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> Is The Property Market Really Recovering?, "Market Rally" Or "Dead Cat Bounce' ?

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TSWebspeed P
post Aug 3 2022, 10:59 AM, updated 2y ago

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Based on a survey of its real estate agents, Juwai IQI’s CEO says a recovery is imminent in the next 12 months. Elsewhere, Knight Frank Malaysia also expects prices of residential properties to rise. Ceteris paribus, I expect real estate professionals to be optimistic about the property market. Otherwise who will buy property?

But are the prospects for a broad based market rally really there ? If Bolehland follows the US into recession next year, perhaps the property market might NOT see a rally but a dead cat bounce?
Based on anecdotal evidence from lackluster auctions of 5* luxury condominiums, high end property investors are still waiting for prices to fall further. Many 5* condominium auctions have no bidders at 2nd and 3rd outings.

The Triple Whammy
Buying interest has returned for the affordable landed terrace houses market. But as anecdotal evidence from property auctions of 5* condominiums in KL indicate , sentiment towards the high end property segment is still fragile: Just Google “Lelong KLCC condo “

Foreign property investors from China and Red Dot Island that used to account for the bulk of sales of Branded Residences in the range of RM1,500 to RM3,000 psf are staying away, spooked by the fall in the Ringgit and lacklustre rentals in areas like KLCC that are dependent on a dwindling expat pool of tenants.

Some high end property developers of Branded Residences and 5* luxury condominiums without deep financial pockets will face strong headwinds due to a “Perfect Storm” in 2023 :

1. rising interest rates (resulting in greater financing costs),

2.higher building materials costs (due to inflationary pressures worldwide) and

3.a drop in housing mortgage demand for luxury apartments (leading to dwindling buyers for their unsold inventory).

BURSA Malaysia Securities Bhd has just placed Penang based Ivory Properties Group Bhd under the Practice Note No 17 (PN17) category of financially troubled companies. Will there be more developers joining the list of PN17 group of listed companies in 2023?

Will any nascent property market recovery be snuffed out if the economy turns south, ie turn out to be a dead cat bounce? The US looks like it's already in a recession by some yardsticks , e.g. two consecutive quarters of negative GDP growth. See Bloomberg's "Is the US in a recession?”

Will Chinese property investors turn towards Malaysia because of growing woes in the China property market? Many Chinese home buyers are not paying their loan installments because developers have stopped construction. There are reports that home buyers in 86 cities are defaulting on their loans.

In a previous post at my property blog 360 KLCC I looked at the EverGrande crisis in China and it's possible impact on China's economy should the world's most indebted developer be allowed to be liquidated. See also Financial Times's infographics driven YouTube explanation of the EverGrande crisis's origins in “EverGrande: The end of China's property boom”.

https://pictr.com/images/2022/08/03/B3Zx5f.md.jpg
Cavatzu
post Aug 25 2022, 07:39 AM

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If you’re looking at the top end of the market, then yes these are pretty much discretionary spending goods and there’s been a real pullback from these types of purchases. I feel that priorities have shifted also so the local mass affluent who may have been a potential client base for these type of property are now not.

There’s so many centres of gravity being created in KV right now that it’s pulling focus from one another. Between TRX, 118 and BBCC: that’s just a lot of high end property to be absorbed. KLCC will be seen as the established old guard and will have its admirers but is now dated.




TSWebspeed P
post Aug 30 2022, 08:19 PM

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QUOTE(Cavatzu @ Aug 25 2022, 07:39 AM)
If you’re looking at the top end of the market, then yes these are pretty much discretionary spending goods and there’s been a real pullback from these types of purchases. I feel that priorities have shifted also so the local mass affluent who may have been a potential client base for these type of property are now not.

There’s so many centres of gravity being created in KV right now that it’s pulling focus from one another. Between TRX, 118 and BBCC: that’s just a lot of high end property to be absorbed. KLCC will be seen as the established old guard and will have its admirers but is now dated.
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I am not sure about these new "centres" of gravity IE TRX, 118 and BBC. I think but cannot be 100*% sure they are probably going to turn out to be white elephants. There is simply no demand. Don't believe me? Do a simple test.

Just Google Lelong KLCC and you will find many auctions of 5* KLCC condominiums at RM500-600 PSF. Shocking but true. Many were launched at RM800-900 PSF just 10-15 years ago.




