Estate agents warned over foreign deals

PHOTO: Estate agents warned over foreign deals

SINGAPORE - A regulatory body is warning real estate agents against selling potentially dodgy foreign property investment schemes here.

Already, at least 16 agents have been sacked over suspicions they were involved in selling these get-rich-quick schemes.

The Council for Estate Agencies (CEA) has issued an advisory note warning the chiefs of real estate agencies over the issue.

In a briefing earlier this month for key executive officers (KEOs), an industry term for agency bosses, it said "foreign investment scheme companies" have been recruiting local agents.

"KEOs (are) to advise their salespersons not to participate in property investment schemes if they are unsure about their operations and background," it said.

At one agency, ECG Holdings group chief executive Eric Cheng said he has fired 16 agents suspected of marketing such schemes. ECG checks online advertisements placed by its agents.

CEA cited an ad placed by a foreign developer saying 1,300 units in a foreign project had been sold to clients here for $70 million. The council said it will probe any registered salesman here involved in unlicensed estate agency work.

In response to queries, CEA deputy director (licensing) Yeap Soon Teck said laws governing real estate agencies operating here cover both sales here and abroad.

Recently, property investors have been flooded by offers to invest in the likes of the United States and Brazil, promising returns of up to 64 per cent in three years. These include investments in a "beachfront condominium development" in north-east Brazil and an island south of Batam.

When The Straits Times contacted such a firm, it said a mix of agents were marketing its projects, but had no way of knowing if they were authorised to do so.

Industry experts say investors attracted by these schemes may think they are buying brick-and-mortar properties - but they are actually buying investment instruments backed by property assets.

Agents marketing such investments could mislead buyers into thinking they are buying a property, said Mr Cheng.

And should the deal turn awry, investors could argue they had trusted the investment because of the agency's representation, said PropNex chief executive Mohamed Ismail. "It is a real estate salesman with a CEA licence trying to sell investment-related products, not physical properties."

Investors may be buying into co-investments in a title deed or rights to part of a development project, so they might not have direct ownership of the property, said International Property Advisor chief executive Ku Swee Yong.

"Here, there are risks of not knowing who your co-investors are. If one of your co-investors defaults on his liabilities, creditors may come after this asset that you jointly own with him."

Under current regulations, CEA allows licensed foreign developers or estate agencies here to market foreign properties. Agents must have the approval of their estate agency before doing so.

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(1) The Estate Agents Act & its Regulations only cover estate agency work done in Singapore for local and foreign properties.

(2) Foreign developers may choose to sell their overseas properties in Singapore through their own staff. Such transactions which do not involve estate agents are direct sales from the developers and therefore not regulated by CEA. ]