Business Times - 23 May 2009
Passing the baton at Knight Frank
Managing director Danny Yeo, chairman Tan Tiong Cheng outline future plans. By Kalpana Rashiwala
QUIETLY but confidently, property consultancy firm Knight Frank Pte Ltd entered the business of managing shopping centres two years ago. So far, it has clinched three appointments in Singapore and plans to take this venture further afield to places like China and Vietnam.
The group also hopes to strengthen its presence in the office leasing arena while in the residential agency business, it is working to better integrate its project marketing division (which handles property launches for developers) with its agency network of about 700 associates, or agents who are not salaried but instead receive commissions on sales. Another priority area is grooming talent in the firm, its newly appointed managing director Danny Yeo told BT.
The retail property consultancy veteran was promoted to managing director on May 1 after 'careful and considered succession planning', says Tan Tiong Cheng, who used to be managing director but has now been elevated to executive chairman. Mr Tan, 58, fills a position that has not been occupied ever since the firm's previous chairman, Cheong Thiam Siew, died in 2007.
'Property is a fun business. It keeps you on your toes all the time. You meet all sorts of interesting people in all sorts of interesting situations. Singapore's skyline has evolved so much over the past 40 years since I started working - and continues to change for the better,' he says, making it clear that he is not retiring.
His successor, Mr Yeo, had been assisting him in running the company even before his latest appointment, when Mr Yeo became its deputy managing director in July 2007.
Mr Tan and Mr Yeo are the two biggest of eight local shareholders of Cheong Hock Chye & Co, which effectively (directly and indirectly) controls about 66 per cent of Knight Frank Pte Ltd. The rest is in the hands of Knight Frank of UK.
'So Knight Frank Pte Ltd is effectively a subsidiary of Cheong Hock Chye & Co,' Mr Tan says, adding with some pride that this structure - with the eight Singaporean executive directors of Cheong Hock Chye owning a majority stake in Knight Frank's operation here - sets it apart from other major property consultancy firms here that are controlled by Western corporations.
'We control our own destinies. This provides a good motivating base for talent retention, since those who do well in their fields can rise to the level of executive director and own a stake in the company.
'That may explain why most of our department heads have stayed on for a long time,' says Mr Tan, who will focus more on business development.
It is also significant that Knight Frank UK is not a publicly listed company, unlike most of its rival global property consulting giants, Mr Tan emphasises.
The pressures that listed entities face - such as quarterly reporting and dividend payouts - can lead them to make decisions that may adversely affect some of their businesses in the long-term, like hiving off and shutting units.
'Privately held professional firms have a more sustainable model,' Mr Tan argues.
Knight Frank Pte Ltd, through a 25 per cent stake in Knight Frank Asia Pacific - of which Mr Tan is also chairman - also has interests in regional Knight Frank offices in Hong Kong, China, Indonesia, Thailand, Malaysia and Cambodia. 'We are also looking into opening in Vietnam soon,' Mr Yeo says.
A key priority area in the Singapore office is strengthening the service to developers in marketing their residential projects. This will come from bringing associates into the picture earlier when working on residential launches. There are also plans to expand the associates network, with greater emphasis on project-marketing training, culminating in certification. Says Knight Frank executive director (residential) Peter Ow, who oversees the associates division: 'We are also looking into making bigger inroads into the HDB resale market; currently our agency network focuses mostly on the private residential market.'
Mr Yeo is one of the most well-regarded names in the retail property consultancy field. One achievement he is particularly proud of is the setting up of subsidiary Knight Frank Shopping Centre Management, which today manages Ang Mo Kio Hub and The Verge (formerly Tekka Mall). It has also been appointed to manage the retail space for *scape Youth Centre, which opens beside Cathay Cineleisure Orchard next year. 'We're the first and only property consultancy firm in Singapore to clinch appointments to manage every aspect of operating a shopping mall. And we don't just do maintenance and rent collections but everything from promotions to optimising the tenant mix and other aspects of asset management - pretty much like what the retail Reit managers are doing, except that our client is not a Reit, of course,' Mr Yeo, 55, says.
The former ACS boy has three grown-up kids - one a doctor, another an architect and the third waiting to enter university. His wife is a homemaker.
He lists cooking as one of his passions - although he does not have much time for that these days. His new appointment should keep him busy cooking deals at Knight Frank instead.
Profitable, so deducted staff pay given back
LIKE many other companies, Knight Frank has cut staff pay as one way of riding out the downturn. But unlike most, it's ready to pay back the amount taken away - when it does well.
Staff whose pay was cut by 10-20 per cent for the months of February to April have been paid back the deducted amount.
Knight Frank chairman Tan Tiong Cheng told BT that this was done after the company managed to 'scrape through' and make a profit for the year ended April 30, 2009.
And while the pay cut remains for the current financial year, Knight Frank will return the deducted amount again should it do well.
The group has a total headcount of about 560 people in Singapore. That's excluding its network of about 700 associates or agents who don't earn a salary but are paid commissions on sales instead.
Executive directors and directors took the biggest pay cut of 20 per cent from Feb 1, with other staff seeing their salaries trimmed between 10 and 15 per cent, again with more senior staff members taking the bigger hit. Those earning less than $2,000 a month were spared.
Mr Tan declined to say just how much profit the company made for the financial year just ended. However, he disclosed that turnover fell 25-30 per cent - investment sales and residential agency businesses were hit by the property slump, but valuation did 'extremely well' and retail agency also chalked up good numbers.
On a group basis, including the results of subsidiaries such as Knight Frank Shopping Centre Management, Knight Frank Estate Management (which does property and facilities management) and Knight Frank Property Network (the associates arm), revenue took a small dent.
Accounting and Corporate Regulatory Authority records show that the company made an after-tax profit of $5.4 million and had revenue of $37.2 million for the year ended April 30, 2007. Figures for the year ended April 30, 2008 were not listed.