious consideration as property is a vital and growing sector here, which means there are good job opportunities in the sector.

Property is well represented in Singapore’s benchmark Straits Times Index (STI). Four property groups – namely CLI, CDL, Hongkong Land and UOL – and 7 real estate investment trusts (Reits) are constituents of the STI. Another constituent of the STI, Keppel Corporation, has property as a big part of its business.

Singapore is a hub for Reits. New trusts continue to get listed here while existing Reits are active in growing the size of their portfolios and raising capital. Property developers here are taking on projects of greater complexity and higher GDVs such as integrated projects. Family offices, sovereign wealth funds and institutional funds are busy foraging for property investments in Singapore or elsewhere from offices here.

Warehouses and data centres may grow more valuable while some office towers and malls could struggle. But the need for high quality physical spaces to live, work and play in is evergreen.

Governments intervene heavily in real estate. Property is part of political discourse – whether to clear green spaces for housing, levy higher taxes on home-owners to fight inequality, or do more to keep housing affordable for young adults, and so on.

Leaders such as Lee of CLI, Cheng of GuocoLand and Liam of UOL have public sector experience. Perhaps having spatial, financial and public policy skill sets is useful in the property arena.

One does not need a real estate degree to be hired by a property group or to climb the ladder in the property sector. Still, what is learnt in a real estate course has useful application in a resilient and growing sector, which makes studying real estate a solid investment.

Source: Seeing value in pursuing further studies in real estate, Real Estate – THE BUSINESS TIMES