Source: https://m.facebook.com/story.php?story_fbid...mibextid=q5o4bk

This was too good an article for me not to share. Credits to Propcafe.

PROPCAFE GPT: Can you share some experiences related to the KLCC property rental market article earlier?

The latest exprience of PROPCAFE in KLCC property was related to one of the properties (near to 10 yrs old building) in a strategic location. Thanks to its low number of unit per floor and density, the small 1+1 room unit able to rent out around rm3800-4300 before the pandemic. The rental dropped significantly due the airbnb activities then Covid MCO period. The management then decided to ban the airbnb activities via the AGM which helped to stablise the rental. Unfortunately, pandemic has made most expats exit our country. This property then brought in many local tenants with lower budget. Due to its location and low density (& privacy), it was well received by local professional from other states. So many agents see great opportunity from this desperare period (landlords) to market it (previously not easy to see avg. or bad agencies or agents get the mandate from landlords here) with the rental price RM2200-2800. This particular unit was rented out at RM2,500 (painful as it dropped from rm4000). With this RM2k+ level, so many KLCC agents wannabe started to come in and the standard of services also declined significantly. Many landlords there have no choice but to entertain this type of agents who have many second or third tier customers, of course with their low ball approach to fish the customers in superb location like this.

Anyway, the extension of tenancy sees the rent moved up to RM2800 when MCO was lifted and life slowly went back to normal. Too bad, the agents continued to try their "pasar malam" way of marketing i.e. cheap and volume game to squeeze desperate landlords and close more deals i.e. to bring in sub-standard & lower quality of tenant to the building. Eventually that tenancy ended recently and of course the agent continued trying to convince the landlord to stick the rent around rm2500-2800 level and provided the same stories by showing all the lowly priced advertisement from the two property portals which clearly filled with the advertisements by two to three agencies with low ball prices. Having said that, there were few geniune agencies with much better prices but their advertisements were pushed to the lower pages in portals.

One should know the game well in property advertisement there!Just few calls could demystify their stories easily and proved not many units were available in the market. Although landlord still receive many inquiries from agents, again mostly were those who want to have a quick deal with low price. Often, no return calls after landlord stated down his price. The landlord decided to stick with the agent who at least tried to set the reasonable rental price in the portal (not those in the first page for sure). After 2.5 weeks from the day it was available, the good agent closed the deal after her first viewing arrangement with the price of RM3600. The tenancy started 1.5 weeks time. It is still not back to its peak back then but it is considered a decent deal as the price has moved from RM2500 (MCO) to RM3600 that translated to 44% improvement from the low.

The moral of the story is KLCC landlords need to be alerted and find out the actual liquidity of the property. The property portal could be misleading and the agencies do it with their own purpose and strategy. While landlords could not do much about the portal and advertisement, landlords can still make test calls on the low price advertisement. The trick is one must also check more and talk to agents who posted higher price too (often they ll share you with the liqudity close to the market). Remember, no agents love to post high price and get less enquiries. 😁 So they will be more trustworthy.

Hope the above case helps! To KLCC property owners - HAVE FAITH! You can always turn the tide! 💪

PROPCAFE GTP: Why KLCC Property's Rental Market Recovery Lagging Behind Other Areas?

It is all about Supply & Demand, Airbnb Operation, Unprofessional Agents, and Ignorance of Landlord.

1. Supply & Demand: KLCC tenant market's demand and supply are yet to reach the right equilibrium point as the supply keep coming in (though much less than 5-7yrs ago) and demand was dropping last two years. "Tthanks" to Covid (Expats number went down significantly), Need for Office (WFH or hybrid becomes norm), City Office Movement (from KLCC to PJ, TRX, and future Merdeka 118) and lastly FDI and economy is not recovering fast enough to bring in more MNCs, better city jobs, and foreigners to KLCC. Policies that attract foreigners like MM2H also altered and became less friendly.

2. Airbnb Operation: While the opening up of countries help tourists arrival and airbnb activities, most of the investors (while waiting for the return of expat) turn to airbnb to reduce their "pain" on installment. Tenants who look for long term lease do not feel comfortable with the chaotic lobby, parties, constant noise pollution, and mis-behaviour of guests in common facilities. Not to say the facilities' wear & tear issues becomes more serious that affect the attractiveness of the property. Tenants become less willing to folk out higher budget for it and they may also want shorter tenancy period to keep their choices open.

3. Unprofessional Agents: COVID/ MCO was the nightmare to KLCC property owners. No expats, no airbnb, and relatively higher maintenance fees & installment. The collapse of demand of KLCC property made the rental fall drasticly which became so affordable (some are cheaper than Cheras, Puchong etc). Because or this, agents bring in more lower tier tenants into this market. While the rent of most of the other areas have moved up 30-40pc from the low, KLCC properties is still struggling to push up 20pc level. Agents are still giving the same comments/ reasons to landlord i.e no expat, plenty supplies and hope for quick deals with low pricing. Many landlords are furious that agents who comtinue to advettise their units at low price and fish the enquiries. Many times, the units either not available or "rented" out when test calls are made. With airbnb back in business to fill up more units, agents should help KLCC to go back to its proper level (easily compare the rent in other areas). Agents should not unethically low ball the landlord and create artificial cheap rental market out there.

