This article first appeared in City & Country, The Edge Malaysia Weekly on December 19, 2022 - December 25, 2022

The excitement in the auction market returned in 3Q2022 as the normalisation of economic activity sparked interest in the overall real estate market, particularly in the landed residential and industrial property segments, be it in the primary, secondary or auction markets.

In the commercial property auction segment, there were increasing enquiries for and growing interest in shophouses in good locations, according to Property Auction House executive director Danny Loh. The retail lots and office premises segment remained sluggish, however, and the auction take-up rate for those properties remained low, mirroring the performance of the primary market. 

“For commercial properties, shophouses and industrial lots in good locations are still some of the most popular properties in the real estate market. Hence, there weren’t many up for auction [in 3Q2022],” Loh tells City & Country in an email interview.

Meanwhile, the high-rise residential property market also experienced a slow take-up rate in 3Q2022, he says.

“Many purchase [high-rise residential properties] for the rental yield, which is still not performing very well, hence the slow take-up [in the primary market] … The number of these units has also increased in the auction market in 3Q2022,” he comments.

On the other hand, landed residential properties are seeing strong demand, which Loh attributes to the ever-growing housing need and property being a hedge against inflation.

“People have higher confidence to commit to a big-ticket item [now]. Previously, they were concerned about their health and wealth ­issues … [The market improvement] could also be attributed to an increase in the number of upgraders moving from high-rise to landed housing,” he says.

A stronger demand for landed properties was also seen in the auction market in 3Q2022, with a few auction bids concluded at a higher final price than in the previous quarter.

For example, a 2-storey terraced house in Seksyen U13 in Shah Alam with a reserve price of RM756,000 was auctioned on Sept 29. It attracted a number of bidders and was finally sold at RM854,000.

The freehold property has a land size of 1,798 sq ft, 4+1 bedrooms and five bathrooms. It is just a three-minute drive from Setia City Mall and surrounded by many amenities. The market price of the property was RM840,000 in 3Q2022.

Another well-received auction property in 3Q2022 was a 2-storey terraced house in Mutiara Tropicana, Petaling Jaya. With a reserve price of RM800,000, it was sold for an impressive RM1.37 million on Sept 12.

The property has a land area of 2,637 sq ft, 4+1 bedrooms and four bathrooms. It has a spacious car porch that fits four cars. The leasehold, individual-titled property was valued at RM1.2 million in 3Q2022.

On Nov 1, a semi-detached house in Kota Emerald, Rawang, was auctioned for a reserve price of RM801,900 and sold at RM937,000.

The freehold house, with a land size of 4,627 sq ft and market value of RM1.1 million, has six bedrooms and four bathrooms. It is located in a gated and guarded community close to the town centre of Rawang.

Given the improved market sentiment and strong housing demand, Loh believes the market will continue to perform well in the near future.

“While many people are looking to invest in real estate, rising building material and construction costs have propelled many to look at the auction market. To buy a second-hand house in a subsale market, the renovation and refurbishment cost could be even higher than the reserve price of an auction property; thus, it is a good time to look for a good buy in the auction market,” he says.

With the loan moratorium lifted and the overnight policy rate (OPR) rising in the last nine months, he expects banks’ non-performing loans to rise, contributing to more properties going under the hammer in the near future.

Loh notes: “Do keep in mind that some people are still cautious about buying [property] for investment purposes, as the rental yield may not be feasible compared with the prevailing fixed deposit rate offered by the banks. There are also concerns about the oversupply of high-rise residential units, which may not be easily rented out upon completion. If buyers do not have strong holding power, these high-rise residential units will go under the hammer in the future.”

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