Speech by MOS Faishal Ibrahim at SEAA KEO and Leaders Conference
Nov 14, 2023
Mr Adam Wang, President, SEAA
Mr Edmund Toh, CEO, SEAA
Ladies and Gentlemen
Introduction
1. Good afternoon. I am delighted to join all of you for this year’s Conference.
2. First, I would like to thank SEAA for organising and inviting me to today’s event. I also want to commend SEAA for its strong partnership as one of the key industry associations representing real estate professionals and spearheading the industry’s growth.
3. The theme of today’s conference is: “Safeguarding your real estate business through risk mitigation”.
a. Amidst the uncertainties in the macroeconomic and geopolitical environment, it is ever more important for businesses to understand the risks they face, and how they can strategically mitigate them. Our real estate sector, with its exposure to many external forces beyond our control, is no exception.
b. As leaders in this dynamic industry, we will need to look ahead at how to navigate this increasingly turbulent and challenging landscape and at the same time, find opportunities to innovate and be future-ready.
4. Today, I would like to touch on 4 key risk areas affecting us, how we are mitigating these risks, and lastly, how you, as real estate leaders, can play your part to take your business to the next level.
Risk 1 – Money laundering and terrorism financing
5. I will first touch on the risk of money laundering and terrorism financing. Over the years, our Singapore economy has managed to stay competitive and been a destination of choice for many companies and investors in the region and globally.
a. This is made possible due to our strong governance, stable political landscape, an open, welcoming and transparent operating environment, and a skilled and competitive workforce that businesses can easily tap into. We have an extensive financial network with easy access to global capital and professional services.
b. Businesses and investors trust us and are confident in what we can offer. They establish their presence here, bringing along a wealth of knowledge and skills that contributes to our economic growth and prosperity. This in turns benefits our property market, attracting investment appetite and capital flows.
6. However, these very advantages which allowed us to shine, have also attracted bad actors trying to exploit our systems for their personal gains.
a. Recently, we have seen how a group of foreign nationals have abused our financial and property markets to launder their funds. They took advantage of our business-friendly banking systems that are designed to facilitate and encourage legitimate activities, and hid under complex corporate structures to avoid detection.
b. Our real estate sector is not spared from such ill intents. Property is a valuable and attractive asset class, and money laundering is often carried out through acquisition. We take this seriously, and will clamp down hard on anyone who abuses the system to legitimise their illicit gains.
c. As leaders and professionals of your industry, you are one of our key gatekeepers to counter these threats and uphold Singapore’s reputation as a global financial centre. Currently, we require all property agencies and agents to perform Customer Due Diligence checks on your clients. Anyone who has reasonable grounds to suspect that any property may be connected to criminal conduct is required to file a Suspicious Transaction Report.
d. It is crucial that property agencies put in place processes and systems to ensure that such due diligence are carried out. CEA will work with the industry to identify gaps and develop the necessary systems or capability to ensure compliance with our anti-money laundering and terrorism financing regulations.
e. While we cannot completely prevent people from trying to abuse our systems, your contribution and effort goes a long way in detecting and stopping them right from the start. This is a very powerful deterrent.
Risk 2 – Evolution of scams
7. Let me now say something about scams. We have also seen a proliferation of scams that are becoming increasingly sophisticated.
a. Gone are the days where scammers use brute force and get away with small amounts of money. Today, they deploy novel methods involving complex social engineering, aimed at one’s vulnerability and weakness. They impersonate family and friends, taking advantage of one’s desires and emotions. I am sure you have seen many news reports of victims who have suffered life-changing losses.
b. Our property market is not immune to scams too. We have seen scammers impersonating landlords to cheat unsuspecting tenants of their deposits. Fake property listings designed to bait prospective clients into parting with their money. Shady investment proposals or outright scams masquerading as legitimate offerings.
c. I am happy to learn that SEAA is committed in stopping such scams and has pledged to fight scams alongside CEA, SPF and the National Crime Prevention Council. This will be done through anti-scam campaigns and educating the public on how they can protect themselves against scams. Through regular reminders and sharing of anti-scam messages, I hope we can educate and protect our consumers better, so they do not fall prey to such scams.