Cavatzu
post Aug 30 2022, 09:00 PM

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QUOTE(Webspeed @ Aug 30 2022, 08:19 PM)
I am not sure about these new "centres" of gravity IE TRX, 118 and BBC. I think but cannot be 100*% sure they are probably going to turn out to be white elephants. There is simply no demand. Don't believe me? Do a simple test.

Just Google Lelong KLCC and you will find many auctions of 5* KLCC condominiums at RM500-600 PSF. Shocking but true. Many were launched at RM800-900 PSF just 10-15 years ago.
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I agree the demand just isn’t there for luxury high rise. Landed is the real winner here. Just to cite the case in Australia, landed prices pretty much went up 50% in the span of Covid whereas units remained stagnant and those in the city centre actually regressed. Those who would buy into luxury high rise - wealthy foreigners have been terribly snubbed by the government.

Do you find KLCC to be an exceptional place to live in? It had its moments as the pinnacle of visibility and conspicuous luxury. Strip away the giant mall with overpriced brands and you get a former race track teeming with people and traffic.

The new centres of gravity are just that - new. KLCC and it’s surrounds are over 20 years old now. For people who would buy into conspicuous luxury, this is important.

This post has been edited by Cavatzu: Aug 30 2022, 09:10 PM
jehhlim
post Nov 1 2022, 01:01 AM

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QUOTE(Webspeed @ Aug 3 2022, 10:59 AM)
Based on a survey of its real estate agents, Juwai IQI’s CEO says a recovery is imminent in the next 12 months.  Elsewhere,  Knight Frank Malaysia also expects prices of residential properties to rise.  Ceteris paribus, I expect real estate professionals to be optimistic about the property market. Otherwise who will buy property?
But are the prospects for a broad based market rally really there ? If Bolehland follows the US into recession next year, perhaps the property market might NOT see a rally but a dead cat bounce?
Based on anecdotal evidence from lackluster auctions of 5* luxury condominiums, high end property investors are still waiting for prices to fall further. Many 5* condominium auctions have no bidders at 2nd and 3rd outings.
The Triple Whammy
Buying interest has returned for the affordable landed terrace houses market. But as anecdotal evidence from property auctions of 5* condominiums in KL indicate , sentiment towards the high end property segment is still fragile: Just Google “Lelong KLCC condo “
Foreign property investors from China and Red Dot Island that used to account for the bulk of sales of Branded Residences in the range of RM1,500 to RM3,000 psf are staying away, spooked by the fall in the Ringgit and lacklustre rentals in areas like KLCC that are dependent on a dwindling expat pool of tenants.
Some high end property developers of Branded Residences and 5* luxury condominiums without deep financial pockets will face strong headwinds due to a “Perfect Storm” in 2023 :
1. rising interest rates (resulting in greater financing costs),
2.higher building materials costs (due to inflationary pressures worldwide) and
3.a drop in housing mortgage demand for luxury apartments (leading to dwindling buyers for their unsold inventory).
BURSA Malaysia Securities Bhd has just placed Penang based Ivory Properties Group Bhd under the Practice Note No 17 (PN17) category of financially troubled companies. Will there be more developers joining the list of PN17 group of listed companies in 2023?
Will any nascent property market recovery be snuffed out if the economy turns south, ie turn out to be a dead cat bounce? The US looks like it's already in a recession by some yardsticks , e.g. two consecutive quarters of negative GDP growth. See Bloomberg's "Is the US in a recession?”
Will Chinese property investors turn towards Malaysia because of growing woes in the China property market? Many Chinese home buyers are not paying their loan installments because developers have stopped construction. There are reports that home buyers in 86 cities are defaulting on their loans.
In a previous post at my property blog 360 KLCC I looked at the EverGrande crisis in China and it's possible impact on China's economy should the world's most indebted developer be allowed to be liquidated. See also Financial Times's infographics driven YouTube explanation of the EverGrande crisis's origins in “EverGrande: The end of China's property boom”.
<a href='https://pictr.com/images/2022/08/03/B3Zx5f.md.jpg' target='_blank'>https://pictr.com/images/2022/08/03/B3Zx5f.md.jpg </a>
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Recovery?? A Kuchai Lama property just went abandoned with hundreds of victims…worse is yet to come!!!!

taitianhin
post Nov 1 2022, 01:12 AM

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In Serious side, I believe properties are at bottle neck of something

- Lelong keep coming in. Especially One bidder property takers are a lot...
- Rental Market in KL city is going down, because not enough Expat to join the rental market. When rental price go down due to over supplies, then the rental income couldnt serve the Loan Monthly installment. And it cost ppl to fork out money for monthly payment.
- when ppl need to fork out $$, if they think is not worth to stay, they would sell. If domino effect created, more ppl will sell due to property price drop. and it become over supplies of selling

My study show Damen-subang , Regalia-KL have impacted. Just to name a few

Short answer - slowly going down
mini orchard
post Nov 1 2022, 06:48 AM

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Generally, many people on the street may not see the trend in property pricing but based on general assumptions of overhang properties or auctions.

