Despite MCO, opportunities beckon in real estate
Every cloud has a silver lining
By Vigneswar Rajasurian firstname.lastname@example.org
News is rife about the impact of the pandemic on businesses, and the real estate industry is no exception. Although it’s far from business as usual, real estate activities have shifted into low gear with many property developers and agents pushing for property transactions online. Therein also lies opportunities for stakeholders and prospective home buyers.
Luck is when preparation meets chance
That being said, the Covid-19 pandemic and resulting movement control order (MCO) is unprecedented so the true extent and severity of its impact on the property market is speculative. However, the financial crisis’ of the past lend a measure of foresight to the current situation.
Speaking to StarProperty in a separate video interview, real estate author Khalil Adis said in the 2008 global financial crisis local property prices dipped between 15% and 30% in the secondary market. He emphasised that this was particularly true for the secondary market where market forces have a more considerable influence.
There is some sense of urgency as the local property market has shown to have a relatively quick recovery in the past. Bank Negara’s Annual Report 2008 cited that demand for properties dropped to -3% when the global economic conditions deteriorated. Subsequent reports showed a dip to -14.3% in H1 2009 before picking up to 17.1% in H2 2009 and 30.7% in H1 2010.
“This showed that despite the severity of the situation during the economic crisis, the property market managed to recover considerably within the next two years,” said Real Estate and Housing Developers Association (Rehda) president Datuk Soam Heng Choon. However, he expressed concerns with the ability of Malaysians in the B40 and M40 brackets to make home purchases in lieu of the crisis.
Collectively, Rehda has proposed that the government reintroduce the Home Ownership Campaign, waive the Real Property Gains Tax for two years and extend loan tenures, among other recommendations. Should the Ministry of Housing and Local Government (KPKT) adopt these measures, even greater opportunities in the housing markets would open up for home buyers.
Necessity is the mother of invention
Soam stated that while the current crisis may be worse than its predecessors, property developers would be able to sustain for the next few years from the huge unbilled sales gained during the HOC in 2019. “The real impact of this pandemic may be felt later,” he added in a written interview with StarProperty.
Resourceful property developers have turned to online sales and some are offering virtual tours of show units in efforts to woo buyers during the MCO.
These innovative online marketing methods would make newly launched project sales more favourable to buyers over the sub-sale market as the latter often requires physical viewings to inspect deterioration of the property. In analogy, it’s much easier to trust and buy a new car under warranty over a second-hand car without a physical inspection. But those who deal with the sub-sale market are beginning to adapt to the current environment.
Play with the cards dealt
Real estate agents and negotiators whose earnings are based on sales commissions are likely the ones who suffer the most but this crisis has not stopped them.
Some property agents have managed to close sales online during the MCO by tapping into the many social media platforms in the market. Despite being restricted by their budget, they invest time and effort instead to do conference calls and showing prospective clients and tenants the homes which they have recorded into their smartphones. Others are taking this opportunity to update databases, refine skills and build a stronger social media presence to leverage upon once the MCO ends.
Freeman Woo of Kith & Kin Realty believes in adapting to the crisis with an MCO strategy of targetting distressed sellers for cash-rich ready buyers. In contrast to the typical pre-MCO setting, Woo observed that the MCO period had seen sellers more eager to lower prices and buyers are willing to make purchases without viewing the property to take advantage of unusual market conditions.
Housing is ultimately a basic human need and homeowners disenfranchised by the economic impact of the pandemic will seek out more affordable housing to purchase or rent. While the purchasing power of the general public would likely reduce post-MCO, property agents could depend on an aggravated rental market to supplement commissions from the sale of properties.
A helping hand
The government’s stimulus package and the six-month loan moratorium by Bank Negara are invaluable efforts to soften the blow of the pandemic on Malaysians.
The Credit Counselling and Debt Management Agency (AKPK) advises Malaysians to look out for federal and state government incentives. Prudent measures to take now include preparing a crisis budget, re-adjusting cash flows, revisiting financial savings and seeking free financial knowledge from trusted sources.
The agency reiterated there is an opportunity in every crisis but stresses on gaining knowledge and to embark on long-term investments only when financially ready.