Malaysia property auctions take on a new lease of life

THE idea of an auction seems to be the creation of a market for goods that would otherwise not exist. For instance, antiques and second hand merchandise are rare goods that would be difficult to obtain without going through an auction.

In light of recent economic hardship, another segment appears to have entered the auction market in a relatively big way and that is property.

Property auctions are far from new, but they have taken on a new lease of life in the west since the credit crunch.

The Daily Telegraph reported that only 15,000 properties changed hands in the United Kingdom at auctions in 1998, but by 2007 the figure had more than doubled. This was just before the financial crisis hit its peak, when 45,000 repossessed homes flooded the UK property auction market in 2008.

Back home in Malaysia, acquiring properties through auctions seems to have become popular as well.

However, although the number of purchases have risen in recent years, Ehsan Auctioneers Sdn Bhd sales manager Mohd Ali Abdul Majis argues that this increase, unlike the trend in the west, is not related to the credit crunch.

“We have recorded a steady rise in the number of auction purchases in recent years. Business started picking up in 2007, and although there is an indirect link between the credit crunch and this increase, I would say that public awareness was the most important factor,” he says.

He cites the ease at which people can get details of auctions via the Internet as a major contribution to this awareness.

“As a result, investors nowadays are more willing to invest in different ways if it benefits them. It seems that they have associated good opportunities with property auctions,” he adds.

Good opportunities indeed. Most properties are auctioned off at 20% below their market value, with a reserve price of up to 50% below its market value, in some cases.

It is not difficult to take part in a property auction – all that is needed is a bank draft of between 5% - 10% (depending on the property and auctioneer) of the reserve price, as well as the ability to pay the difference of amount in cash if the final auction price moves up. This, in addition to being over the age of 18 and having an identity card, and you are ready to take part in the bidding process.

Is a property bubble forming? ~ Sept , 2010 Report

There has been some concern in recent months over an imminent real estate bubble in Malaysia. How real is this threat or is it merely confi ned to a few hot spots?

CONCERNS over whether the local housing market is overheating and will lead to an asset bubble are raising questions on whether there is a need for more tightening measures to curb speculative buying and ensure the market stays sustainable.

Dr Yeah Kim Leng ... ‘Anything can trigger a collapse. An economic slowdown, for example.’

The local housing market has not “hit the roof” like in some places in the region such as in Hong Kong, Shanghai and Singapore which have recorded sharp price jumps of 40% to 60% since last year.

Nevertheless, prices of landed houses in some popular areas in the Klang Valley, Penang and Johor have appreciated by 10% to 30% over the past six to eight months.

Tang Chee Meng ... ‘The state of the property market is very much dependent on the state of the country’s economy.’

If the Government decides to reintroduce the RPGT in its entirety, property speculators will get the brunt of the “axe” as gains from property sales within the first five years of purchase will be subjected to a tax of 5% to 30%.

Usually if a market is flushed with speculative buying and a bubble is imminent, property prices will spike sharply across the board of a certain market within a short time like what is happening in a number of countries in the region today.

A case in point – a 26-year-old government-built apartment of 420 sq ft in the Sham Shui Po area of Kowloon district was transacted at HK$1.98mil, or HK$4,714 per sq ft.

Reason for concern?

Is Malaysia facing a similar risk and is there worry of an imminent overheating or bubble?

Real Estate and Housing Developers’ Association (Rehda) president Datuk Michael Yam discounts the possibility of overheating or an asset bubble in the local market.

“We believe the steep price increases are only reported in scattered locations in the Kuala Lumpur City Centre and some landed housing projects in the Greater Kuala Lumpur area. This does not represent a bubble but more of a short-term deviation from fundamentals that are due to isolated speculative activities in some areas.

“The recent spurt in prices may be due to the effect of the earlier stimulus package and liquidity but that has stabilised and a plateau has been formed,” he relates to StarBizWeek.

“Landed terrace and semi-detached houses have seen big capital appreciation due to the limited stock available and future supply especially in prime locations. As a consequence, prices of current stock in strategic areas of Medan Damansara, Bangsar, Sri Hartamas, Bandar Utama and even new launches at Desa Park City are at or above the RM1mil mark for a double or 3-storey terrace house.

Malaysia Property Inc chief executive officer Kumar Tharmalingam says the issue of a bubble is being overblown.

“A single swallow does not make a summer. There may be certain projects fetching premium values or prices for their products, but it is not representative of the overall market.

“ The strong buying interest is not across the board but is mainly centred in the high growth markets of the Klang Valley, Penang and Johor,” he adds.

Kumar says concerns that the potential slowdown in the West will affect the local market are also overrated.

An imminent uptrend?

According to Mah Sing Group Bhd group managing director and chief executive Tan Sri Leong Hoy Kum, the property market is still in the early to mid-phase of an upcycle.

“We do not see a strong risk of a property bubble happening yet and there is no sign of overheating. The price increase in properties has not been broad-based, but demand driven and rather selectively in prime locations.”

Leong says certain locations and types of products are more resilient in terms of demand, capital appreciation and value preservation.

“A healthy property market is good for the economy and quality properties in prime locations are deemed to provide a good hedge against inflation. Barring any external shocks, we are cautiously optimistic that the property market should continue to do well in the short and medium term,” Leong says.

Kumar concurs with Yam that the Government’s stimulus packages are only filtering into the system now and are creating greater confidence and interest in the property market.

“Developers are venturing into niche products with better quality finishings and designs, as buyers want the least fuss these days. This has driven developers to go into higher value residences,” he concludes

Preparing for an auction

1. Be familiar with the property Identify property lots which suit your needs and interests, then make the necessary arrangements to survey it. Enquire about outstanding bills (electricity, water, maintenance charges) of the owner. Arrange legal assistance with either the solicitors, state authority or the auctioneers to help you understand the Condition Of Sale.

2. Sort out your finances Work out how much you can afford, your maximum bid and proceed to obtain your deposit. Avoid a cash deposit, but be prepared to top up the balance if the final price defers from the reserve price.

3. After the auction You are usually given 90-120 days after the auction date to complete the purchase, but this differs for each property – remember to check beforehand. If you are applying for a bank loan to settle the outstanding amount, do it on the same day you win an auction.

Whatsup ~ Wedding Invitation Agreement ?

Yup, that's what I received on the 1st day of this week, when I opened up my mail box.



Lately, I'm seeing agreements, such as Tenancy Agreement and Sales & Purchase Agreement, but I ended up having myself ought to sign up this so-called Wedding Invitation Agreement.






Tell ya, its the most formal Invitation I've ever gotten in my life.












Well, you will show out a curious yet dull expression when a wedding invitation card landed on your palms.




Why curious ? Coz you wonder who is the sender of this "Pink Bomb", and why dull, coz you expect the same monotone sentences pre-printed on the insider page.



Hoho, such a creative creation that he & his wife-to-be had came out with!

Putting aside having to fork up money for angpow on wedding dinner, the Host (The Bride & Groom-lah, who else) requires me to abide to the Invitation law woh ...!!























Makes me really wanna join their ceremony. Bravo !!

Ya know what? I'm glad that I accepted this friend of me, when he called up to get my consent to expect his "Big Day" invitation.

















Jangan main-main, the Guest need sign acceptance to this invitation, or else even if he or she do turn up on that evening, will be automatically disqualify to participate in some of the pre-arranged event(s)/program(s) during Wedding Reception !!




...and they leave happily ever after ....

THE END, got it?!