If one were to follow transacted pricing and portal advetisements, there are signs that indicate the property pricing trend.

Valuers and agents spend years gathering data to study the trend.

Transacted and advertisement pricing have increased post mco in my area. Cant comment on other areas as I dont monitor those placees but generally, if one is buying into good locations, it will indicate an upward trend.

Even when property market was 'hot' then, poor locations will not see much upward price movement. A couple of thousands maybe but nevertheless, a price increase or recovery thou.

Auctions are different trend and not a good indicator of pricing because the properties are sold on different criterias. Past transacted data of auction units or abnormal pricing are excluded from valuation comparison method or studying of market trend.

Similar to unsold developers units. A 'price dropped' doesnt meant the trend is going down but how the price was tag initially. A 1 mil launching price and a 30% discount 5 years later is NOT a falling trend but developer foregoing abnormal profits.

In the long run, properties pricing should go up albeit one or two intermittent drop along the way and NEVER will it fall to ZERO.

'Investment' criterias are another topics because people buy properties for different reasons, albeit hoping to breakeven or make some money maybe the reason over the years.
Dunamiz
post Dec 4 2022, 03:01 PM

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I just started my journey into property investment after putting it off for so many years and would appreciate the insights from the sifus here. I'm currently staying in a landed house and had bought an apartment in Puchong about 10 years ago just based on advise that property is a good way to keep up with inflation. Whilst my landed house had appreciated double since I bought it almost 20 years ago, I made a mistake by buying the aforesaid apartment sub-sale at way above the median psf then. In terms of capital gain, it has been zero. Current rent is also below 4%. I'm just waiting it out to increase the rent gradually. Having saved up, now I'm considering buying another property. I had been looking around and based on the price range, a service apartment or condo priced below RM500,000 is considered affordable to the mass market now. And that so long as I buy below RM500,000 in Sentul where jobs are plentiful in the vicinity and the location being around 5km to 6km to KL City Centre, there will always be demand either for own stay or rent right? Is my assessment correct?
mini orchard
post Dec 4 2022, 04:11 PM

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QUOTE(Dunamiz @ Dec 4 2022, 03:01 PM)
I just started my journey into property investment after putting it off for so many years and would appreciate the insights from the sifus here. I'm currently staying in a landed house and had bought an apartment in Puchong about 10 years ago just based on advise that property is a good way to keep up with inflation. Whilst my landed house had appreciated double since I bought it almost 20 years ago, I made a mistake by buying the aforesaid apartment sub-sale at way above the median psf then. In terms of capital gain, it has been zero. Current rent is also below 4%. I'm just waiting it out to increase the rent gradually. Having saved up, now I'm considering buying another property. I had been looking around and based on the price range, a service apartment or condo priced below RM500,000 is considered affordable to the mass market now. And that so long as I buy below RM500,000 in Sentul where jobs are plentiful in the vicinity and the location being around 5km to 6km to KL City Centre, there will always be demand either for own stay or rent right? Is my assessment correct?
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1. How much savings you have now ?
2. Where do you currently live ?
3. How much bank borrowing for this new property ?
4. Is your own current assessment eligible for bank loan taking into account the two properties ?
5. Where is your next preferred location other than Sentul ?
Dunamiz
post Dec 4 2022, 09:05 PM

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QUOTE(mini orchard @ Dec 4 2022, 04:11 PM)
1. How much savings you have now ?
2. Where do you currently live ?
3. How much bank borrowing for this new property ?
4. Is your own current assessment eligible for bank loan taking into account the two properties ?
5. Where is your next preferred location other than Sentul ?
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1. RM250,000
2. Where do you currently live ? Putra Heights
3. How much bank borrowing for this new property ? Considering RM240,000
4. Is your own current assessment eligible for bank loan taking into account the two properties ? Yes
5. Where is your next preferred location other than Sentul ? Taman Equine

mini orchard
post Dec 4 2022, 09:51 PM

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QUOTE(Dunamiz @ Dec 4 2022, 09:05 PM)
1. RM250,000
2. Where do you currently live ? Putra Heights
3. How much bank borrowing for this new property ? Considering RM240,000
4. Is your own current assessment eligible for bank loan taking into account the two properties ? Yes
5. Where is your next preferred location other than Sentul ? Taman Equine
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In my opinion, is better to buy nearer to where you live for better management of tenants and maintenance of the property.

