The co-founder of Polygon Properties, Derek Soh, shares his views of the property market in 2019.

Derek Soh, co-founder of Polygon Properties.

In your opinion, is there a property overhang in Malaysia?

We are a bit overbuilt in Malaysia – not because we lack the population to absorb it all but because people lack the income to buy. Most of us have to buy cars too, which makes buying property more difficult.

That’s why the government’s initiatives and benefits, such as the discounts and exemptions of stamp duties on overhang property – not new and upcoming developments – are helpful.

In addition to the new affordable housing initiatives and exemptions to clear off the unsold units. Which means now is a good time to buy property as there are a lot of good bargains out there.

What is your vision of the Malaysian property industry in light of issues such as the current property overhang and the need for affordable housing?

Back in 2016, it was autumn – it wasn’t winter yet. Now is definitely winter, but spring will most likely come in 2020 or 2021. The effects of new government initiatives will result in higher property prices for mature developments.

"Which means now is a good time to buy property as there are a lot of good bargains out there." Photo by Patrick Leong on Unsplash.

Prices have gone down now because of the many affordable housing initiatives – but prices in the Malaysian property market will shoot up again. Prices for Klang Valley properties should be averaging around RM800 to RM900 per square foot (psf) and properties around KLCC should be priced at about RM2,000 psf, but the average market prices have gone down to about RM600 to RM700 psf for top-tier properties and RM1,300 to RM1,700 psf around KLCC.

What is your opinion of Airbnb & short-term rentals?

I support the concept. There is already the issue of the property overhang and the long-term rental market is not enough to cover the gap – a lot of people also cannot afford to buy. Without short-term leases, many properties would be empty. A lot of a property’s value comes from rentals. If short-term rentals like those from Airbnb are doing well, the development will also do well.

Places like Penang and Melaka are tourism hotspots, and guests may not want to stay in a hotel for more than a few days as it can get expensive. If you don’t rely on Airbnb then you could lose the crowd. If you don’t do it, nobody will rent, and with few being able to afford to buy, developments could just end up with low occupancy rates.

"Places like Penang and Melaka are tourism hotspots, and guests may not want to stay in a hotel for more than a few days as it can get expensive." Photo by elCarito on Unsplash.

Is there a potential for conflict between property owners who rent for the long term and owners who let their properties out on Airbnb or similar short-term rental platforms?

This is the trend and you can’t stop it – but the requirements, the screening processes, as well as rules and regulations need to be improved. Management bodies need to know which units are under Airbnb or other short-term rental platforms, and they need to formulate standard house rules.

Short-term rentals should be subject to rules such as guests being prohibited from using public facilities, they should know where they can park, and they should know where the dust bin is so that they know where to throw rubbish.

In some developments, Airbnb guests cannot use the shared facilities – if there are any items damaged, the residents will have to pay for repairs. So, short-term rental guests are barred from using these areas – if they want to use them there should be very high charges to cover maintenance costs.

Will the wider use of property technology have a positive effect on property transactions?

I think technology can help the real estate industry to be more productive and effective, but it cannot disrupt the industry. At the end of the day, agents are still needed to bring buyers to view the property. There will always be property owners who would prefer to have agents deal with tenants.

"I think technology can help the real estate industry to be more productive and effective, but it cannot disrupt the industry." Image by FunkyFocus from Pixabay

Technology can help buyers to select, view, and buy properties online – but every floor is different, every unit is different, and the renovations of each unit could be different. Buyers can select their properties on the internet, but they still have to view the property when purchasing – buying real estate is not like buying a RM30 LED light that you can just throw away.

Do you feel that co-living and co-working spaces are a viable solution to address the current glut of property, or is it just a passing fad?

I think they’re very good ideas, but there are some important factors to consider. One must look at location, public transport and price.

Locations that are congested, where there is not enough space, would be a good start. Overseas, things are different, because rental is expensive, some people cannot afford the rental and that’s why they need to share the costs.

Besides having the right location, public transport is also important. There is no point in choosing a location without any public transport options available nearby.

The price also needs to be considered. Why do people want to rent rooms? Because they can’t afford a house. If the price is the same, why would people want to rent a room?

Do you believe property owners should have the right to discriminate between tenants on the basis of ethnicity?

I believe it really is up to the preference of the property owner. Sometimes a certain level of filtering and selection is necessary to maintain the quality of a residence and to avoid the issues of fraud, crime, and cost.

Personally, I don’t encourage discrimination but property owners need to take certain nationalities into consideration – for example, until there are more comprehensive regulations or screening processes in place, they need to protect the safety of their living area.

Read more from our interview with Derek Soh.