Strong property demand in Q4

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Metro Homes has about 500 representatives including real estate agents and negotiators.

Operating a network that covers 25,000 properties in the country, property consultant K.L. See envisaged a slowing trend in property transactions in the early part of this year due to more stringent vetting of loan applications by banks.
The first quarter of the year would be “quiet”, pointed out See, 41, a director of Metro Homes Sdn Bhd. The nett income of most people such as property buyers would not increase substantially. But banks were likely to be more stringent in assessing borrowers due to prevailing economic factors. (See related article on “Property prices trending now” in StarProperty.my )
Price increases
Therefore, property transactions in the second and third quarters of the year would generally be quite “flat”. In the past two years, there have been quite substantial increases in property prices. So, property prices were already quite high compared to what the market could afford, explained See, who holds a master’s degree in business administration as well as an accounting degree from Universiti Malaya.
The costs of construction material and development land would not likely come down, he added. Faced with a soft market situation, the bigger developers who were financially strong, might delay any project launch this year.
But the last quarter of the year, would see a significant price movement – upwards, predicted See.
And due to such a scenario this year, he rationalised that the more speculative type of property purchases including high-end condominium units will be affected.
But he advised property buyers who intended to buy for their own use or “with a purpose” to proceed.
“The supply side is still plentiful. Projects that were launched in 2009 and 2010 would have been completed or are nearing completion by now, therefore contributing to quite a significant supply.”

Prestij @ Kota Damansara is another project marketed by Metro Homes. It offers three-storey, semi-detached shop-office units with an average starting price of RM3.8mil. The units come with individual titles with lift facility and private parking space and land.

Occupancy rate
See said that every completed project would take time before buyers or tenants started to occupy the units. The occupancy rate would initially be low due to the time lag. Therefore, property buyers shouldn’t be unduly influenced by such a situation when assessing a project to buy in.
“Everyone in the industry worry about the occupancy rate,” said See, when asked to comment on the seemingly high number of vacant units in many high-end condominium developments in the Klang Valley.
“If there is 30% occupancy rate in the first year of the project’s completion, the developers would be very happy.
“Normally, the rate would increase to 60% to 70% in the second and third year.
“Our property market is not as active as in Singapore or Hong Kong. Over there, residents will start moving in within two weeks of vacant possession or when the property is ready to be occupied as the rental market is active.”
See explained that many people who buy such condominium property were cash rich. And therefore, were not in a hurry to occupy the units or to rent out.
“Such property purchases represent only a small investment in their total portfolio. And some would be only waiting for capital gains.”
Infrastructure
When it comes to picking the right developments or areas to invest in property, See advised prospective buyers to look at the overall picture.
All prime areas were popular and one should also look at the infrastructure of the developments. For instance, Damansara, Puchong and Cheras represent the more matured areas.
When linked-houses were launched in Puchong a couple of years back, the price was RM600,000 per unit, now the asking price is about RM1mil.
Buyers of newer areas of development have to take greater risks.
For example, demand for Setia Alam property in Shah Alam were rather slow between 2006 and 2008 but the market picked up later. The township was launched in 2003 and subsequently, the New Klang Valley Expressway was opened in 2006. Today it is quite a popular residential area with access from the Federal Highway and Klang Town via Jalan Meru.

Each Metro Homes representative has at least 50 property listings, says K.L. See

Licensed
See, who is licensed by the Board of Valuers, Appraisers and Estate Agents in Malaysia, said property agents and negotiators needed to be trained in order to provide professional services.
“We have close to 500 representatives including agents and negotiators. And each of them has at least 50 listings. While other agencies have franchised their business, we don’t do that. We are stakeholders of our branches and we own the operations. So, we are able to mobilise all our offices for any marketing project,” said See who cited economy of scale as one his company’s advantages in operation.
Since Metro Homes was established in Petaling Jaya in 1995, it now has offices in Sri Hartamas, Damansara Utama, Kota Damansara, Subang, Puchong, Shah Alam, Cheras, Klang, Setia Alam, Serdang as well as Penang and Kota Kinabalu.
“Last year, we conducted a fair bit of project marketing by bringing developments from here to East Malaysia. For instance, we were involved in projects by Glomac and Mah Sing. We are exclusive agents for such projects in East Malaysia,” said See whose company also market projects by smaller developers and overseas properties.
“Our business comprises 70% transactions involving property in the secondary market and 30% from new developments. We also have special teams to handle luxury property as well as industrial projects and property put on auction.”
See advised property owners to have a written agreement with agents tasked with selling their property, stating whether it would be an exclusive, ad hoc or joint listing.
Owners need to check the relevance of the information on their property. They cannot leave it to the agent with a “freehand”.
- StarProperty