As we usher to year 2019, be prepare to gear up as we
are heading to bumpy road for this year as the number of unsold units in
Malaysia’s residential property market continue to rise. According to the
Valuation and Property Services Department (JPPH) latest figure, it is rather
an alarming signal the number of unsold completed residential units rose from
20,304 units to 30,115 units year-on-year as at 30 September 2018. These
numbers are not inclusive of government’s initiative on housing like PR1MA,
MyHome, My First Home Scheme and other initiatives. The total value is RM19.54
billion that represents a 56.44% jump from RM12.49billion a year ago.
If the statistics is inclusive of serviced apartments
and small offices home offices (SOHO), the total value is RM27.48 billion with
the 40,916 rooms which is rather alarming. Meanwhile, Johor has the largest
unsold completed serviced apartments and SOHO units at 7,714 that rose with
191% from 2,647 units a year ago. Keeping these less-than-rosy residential
market prospects in mind. Here are some of the trend to take note of in the
hotel.
1. Soon it will
be renter’s market
With the new uprising of the completed units from
those existing units will lead you spiraling downwards in the rental market
causing the supply more than demand, rental prices to fall. The reason for this
is because rent-seekers will be spoilt for choices and landlords will be
fighting over tenants. This will be ideal for rent-seekers as landlords will
most likely are open for negotiations. On the other hand, landlords will be on
the losing end whether to manage to secure the tenant. The rental will most
likely not be able to cover the mortgage that causes negative cash flow. In
this scenario, landlords will have to cover their own mortgage. However, if
those do not have the holding power, they have no choice but to let go of their
unit for sale.
2. Sub sale
market buyers have the higher power to negotiate
Property market will be in favour to the sub sale
market buyers as property owners/investors are in desperate to let go of their
properties, especially those who have multiple units. Thus, the property
hunters are in the stronger position to bargain for better deals. As for the
owners, they are more than willing to negotiate on the payment terms and more
flexible with the payment deal through their agents if you do not have sufficient
deposit on hand. With the supply overhang, it means that most secondary market
properties are priced 20 to 30% cheaper than new launches. Bear in mind that
you will need to pay upfront 10% for your deposit or down payment.
3. Fire sale in
the auction market
If you are looking for property below the market value
(BMV), this will be a opportunity for you to grab one property. You will need
to attend an auction in court and prepare bank draft in advance to show your
interest. When you have successfully to bid for the property, you will need to
settle the balance of payment within 120 days. There are couple of hidden costs
like legal fee, quit rent, unpaid utilities, maintenance fee and others. A
gentle reminder for buyer is that when buying a BMV property, best to find out
beforehand if it’s occupied by tenants/owners because you don’t want to get
headache over tenant eviction.
4. Upcoming
transit-oriented developments along MRT line 2
Under the newly elected government, the project of
Sungai Buloh - Serdang - Putrajaya MRT
line 2 is one of the few major infrastructure projects to be continued.
Developers then will acquired land banks along this line to build TODs. We
recommended that to watch out some of the developers like Kwasa Damansara,
Sungai Besi, Bandar Malaysia and Cybercity City Center.
5. Airbnb
accommodation stricter regulations
Even if the government has the intention to legalise
Airbnb, it will be harder for landlord to make money from short stay travelers.
This is because we are seeing trends of management committees barring
Airbnb-type of accommodation due to safety and security issues. Thus before you
decided to list your untenanted unit on Airbnb,we suggest to check with your
management committee for permission. However, if you happened to own a serviced
apartment, short stay or Airbnb will not be an issue as it falls under the
commercial title.
