25 SEPTEMBER 2002

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Redefining the property industry

Dhalia Group Operations Director Andrew Gatt speaks to David Lindsay about the Group’s streamlining and efficiency-generating restructuring process, trends in today’s property market and the Group’s future

When did the Dhalia Group’s restructuring process begin and what has emerged from the exercise?

Preparations for the process had actually begun at the end of 2000, when Franco Valletta was appointed Chairman and CEO of the Group.

The primary reason for Franco’s engagement was to establish a vision for the future, prepare a strategic plan and re-organise the company thereby raising the standard in terms of organisation and bringing Dhalia on a par with other professional organisations operating in other industries.

Franco Valletta comes from a strategy and HR background and has held senior management positions and directorships in the public and private sectors.

So these past two years have been more a time of consolidation and bringing the level up to that of a professional organisation.

But when he officially came on board the ball really started rolling. Franco is a strategist and we are currently mapping out strategic options for the next five years.

The brief was to professionalise Dhalia, to ensure its systems are set up to provide forthcoming information that was on time and accurate.

When this whole process started, we began looking at our people. By then we had grown to quite a large company and the setup at the time was not conducive to maintaining uniformity. We were at the time more an alliance of loose partnerships, where the common denominator was Chris Grech. For example, I was a partner at St Julian’s, someone else was partner in Balzan and so on.

In this respect the biggest challenge was to assist these companies, determine their net worth, close them down and to create one new company. We pooled everything into one and all the managers were allocated pro rata shareholdings in the new company.

Targets were also provided for each branch, which were brought down to and built up from negotiator level. Now the manager of each branch plans and sets out targets with each and every consultant based on experience, capability and past results.

What has this reorganisation process brought the customer at the end of the day?

The customer is now reaping the benefits of the impact of certain methods of working and standards we have introduced.

First we had to ensure that the correct structures were in place, then we were able to start building on providing the tangible deliverables to our clients.

Such structures include what may seem obvious, such as, for example, a follow up call after a client views a property. The concept is simple and obvious, but the practice has consistently been pushed to the side across the profession as a whole. Our consultants are now expected to make these calls, which are an invaluable opportunity to give feedback to the owner of the property in question.

I would like to see the owners being treated with the respect they deserve, particularly when you consider we are selling their homes, which can often be an emotional process. Buying a new house or parting with an old one can be trying and many players in this industry tend to forget the real importance and impact of the process on the clients.

How would you best describe the state of the property market as it stands today?

I’d say it’s a realistic market, it’s not particularly a sellers’ market, in which people can dictate prices and buyers pay figures asked. But it’s neither a buyers’, in which there are bargains to be had and property is going dirt cheap. As such, it’s a realistic market in which reality sells and in which realistic budgets find properties to suit buyers’ requirements.

It is the perception more than anything else that the market tends to suffer from. We are very much a property culture and everyone has an opinion about property. It’s surprising to what extent people can be ruled by perception, when the reality can be very different.

The company has close to 60 people out in the field every day - that’s many pairs of ears and what they are faced with is sometimes having to explain to people that their property is not worth quite as much as what they are asking. We are asked to give evaluations but in many cases that figure is lower than what the owner insists on marketing it at.

Of course we will always try and get the best price for the seller because ultimately the seller delivers the commission, but to get that best price, you also have to find a buyer willing to pay that price – that is where the juggling aspect comes in to play and that is our role.

Housing affordability in Malta really has to be kept in mind, especially when it comes to first time buyers and young people, who sometimes simply don’t have the resources so early on in life to purchase the right property. But at least let’s have them on the property ladder with a one or two bedroom property and then they would move up that ladder with salary increases, lifestyle changes or with more children.

Do you see this as a change in culture, in which people are not necessarily looking for a home for life?

Lifestyle and social changes are mainly visible in the expectations of newlywed or engaged couples. The days of large families appear to have finished. As such, the family unit is getting smaller and first time buyers don’t always need a huge house from the outset.

Social trends are also changing and younger people are moving out from the family home earlier, not because they are getting married but to try out independence, to get themselves on the property ladder and a variety of other reasons. Not so long ago this was practically unheard of but today this stigma appears to be fading very fast.

I can say that the trends have definitely changed and people are no longer expecting to stay in the same house their entire lives and I think we are becoming more European in this sense. You go for what you can afford and what you can handle. Not just in terms of finance but, for instance, if you work and enjoy your job, you’re busy and you have a huge garden – who’s going to look after it and enjoy it?

