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City&Country: Auction-- More properties expected to be sold this year

About 74,905 properties in the country were up for auction last year, 7% higher than the 70,057 cases in 2009, according to Auction Data Sdn Bhd.

The majority of the auction cases last year were low-medium-cost residential properties located in out-of-town areas.

Of the total, 67,559 were residential properties, comprising 29,318 landed homes and 38,241 condos and apartments. Some 5,291 cases were commercial properties while 2,055 were plots of land.

“About 30% of the auctioned properties were sold last year,” says Auction Data’s CEO Gary Chia, adding that the number of auction cases will probably be the same this year, with the number of properties sold rising 15%.

On average, about 25% to 30% of auctioned properties are sold every month.

He tells City & Country that rising construction costs, new properties being launched at high prices and limited or no new developments in selected established locations are some of the factors that will encourage more people to buy properties at auctions.

“More investors understand and accept auctioned properties today, with many considering auctions an alternative place to shop for property.

“Consumers are also positive overall about the impact of the country’s Economic Transformation Plan.”

In December 2010, some 3,392 properties were up for auction in the Klang Valley, increasing from 3,107 properties in the previous month.

According to Chia, the number of landed properties, comprising both residential and commercial, that went under the hammer in December in the Klang Valley rose 10% to 828 from 757 in November.

He adds that it is common to see a hike in the number of auctioned properties in December because of the timing of the auction schedule.

“The auction market is expected to be quiet this month and next because of the Chinese New Year celebrations. Investors, especially institutional, tend to be less active at this time of the year. We expect interest to return from March.”

Properties in prime areas or locations, such as Petaling Jaya, Ampang, Bukit Bintang, Damansara Heights and the Kuala Lumpur city centre, continue to draw strong attention from bidders due to their potential for value appreciation.

Also beginning to capture the interest of bidders are areas such as Seri Kembangan, Dengkil, Semenyih, Bangi and Kajang “due to affordable pricing and improving accessibility”.

Licensed auctioneer John Pakianathan says an auctioned property can always be sold “provided the price is right”. Auctioned properties are also usually located in established or mature neighbourhoods. “People like to live in good areas. In new developments, we don’t know who will be the occupants, and also amenities take time to be built,” John observes.

He says residential properties in the Klang Valley mostly command good rents and are therefore attractive to investors.

“One can also buy, redo and put a property back on the market. The value of some properties can appreciate  by RM20,000 to RM30,000.”

There is more investor interest in the commercial landed properties in the auction market in view of the long-term value gains.

“We have investors who are keen only on high-end high-rise residences in Petaling Jaya or the KLCC area which offer higher rental yields,” says John.

City & Country surveyed landed homes up for auction in the Klang Valley in November and December last year that were priced from RM250,000 onwards.

Among the properties sold in the two months was a 13,218 sq ft intermediate 4-storey detached house in Bukit Bandaraya, Kuala Lumpur, that was sold at its reserve price of RM7.29 million at its fourth auction. Another notable sale that took place at the end of last year was an intermediate 2-storey terraced house in Bukit Rahman Putra, Sg Buloh, Selangor, that fetched RM347,400 at its first auction. Its reserve price was RM257,400.

Properties that are still on the market include a 2-storey terraced house in Wangsa Melawati, Kuala Lumpur, with a reserve price of RM400,000 and a 2-storey detached house in SS1/25, Petaling Jaya, Selangor, for a reserve price of RM2 million. — Compiled  by Siti Sakinah Abdul Latif

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 843, Jan 31-Feb 6, 2011

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