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City&Country: Going, Going... Gone! Interest in auctions takes a dip

The property auction market in the Klang Valley is expected to stay quiet till 2Q2010 as prospective bidders take year-end breaks or mull the fixed 5% Real Property Gains Tax (RPGT), auctioneers say.
Auction Data Sdn Bhd CEO Gary Chia says investors, especially institutional buyers, tended to be less active at this time of the year. He expects interest to return from 2Q2010.

Chia also feels some investors would need time to accept the RPGT. Effective Jan 1, gains from the disposal of a property will be subject to the tax, irrespective of the holding period and category of owner.
According to First Auction House Sdn Bhd’s licensed auctioneer, Zaarif Zainal, interest in auctions has dipped since the RPGT was announced in late October.

He expects the current mood to prevail till next year. “However, we do see interest in commercial and landed properties,” he tells City & Country.

Syarikat R.S. Maniam’s G Nadarajan also concurs, saying the RPGT has dampened investor interest. “Investors will keep away from the market at the moment,” he says. 

In October, Auction Data put up for auction some 6,500 units of real estate comprising mainly residential (5,898 — of which 65% is highrise properties and 45% is landed properties), commercial units (488) and other types of properties (114).

“From our records, commercial and landed residential properties are more popular. We also have investors who are keen only on high-rise homes, which give higher rental yields  than landed properties,” says Chia says.

First Auction’s Zaarif says landed properties are a hot item. “From my observation in September and October, many landed homes were sold through auction because of attractive pricing,” he adds.
City & Country randomly tracked and compiled below some landed homes in the Klang Valley put up on the block in October and early November. All of these have a reserve price of RM250, 000 and above.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 786, Dec 21-27, 2009.

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