https://www.thestar.com.my/business/busines...es-in-malaysia/

It may sound like a stupid question, but I really don't know the answer even after google.
So all those unsold units will become sub-sale units by developer after the construction is completed?

Ok listen to below.

This post has been edited by sonic31s: Dec 27 2017, 05:19 PM

I don't think can call sub-sale cos the houses have not been sold b4. Sub-sale is sale from 1st owner to 2nd owner.

Which is correct?
Need more advice from other sifus ~

Its not called subsale.

Its exactly the same as buying form developer before the house completed.

Subsale is buying it from someone who first bought from the developer. Call it "2nd hand" unit if that makes more sense to u

If you're still buying from the developer, it's not considered as subsales. Unless the developer sold these units to a holding company and you purchase from the holding company, it's considered as subsales.

The holding company can be somehow relates to the developer. And it's quite common in Malaysia.

Sifu, thank you very much!
If like this, no matter buying those unsold units directly from developer or buying as sub-sale from those holding company, what is the trend currently? Is there any chance those units will become cheaper or with more benefits?

Since the unsold units phenomenon become more serious nowadays, if remain unsold for years, it won't be good to developer or holding company side as well right? They sell, they get cash, they don't sell, they get nothing. Or it is not as simple as that?

Normally they'll only transfer to their internal holding company when they have confident to complete the project with sufficient funds. So it won't be any benefit to buy from holding company, instead, expect at least 10% hike from developer price. The holding company is earning money from trading.

The theories of property development in Malaysia is like,

1. Early investor buy props from developer at low price

2. Funds from investor supports developer to finish the project.

3. Any remaining unsold units will be collected back by developer via holding company to resell at higher price upon completion of project.

4. First batch of investor enjoy to sell their props at higher "market price" bidded by the holding company.

But the problem now is, most of the new project does not receive sufficient investor to complete it. New project now is kinda oversupply specially condos.

I have few developer clients couldn't settle his debt with us in klang valleys..

Ya ~ and this phenomenon seems not going to stop, see those projects with > 2000 units. The unsold units situation will only become more serious, may be the unsold units percentage will eventually reach 10% for each project averagely.

So if 2 years after the completion of the project, also no one is buying it, will the holding company still die die want to keep their ideal offering price and keep the units, instead of selling it off with under-market price to receive cash flow?

Previously may be not since the unsold units phenomenon is not that serious, but how about in the future?

Or actually if the developer cannot sell at least certain percentage of the units (e.g. 95%), they would rather on-hold the project, and wait until this percentage was reached? But this doesn't make sense, if a project is being on-hold, the reputation already busuk, who will buy an on-hold project? That is why there are a lot of abandoned projects?

This post has been edited by KennRicky: Dec 28 2017, 10:41 AM

Developer would rather hold than loss, as long as the project able to complete, the prop would be pushed and sell at higher price.

If the current project's income is slowed down, developer would normally obtain more cash from another new projects or additional phase.

Such like,

Tower 1 obtained 50% investor, release Tower 2 to obtain another 50% to cover Tower 1 construction, upon Tower 1 completion, it can became a "good" record for Tower 2 or possibly Tower 3 to gain investor trust. So, selling below market price is a big "No" for developer.

However, if come to the worst case they would rather abandon the project than completing it with losses because construction material inflate almost yearly and they have no responsibility to fulfill the project completion.

As a conclusion, can i say that if the unsold units phenomenon is not improving, generally the project on-hold & abandoned risk will also become higher in the future?

This post has been edited by KennRicky: Dec 28 2017, 11:29 AM

second-hand home is called sub sale

Yes, unless government restrict or hold developer a certain amount of funds to ensure the completion of the project before selling it to public.

So, if you're looking for something below market rate, probably just look for older prop. It's more worthwhile than buying new project or waiting for them to reduce their price.

Thank you sifu, learned a lot today ~