4. Ignorant Landlord: KLCC property owners need to be patient and not too panic to simply accept all prices as long as it can rent out. Please in mind that low budget tenant may not be the type of tenant you want to have (trouble x 3 when they move out). If you see the matured market like Desa Parkcity and Mont Kiara, the financially strong owners make the market more solid and sustainable. More so, it bounce back immediately after MCO. So, landlords pls do not just check the listing in two big property portals because there are many "fishing" advertisement. If you are uncomfortable with the quoted low rental, just make few calls to the low ball agents and find out more (for viewing and confirm the rental). You will find many are "bullshit". So, moral of the story is you cannot be lazy when comes to investment, just do more homework and get the right agent to make more investment more worthwhile. When majority of landlords do it cohensively, the property rental market in KLCC surely will come back to a very reasonable level soon!


This post has been edited by Cavatzu: Feb 27 2023, 02:31 PM

The bigger question is what happens to the surrounding areas sold on proximity to KLCC like Ampang, Kampung Baru and Wangsa Maju. Ampang has been a very good test case.

This post has been edited by Cavatzu: Feb 27 2023, 05:12 PM

We’re no Singapore nor Thailand and even Cambodia or Vietnam has more expats. Nor do you have the wage levels of the Middle East to make the conservative lifestyle worth it.

The only thing we have going is relatively affordable housing and an environment for retirees if you don’t like partying. They have recently destroyed this with their MM2H debacle.

This post has been edited by Cavatzu: Mar 1 2023, 08:02 AM

Very fortunate that you are seeing an uptick though perhaps not even at the levels it was pre-Covid. As a comparison do you know how overheated the rental market is in Singapore or Australia. They are at historical highs! Like 30% above previous peaks. Wealthy Malaysians - you really are better off parking your money elsewhere.

China told their students that their degrees won’t be recognized if they stayed on shore indefinitely driving this huge surge. This is on top of relatively high demand from new migrants coming in etc.

Malaysia does not really have demand levers beyond being cheaper than everyone else and that there is a substantial Chinese population which appeals to East Asians.

This post has been edited by Cavatzu: Mar 1 2023, 04:19 PM

You’re preaching to the choir dude. Even Indonesia is trying to retain Chinese wealth and influence. Whatever is happening here is a deep rooted insecurity and divide & conquer politics.

There was not much understanding of what was happening here internationally cuz they were trying to paint a rosy picture but it’s been unravelling for some time.

Discrimination politics do not work in this decade when many corporates are meant to be opposed to it. Identity based consumerism is one step away where products will be punished based on where they are manufactured based on underlying discriminatory principles.

Apartheid was over 20 years ago and it seems stronger in this country than ever before. If we go the way of Iran or Zimbabwe it’s game over.

This post has been edited by Cavatzu: Mar 1 2023, 07:54 PM

Correct me if I’m wrong.

The types of expats we get nowadays are typically academic, tech or lifestyle. With perhaps the occasional C suite. OnG expats are virtually non existent.

Academic are your teachers/lecturers in International Schools or private colleges. I believe they get subsidised housing to the tune of 4K per month. Even then may not be true anymore.

Tech usually South Asians but can be diverse will have fairly higher wages than your average local due to specialised skill set but be concentrated in areas like Sentral and Bangsar South.

Lifestyle will encompass your East Asians moving here for children’s access to schooling whilst maybe building up a business or still holding down a job in their home country. Digital nomads are the budget version of these.

There are the occasional senior management rep who are posted here for MNCs to head up teams etc. Though perhaps not quite as buoyant as before?

Until there is a run on OnG prices, doubt you will see the heady highs of 10 years ago when mining execs were on big packages.

This post has been edited by Cavatzu: Mar 4 2023, 07:59 AM

How long can people sustain? You’ve already had 3 years of misery so add another 2-3 years for proper recovery? People who bought at 2014 peaks have already bled like Hailat for years at this point.

“Agents say”, that’s all the info one needs. With the incoming regulations around Airbnb what guarantee is there that this mode of renting can continue. We are one disaster away from all this shutting down as there is a very strong case to be made about safety and security let alone all the usual precautions that apply to a hotel. Where are the crisis management procedures in case something happens again?

Airbnb was meant to be a way to rent out a spare room conveniently not be a substitute hotel which it has evolved into.

This post has been edited by Cavatzu: Mar 4 2023, 05:04 PM

It’s not profitable per say but it gives owners that high for the few months of tourist season when bookings are good. Haven’t we learned the pitfalls of having a property based around a single strategy particularly tourism.

Cherry picking data for marketing reasons is very much part of the sales process. That’s why people need to be informed as many do not have the financial acuity or intelligence to fend off these convincing arguments.