What about the market itself, have you seen developments in terms of the types of properties being sought after?

Houses of character are still rather popular, but, when you think about it, they are obviously no longer being built and the market is not expanding in this respect. Meanwhile, a lot of the best ones have been sold and are coming back on the market converted and at a much higher price. However there are also a number of what are called ‘virgin’ houses of character, meaning they have never been renovated. But these also carry their own legal problems such as missing titles, inheritance between 15 or 20 owners – half of whom don’t speak to the other half while others are missing. Most purchases involve bank finance and a bank has to be very definite about clear title.

While houses of character are still in demand, the biggest movers are flats and maisonettes, flats more so than maisonettes. In order of turnover across the board, flats experience the highest levels. But you expect that in a country like Malta, where land is scarce and the solution is to either dig down or build up.

How would you quantify Dhalia’s market penetration?

That’s a bit difficult to determine because there are no national figures beyond the countrywide sales figures. A country like England, for example, in March has the figures for January and February with percentage increases and demand levels and all other relevant data. In this scenario the market players can have information quickly and they can act accordingly. Banks can reassess their mortgaging, developers can assess whether to build one, two or three bedroom units and agencies might be able to focus on certain areas of demand or supply.

One thing I can say on the subject is that the Building Industry Consultative Council is working very hard to put a mechanism in place that would see this type of information beginning to flow. But we see this for a couple years into the future because it will involve a rethink of the way the data is actually gathered.

The past years have seen the Dhalia Group expanding almost exponentially, what factors have led to the Group’s success?

You have to be committed and work hard, it’s as simple as that. We are in the services industry and the way that we groom our people and the direction that we take reflect this commitment.

In this respect, next year we will be starting a management development programme for nine of our people who have been identified as having prima facie potential. We are roping in a couple of educational institutions for the initiative because the skills required in the real estate industry do not consist of simply being able to open a door, turn on a tap and show someone around. You have to be able to communicate effectively, write proper reports, work out targets, budgets, look at the financial aspects of a sale and get very much into the hearts and minds of your clients in order to deliver and maintain the right service.

Being set up in that way and having that philosophy I think contributes to the Group’s success. Most of the people at Dhalia, I am happy to say, are here because they want to be and because we want them here as well. As such, there is also a strong element of enjoyment resident at the company.

Competition in the industry has increased over the last years, how has Dhalia adapted itself to the change?

Again, that is very difficult to assess. There are always the big four or five companies – names that have been around with a proven track record – and then you have the one or two man operations who would definitely impact the industry since the cake is only so large and can only be cut into so many pieces.

However, it’s very hard to progress and do very well when you are small because if you don’t have the manpower your inventory suffers. Some of these businesses actually do pretty well by focussing on a particular niche – such as an area or a type of property.

It’s hard to survive in this industry after you consider the advertising, the offices, the mobiles and the numerous other overheads involved in the industry.

For Dhalia to operate we make use of in-house IT, marketing, communications, finance and administration - which is all payroll.

We have enough resources to be able to operate professionally and we have the coverage to be able to penetrate most areas and types of properties.

The role of operations director did not exist before, what factors led to its introduction?

Franco Valletta had identified the need to have a person responsible for the operation who was able to take decisions, move forward, look at our people and raise standards. He was looking at two criteria: experience in the industry and integrity. The reason being that sometimes decisions on internal issues have to be taken – who sold which property or which client belongs to which negotiator. I believe very much in leading by example and wouldn’t expect anyone to do something that I am not prepared to do myself.

I meet with managers every two weeks and we go through an agenda of operational issues while I also meet with managers on a one-to-one basis to go through the management accounts and related matters and look at the people on an individual basis. This would include not just the branch issues but also the consultants themselves – who needs help in certain areas, who’s doing well, who’s not.

Where do you see Dhalia heading in the future?

It’s a very exciting time for us because we are reaping the rewards of hard work, focusing on our people and the service they give.

We are moving in two main areas. One in the consolidation of our operations by becoming more efficient, ensuring the offices, people and management are up to scratch and that the work ethic is being kept.

Then there is also the drive to expand Dhalia overseas, which is Chris Grech and Franco Valletta’s baby, so to speak, and they are developing a network of strategic partners and contacts abroad and the operation will service customers that come down to Malta.

The commercial department is also picking up momentum. Dhalia is actually the first estate agency to set up a commercial branch, which focuses exclusively on business and investment opportunities. It has been set up for seven months and it seems to be taking off pretty well.

 



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Editor: Saviour Balzan
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