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.