If I were you, I would look onto auction property instead of buying subsale for better capital appreciation. Many newly vp properties in auction market are selling very much lower than developers' pricing ... as much 50% 'discount' which you wont get in subsale.

For eg, if you managed to buy one for less 30%, you are orrdi one step ahead of all first buyers. 30% of 500k is 150k savings ! Assuming both fetches similar rental your % return is higher.

If you are not familiar with auctions, there are many good articles in the net for knowledge. Follow some auction agents page in fb to learn further.

Dont rush into buying as I believed the property market wont have any major upset within the next few years plus the mushrooming of RSKU and rumahwip which took away many first time buyers and tenants from other normal projects.
Dunamiz
post Dec 5 2022, 12:16 AM

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QUOTE(mini orchard @ Dec 4 2022, 09:51 PM)
In my opinion, is better to buy nearer to where you live for better management of tenants and maintenance of the property.

If I were you, I would look onto auction property instead of buying subsale for better capital appreciation. Many newly vp properties in auction market are selling very much lower than developers' pricing ... as much 50% 'discount' which you wont get in subsale.

For eg, if you managed to buy one for less 30%, you are orrdi one step ahead of all first buyers. 30% of 500k is 150k savings ! Assuming both fetches similar rental your % return is higher.

If you are not familiar with auctions, there are many good articles in the net for knowledge. Follow some auction agents page in fb to learn further.

Dont rush into buying as I believed the property market wont have any major upset within the next few years plus the mushrooming of RSKU and rumahwip which took away many first time buyers and tenants from other normal projects.
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Thanks ... this is valuable advice. Much appreciated

Cavatzu
post Dec 6 2022, 07:58 PM

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Bear in mind that if a place is rife with auctions then it was overpriced when sold and isn’t supported by either rental or subsale market.

The golden goose is getting a 700-800k property being auctioned at 500k+. Tough find though.
nihility
post Dec 20 2022, 03:49 PM

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I think the good indicator is the rental market. If the rents is going up, property market recovery will follow. If the rent market is getting shittier, property market are not going to recover.
mini orchard
post Dec 20 2022, 08:32 PM

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Any property that goes into auction market is NOT because of overpriced property.

Blaming overprice property because of auction sounds naive and self entitled. Is always others fault .... haiz.

This post has been edited by mini orchard: Dec 20 2022, 09:10 PM
Dunamiz
post Dec 23 2022, 01:52 PM

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I have been looking for an apartment or condo as investment for many months already .... in many areas in KV all the way up to Penang ... in the end, I think its impossible to find one that is perfect based on my budget and the property's price, location, title, density, potential rental, amenities, boosters, sub-sale or auction.

Cavatzu
post Dec 26 2022, 02:46 AM

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QUOTE(mini orchard @ Dec 20 2022, 08:32 PM)
Any property that goes into auction market is NOT because of overpriced property.

Blaming overprice property because of auction sounds naive and self entitled. Is always others fault .... haiz.
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No it’s not the only reason but you can’t tell me recent lelongs where the property in question loses half its sale price does not point to incorrect valuation somewhere.

It’s also a cumulative effect with demand/supply. Fundamentals are simply not supporting the price the property was sold for.
mini orchard
post Dec 26 2022, 06:20 AM

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QUOTE(Cavatzu @ Dec 26 2022, 02:46 AM)
No it’s not the only reason but you can’t tell me recent lelongs where the property in question loses half its sale price does not point to incorrect valuation somewhere.

It’s also a cumulative effect with demand/supply. Fundamentals are simply not supporting the price the property was sold for.
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You can disagreed but the facts remained if the buyer dont buy, nothing will happen.
Cavatzu
post Dec 26 2022, 06:48 AM

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QUOTE(mini orchard @ Dec 26 2022, 06:20 AM)
You can disagreed but the facts remained if the buyer dont buy, nothing will happen.
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People will always buy things. Buying well is another - that’s the only power you have as a consumer.
mini orchard
post Dec 26 2022, 07:26 AM

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QUOTE(Cavatzu @ Dec 26 2022, 06:48 AM)
People will always buy things. Buying well is another - that’s the only power you have as a consumer.
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Isnt this i am refering ?

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