Risk 3 – Economic uncertainty and market risks
8. Thirdly, there are other more fundamental risks the real estate business faces, such as economic uncertainty and market volatility.
a. Over the past 2 years, we have experienced a series of global interest rate hikes and geopolitical conflicts, leading to growing economic uncertainties amidst surging borrowing costs. In this volatile economic climate, it is crucial for buyers to manage their risk exposure, remain financially prudent and avoiding overleveraging.
b. The Government has put in place series of measures to regulate our housing supply and demand so that prices remain within reach for all. On the supply side, we ramped up HDB’s BTO Building Program to provide more affordable housing options for Singaporeans. HDB will launch up to 100,000 flats from 2021 to 2025, with some in prime locations to cater to a range of needs.
c. On the demand side, we regulate investment demand through various cooling measures to encourage greater fiscal prudence. We raised the Additional Buyer’s Stamp Duty earlier this year, to moderate demand from those purchasing residential property for investment.
d. However, while we are committed ensuring a stable and sustainable property market, we cannot do it alone. As real estate leaders, you have an important role to play in achieving this outcome. With your influence and as role models, you are uniquely positioned to guide your agents on the importance of serving clients responsibly and rationally. It is in everyone’s interest to avoid perpetuating speculative advice that may lead to irrational decisions.
e. As you know, from the second half of next year, we will reclassify our BTO flats to reflect their locational attributes more accurately. Instead of mature versus non-mature, they will be reclassified as Standard, Plus and Prime. They come with different subsidies and restrictions, to enhance affordability, inclusivity and fairness. However, we have seen some unhealthy examples of agents stoking buyers’ “fear of missing out”, or “FOMO” emotions, telling them prices of flats in certain locations will escalate further when the new classification kicks in, pushing them into biting the bullet and committing to prices above what they are comfortable with. This leads to irrational decision making, and artificially distorts prices, disadvantaging not just the buyers, but impacts the entire resale market.
f. We hope that you can help us guide your agents towards responsible marketing, and inculcate in them the importance of promoting a stable and sustainable market.
Risk 4 – Shifting consumer trends and expectations, technological advancements displacing traditional roles
9. The last risk I want to touch on is one which all of you may have personally experienced. The risk of changing consumer trends, technological advancements and increasingly well-informed clients have affected the way you carry out your business.
a. With digital connectivity, easy access to information online and tools such as generative AI, your clients now have access to more services and advice beyond the traditional agent-client relationship. To match up to their higher expectations, you must continue to upskill and learn, enhance your professionalism and bring yourselves and the industry to the next level.
b. In May this year, CEA announced enhancements to the Continuing Professional Development (CPD) ecosystem under Project ADEPT, to prepare the real estate industry for the future. Through this, we enhanced the quality of CPD training for property agents and cultivate a continuous learning mindset so that we are all ready to embrace the future.
c. Nonetheless, it is inevitable that when clients are more well-informed and expect more, the potential for conflicts also increases. Knowing how to resolve conflicts to achieve a positive outcome is an important skill in this sector.
d. I am glad to learn that SEAA is partnering with the Law Society of Singapore to offer arbitration and mediation services. With access to some of Singapore’s best arbitrators and mediators, this allows for parties to deconflict and settle disputes amicably, achieving a win-win situation.
10. Besides enhancements to Project ADEPT, we have also made good progress on efforts to boost the industry’s professionalism and digitalisation under the Real Estate Industry Transformation Map. I would like to thank SEAA for playing an important role in this transformation journey.
a. As a co-lead for the Alliance for Action (AfA) on Accurate Property Listings, SEAA is working with the 5 largest property agencies and major property portals to develop a prototype IT system to tackle the longstanding problem of dummy, unauthorised, inaccurate and duplicate property listings.
b. SEAA is also the Deputy Chair for the Digitalised Property Transactions Workgroup, which aims to create a comprehensive digital service journey for property transactions by integrating the various government agencies’ property-related portals.
c. When completed, these efforts will help you provide an even more seamless and efficient service to your clients.
Conclusion
11. Before I end my speech, I want to say that we will continue to be exposed to risks in everything we do. It may sound scary, but as the saying goes – ”no risk, no reward”. Opportunities and risks always come together. We must master the art of taking calculated risks, so that we can capitalise on opportunities. Our efforts in mitigating risks will make our sector more resilient and allow us to excel. Leadership is key in navigating this risk landscape, and as real estate leaders, you have the power and ability to shape the future of this industry. I am confident that you will embrace these challenges and steer the industry towards enduring success.
12. I sincerely would like to thank all of you here for making this effort. In working together, we not only provide opportunities for all, but more importantly, we want to care and protect all, so that whatever we do, we provide a safe environment. With real estate being an asset class that almost all in the public domain will have the opportunity to interact with, I think it is important we develop a system of action for all. This way, we can reap the benefits of these opportunities, enjoying the advantages that property as an asset class can offer, especially to fellow Singaporeans. Your efforts are very important, and we are happy to be able to partner with you. We hope that, together as a society here in Singapore, we develop a system that is safe for us. This will not only open up more opportunities for people, but also help us develop our ecosystem on the global stage. I hope that we continue to enhance where we are and provide future pathways for the next generation to develop from where we are today.
13. As always, we welcome any feedback or suggestions you may have towards any of the topics I mentioned. Once again, thank you for inviting me today. Please enjoy the rest of this conference.