High-end broker E&V aims for Bangkok market growth

07 July 2008

The upmarket residential brokerage Engel & Volkers (Thailand) Co plans aggressive expansion within this year by opening about 10 new outlets in Thailand, including seven in the competitive Bangkok market.

Managing director Martin Phillips said the company next month would open a shop in Samui to list both new and existing units offered for sale.

It also plans to add another shop in Phuket, where E&V opened its first outlet in late 2005. The company is also negotiating to open a shop in Pattaya.

As well, E&V is holding talks with prospective franchisees in Bangkok on the division of territory, to ensure that each one would have more or less equal business opportunities in operating a residential brokerage.

Each investor needs to pay 2.5 million baht for a 10-year contract plus an annual royalty. Normally, it takes about three months to set up a shop and fit the site to conform with the Engel & Volkers universal look. The company helps to find the location but the investor needs to negotiate the lease terms.

Engel & Volkers will apply a sub-market strategy in the capital, with shops in the central business district as well as suburban locations such as Lat Krabang and Rarm Intra where there are many new residential units with quality meeting the company's listing standard.

Garry Irvin, the company's expansion manager, said investors saw the opportunity to enlarge their business with good returns in the future.

Engel & Volkers worldwide currently has 333 residential shops and 32 commercial offices in 25 countries. It has sold 435 licences in all so more than 100 shops are still in the process of being established. The brand's turnover last year was 160.7 million.

Its statistics show that the average fee earned by licence holders is 250,000 in the first year of operation and increases to 400,000, 600,000 and 750,000 in subsequent years.

Mr Irvin said that franchisees benefited from a well-recognised brand, and a turnkey operation that the company supports in terms of establishment, coaching and training, and a global network.

"Although we are growing the network and are close to signing certain deals, we do still have some prime territories available," he said.

In Bangkok, E&V will focus on resales first and later start to list new units, which require a different set of skills.

Mr Phillips believes Engel & Volkers has no direct competitor in Bangkok. He said the capital's residential resale market was fragmented with local and international brokerages but there was no operator in the same style as E&V.

The company believes that its sub-marketing strategy creating brand awareness in designated territories will bring about good brand acceptance within one year. It forecasts that 70% of transactions would involve Thai customers and the rest foreign customers buying units in Thailand.

Engel & Volkers' research also indicates that 40% of customers purchased units through its shops because they were attracted by the shop design, so the company in Thailand hopes to repeat the proven success in other countries.

Mr Phillips, who opened the first shop in Phuket and is the master licence holder for Southeast Asia, said his shop last year sold assets worth more than one billion baht and he expects stronger sale this year, as the high-end market in Phuket is still firm. He plans to invest in a second shop in Phuket.

The company is also working on granting licences in other countries such as Vietnam, the Philippines and Singapore.

Source: Bangkok Post