The intriguing Direct Property Group
The Direct Property Group has aroused my curiosity. Their eye-catching advertisements for overseas property appear on BBC TV channels, in newspapers and in magazines. Some are for bargain USA homes, others for upmarket pads in Europe. They look for all the world like an estate agent, but a search of their website, www.directpropertygroup.com for details of the glamorous properties on offer in places like London, France and the USA yields little. It says, for example: Notting Hill, W11, two bedrooms, pounds 1,150,000, (HK$14.4 million) with no address. You can find handsome interior shots and smart exteriors, but all of unidentified buildings. On the USA site, no listings appear at all. At the bottom of the homepage a disclaimer states:
Not licensed here
“Our property consultants deal exclusively with overseas properties in Hong Kong, and are not required to be licensed under the Estate Agents Ordinance of the Hong Kong SAR. Offers contained herein are not applicable to purchasers located in the United Kingdom, Australia or United States of America.” This raises several points: why, if they operate here, are they not subject to Hong Kong estate agent laws? And secondly, why are they selling UK, European and US property to Hong Kong buyers, but not to purchasers in those countries? Surely there would be demand for bargains back home too? Then it goes on to say that photographs, plans and promotional material provided by Direct Property staff, “are intended for general information purpose only.” But surely, anyone about to shell out a million quid for a London pad wants specific particulars.
Strictly no interviews
And that’s all I can glean from the website. So I contact one of their Hong Kong chaps, Lain Brand, requesting a chat about their company and the market, expecting the usual eager response of an estate agent scenting free publicity. Meanwhile, an internet check finds little, except Asiaxpat and Geoxpat discussion forums. In May, someone posed a similar question on both sites, asking had anyone bought from this company. “They are having many TV adverts and one of them offers six US properties for $200k (HK$1.55 million). Is it a scam?” they wonder. “Not a scam,” someone else replies. “But they're usually properties in areas nobody wants due to high unemployment/high crime areas etc, tenants on benefits etc.”
Now that might possibly be the case for the American properties, but the London and Lake Como places they are promoting are high end, so that doesn’t quite make sense. I read another online reply of several:
“Not a scam in that the houses are most likely there,” replies another reader. “These guys have been operating in Hong Kong for a while (original focus was London), but when I met with them they explained that their business model was to buy the properties themselves and then resell to you. By the time you factor in the transaction costs and their profit margin, I drew the conclusion that the only way for them to make money was to resell to me at well above market value. I lost interest at that point.”
I’m still confused. Are they, or are they not, estate agents? When Direct Property Group’s Lain Brand calls, he is brisk. They don’t talk to journalists, he tells me. “Company policy.” Why not? He says it was because of their singular business model, which they don’t want to reveal to the competition. They are not like other agents, selling new off-plan units. “We have a unique business model in Hong Kong,” he stresses. But you’re selling property, I suggest, so just how complicated can that be? They are not estate agents, he adds. “We physically buy and sell the properties directly.” Which explains the disclaimer: technically, they are not agents. I say this sounds very interesting indeed, but he refuses to elaborate. I say consumers would like to know more about the company. I ask where they are registered, he says Hong Kong. And where do they pay tax? He replies he does not know. Can I speak to someone who would know? He says managing director Steve Lovell is out of town and unavailable. I ask that Lovell call me on his return.
A few minutes later Brand rings back, having contacted Lovell. No interview, he reiterates, and they pay tax in Hong Kong. He does not sound like a happy camper. Then Brand emails me. “It's the first time I have spoken to a journalist and I was really taken aback by the undertone of the conversation,” he says. Notwithstanding this, he adds, and to answer my question, the company is registered in Hong Kong and pays tax in Hong Kong.
“There is nothing "dodgy" about us not wishing to do an interview – I was very clear on the reasons why and ask that you respect this. I wish you well with your story.”
So I am none the wiser. What can it be about Direct Property Group’s business model that makes it so special?