The pandemic has created an unprecedented period of chances never seen before

By Joseph Wong josephwong@thestar.com.my

Buying a home during the MCO periods is proving to be a challenge but it has not deterred potential buyers.

They say that every dark cloud has a silver lining. This adage holds true in the case of the Covid-19 pandemic, which after an initial devastating blow to the property market, is now opening up opportunities for homebuyers and investors. Not just for primary properties, as the residential properties in the secondary market also see headway for those seeking real estate for investment or their own residence.

Even the oncequiet auction market has become alive with discounts, said to be as high as 20% to 30%. Property developers are upbeat over the current situation as hopes are raised, given the encouraging number of potential home buyers’ enquiries into the properties of their choice. “Based on our internal studies, it is found that people still want to have their own dream home but are put-off by cash-flow and economic stability concerns. Meanwhile, first-time homebuyers want to buy a completed property but find that the sub-sale market brings with it a fair amount of risk and inconvenience,” said Mah Sing Group Bhd (Mah Sing) group chief executive officer Datuk Ho Hon Sang.

The good news is that the buying sentiment among Malaysians remains strong as the majority are still looking to own a property, even more so in 2021. One-in-three Malaysians intend to continue with their property purchase, according to findings from a survey. Notably, the eagerness to buy is more prevalent among the younger generation. As more segments of the population are being inoculated and businesses are getting ready to re-open, consumers are expected to regain confidence in spending, including big item purchases such as properties, added Mah Sing group managing director Tan Sri Leong Hoy Kum.

“Purchasing power from households will gradually improve and we foresee affordably priced properties at strategic locations will still be well sought after. The Home Ownership Campaign (HOC), which has been extended by the Government until 31 December 2021, will provide further relief for buyers, while the multiple rounds of Overnight Policy Rate (OPR) cut to a record low of 1.75% has made it more affordable to own a home now and is beneficial for the property sector. We also remain positive on the mid to long term outlook of the sector supported by strong fundamental demand for properties due to the young demography.” he said.

But are buyers rushing to buy?

This is the real question. While the number of take-ups under the Home Ownership Campaign has been encouraging, it does not reflect the entire market. The transacted volume for residential properties has only seen a slight increase prior to the subsequent 2nd and 3rd surge of the Covid-19 cases. In Q1 2021, the transacted volume for residential property was higher at 52,273 compared to the corresponding period of 2020 at 47,045.

The transacted value was also higher at RM19.66bil in contrast to 2020’s RM15.62bil. The total property transactions in Q1 2021 also experienced an increase in both transacted volume and transacted value which stood at 80,694 transactions worth RM36.12bil. For the corresponding period of 2020, the figure stood at 72,867 transactions. However, all this was before the recent sharp spikes in Covid-19 cases in May, which triggered the full movement control order (FMCO) that the nation is currently facing.

Certainly, the FMCO has put a damper on the positive move forward for the property market as the signing of documents and interactions with the financiers cannot be done virtually. Parties who intend to purchase a property would have ordinarily signed offer letters to set out key transactional terms such as consideration, completion milestones, timing for signing of the Sales and Purchase Agreement (SPA) and related conveyance documents. With the FMCO in place, parties cannot conduct land searches due to the temporary shutdown of land offices.

A buyer who wishes to proceed on signing a SPA may only rely on the seller’s representations without independently verifying details of ownership and conditions of Property titles. Contracting parties, their respective legal advisers and property agents are not able to attend face-to-face meetings to negotiate the terms of the SPA. While virtual tours and viewings may be made available, buyers are not able to conduct a physical inspection to ascertain the existing conditions of the property. With the FMCO in effect and social distancing practices generally recommended, buyers cannot visit properties for physical viewings.

As a result, there would be delays by parties in meeting the agreed deadline for the signing of the SPA. And these are just part of the initial challenges. This is not to say that there were no property transactions since the nation was hit by the 3rd Covid-19 wave in May and the MCO period underwent multiple phases until the recent FMCO was imposed several weeks ago.

During those periods of the easing of the MCO, some transactions were pushed through. Albeit, vacant possession and the moving-in process have again seen further challenges. The industry continued to face hiccups. Nevertheless, with the massive vaccination programme being executed to the limits, many property stakeholders remain positive due to the number of inquiries from potential buyers.

Moreover, the other real estate sub-sectors are proving to be still appealing. In the industrial property subsector, Malaysia remains an attractive destination for high-value manufacturing and global services in Asia, according to Knight Frank Johor director Debbie Choy. This is due to its favourable investment environment with the availability of excellent infrastructure, telecommunication services, financial and banking services, supporting industries and skilled workforce, among other factors, she said. The emergence of e-commerce and the need for warehousing has also seen to a demand for such real estate. Like the residential property, the deeper challenge is getting all the proper documentation done in the speediest manner to keep the property market afloat.

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