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City&Country: More homebuyers considering auction properties

The number of genuine homebuyers looking for homes on the auction market has increased lately. These homes continue to see strong sales, according to auction houses.

Generally, homebuyers prefer landed homes over non-landed ones. “Condominiums are tougher to sell,” says auctioneer Razali Hussain, although he tries to persuade potential buyers to bid for condominiums in good locations.

Licenced auctioneer D Yashvanth Rao from Y Rao Enterprise says landed properties are very much in demand, and even sales of homes in locations such as Bukit Beruntung are picking up.

“More people seem to be looking at the area for long-term investments. Maybe they see potential for future growth,” he says.

Yashvanth Rao adds that property auctions are attracting more bidders compared to last year and most landed homes put up for auction are quickly snapped up.

Sales of high court auction cases have also increased. “We can see up to six or seven cases a day being sold compared to last year which usually saw only one or two properties auctioned off.”
Clarance Fernandez of MMR Auctioneers says it is important for potential bidders to understand the auction market before bidding.

He says that high court cases involve properties with issued titles while public auctions are for properties that have yet to be issued titles and which are usually still under the developers’ name.
Clarance says that high court cases usually mean the owners have outstanding charges including maintenance fees, that could amount to the thousands of ringgit.

Landed homes are still the most sought after in the auction market as potential bidders can at least see how the property looks from the outside.

“In auctions, chances of you viewing the property are low. It’s different from sub-sales, which allow potential buyers to check the house. In the auction market, the chances are very slim. At least [for landed properties] you can look at the front door and the surrounding area,” he says, adding that buyers can talk to neighbors to get an overview. However, it may be more difficult to view a non-landed home such as an apartment or condominium due to security.

According to Auction Data Sdn Bhd’s CEO Gary Chia, the months of April and March 2011 saw approximately 5,047 and 6,049 properties put up for auctioning throughout the country.

In the Klang Valley, 2,941 auction property cases in April and 2,895 auction properties were seen in March. Among them were 634 landed residential auction properties in April and another 659 in March 2011. There were 72 landed commercial auction properties in April and 91 in March, while 32 land auction cases took place in April, followed by another 32 in May.

Chia says the number of bidders has increased in recent months, particularly for auction cases in areas such as Petaling Jaya and Kuala Lumpur, as buying from the auction market is usually cheaper than from the secondary market. 

“ People today are getting more familiar with the process of property foreclosures. Auctions provide a fair opportunity to all and sales are usually transparent for buyers as well as borrowers and financial institutions,” he says.

He says that auction properties located in Rawang, Sepang and Bangi have seen transactions picking up.  

The reserve price for an auction property is usually fixed and there is hardly any adjustment to it in the short term or for at least one year.

On the condominium market, Chia says there is strong demand for condos in KLCC and Mont’Kiara, but limited supply in the auction market. The average reserve price for property located at KLCC is RM1,100 psf while in Mont Kiara, it is around RM700 psf, adds Chia.

City & Country recently surveyed landed auctioned properties in Klang Valley with a starting price of RM250,000 for the months of March and April 2011.

Notable auction properties were a 3,595 sq ft double-storey link house in Taman Melewar, Batu Caves, Selangor, with a reserve price of RM520,000 that was sold in April for RM700,000. A 1,615 sq ft intermediate double-storey terraced house in Taman Petaling, Kepong Baru, Kuala Lumpur, with a reserve price of RM390,000 was auctioned off for RM530,000.

A 2,393.9 sq ft, three-storey, cluster semi-detached house in Acacia Subang, Section U9, Shah Alam, with a reserve price of RM710,000 was up for auction for the third time in April.

Another property that was not sold during its second auction in March was a 10,236.56 sq ft, individually designed, 2 ½-storey detached house in Glenmarie Court, Shah Alam, Selangor, that was priced at RM4,320,000.


This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 863, June 20-26, 2011

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