This article first appeared in City & Country, The Edge Malaysia Weekly on December 6, 2021 - December 12, 2021

Following the lifting of travel restrictions, interest in auction properties has picked up, says Property Auction House executive director Danny Loh. “The excitement in the auction market returned once travel restrictions were lifted, and the response has been commendable.”

The favourable response was welcomed, as the property auction market had been quiet because of the Movement Control Order (MCO) lockdowns. “We were only allowed to conduct auctions during Phase 2 of the National Recovery Plan, with restrictions and in compliance with the SOP [standard operating procedure] set by the Ministry of Health. No physical auction was allowed, and all auctions were conducted on a fully online basis,” says Loh. 

“The response was quiet initially, as interstate and intrastate restrictions were imposed. Prospective bidders were unable to conduct the physical viewing of the properties and had to rely on virtual inspections. The response was rather slow and not many properties were sold.”

He attributes the recent good reception to a few factors. The first is pent-up demand, following the MCO period and owing to the ever-growing housing need. “Because of the non-takers at the initial [auction] stages, prices of the properties have dropped to the level of irresistible buy — very much below market value,” he explains.

He adds that the adoption of online bidding has also fed the interest. “More bidders are getting used to the online bidding system. Prospective bidders can now bid from anywhere at their own comfort. They do not need to present themselves at the auction venue.”

The other reason for the good take-up is the low interest rate. “This may have attracted people to invest more in properties. Also, owing to the lockdown, some may have been able to save money,” Loh says, adding that most of the buyers are purchasing for their own stay.

Loh highlights three properties recently sold at auction. The first is a unit in Residensi Xtreme Meridian (also known as Astoria Ampang) in Kuala Lumpur, a new serviced apartment located off the southern side of the Ampang-Kuala Lumpur Elevated Highway (AKLEH) and situated among other condominiums and apartments such as M City, GCB Court, Ampang 971 and Seri Hening Residence.

The unit that was auctioned is 747 sq ft in size and, according to Loh, had gone through several rounds of auctions. “The last auction was on Nov 6 at a reserved price of only RM313,600. The market value for this property is around RM490,000. At the auction, it attracted a total of 33 bidders and was finally sold to a lucky bidder at RM427,000,” he says.

The second property is a unit in Richmond Kiara 3 in Mont’Kiara, KL, about 10km from the KL city centre. The freehold 3-bedroom condo measures 2,136 sq ft and comes with two parking bays. It was recently put up for auction at a reserved price of RM656,100, or RM307 psf, and was bid and sold at RM730,000. The market value for a similar property is about RM810,000, says Loh.

The third property is a unit at DC Residensi in Bukit Damansara, KL. This 2-bedroom serviced apartment is part of the Damansara City development, which is integrated with commercial buildings and a retail mall. Nearby properties include landed properties, condos and apartments in neighbouring Taman Damansara Endah, Sri Beringin, Medan Damansara and Bukit Bandaraya.

The unit in DC Residensi was put up for auction on Oct 12 at a reserved price of RM1.053 million and bid up to RM1.17 million. According to Loh, the market valuation for a similar property is around RM1.3 million.

In terms of outlook, he says: “Generally, if you are looking to invest in real estate, this is the time. The low interest rate and ever-increasing building material and construction costs have propelled many to look at the auction market. The replacement cost of these properties is even higher than the auction price, thus it is a good buy.”

Loh observes that demand for landed residential properties has spiked and this could be due to the lockdowns. “The restriction of visitors to high-rise units during the lockdown could have put people off,” he says.

As for commercial properties, Loh says retail lots and offices may see softer activity, as more people are getting used to working from home. “Working from home and shopping online may become a norm, thus big office and retail space may not be required as much.”

In conclusion, Loh believes now is perhaps the time to look at the auction market as a hedging tool against economic uncertainty and the expected spike in inflation rates. “You can get instant possession of the property compared to new projects, which may take some time to complete.”

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