Low interest rate, rising prices of construction and building materials, as well as relaxation of standard operating procedures (SOPs) have been some of the main reasons why the real estate auction market has become more dynamic in the first quarter of 2022, according to the director of the Property Auction House. director Danny Loh.
Loh tell City Country in an email interview that the easing of travel restrictions significantly boosted the overall real estate auction market in 1Q2022.
“The overall auction market in 1Q2022 has become more active in terms of inquiries and transactions. Excitement in the auction market has returned as travel restrictions have been lifted, and the response has been commendable. reasons [for the market recovery include] ever-increasing housing needs,” he says.
In January, the government further relaxed SOPs, such as allowing interstate travel for fully vaccinated people, and activities and services at all airports and ports to operate around the clock. The government also allowed face-to-face meetings and interviews, press conferences and other physical gatherings with strict SOPs imposed such as wearing masks.
Meanwhile, the overnight policy rate remained at a low of 1.75% in 1Q2022. Low mortgage interest rates continue to encourage buyers to invest in real estate.
While residential real estate remained the main contributor to the real estate auction market in 1Q2022, the commercial real estate segment also saw more activity and transactions.
“With regard to the commercial real estate segment, there have been more demands and growing interest in the logistics and warehousing segment, as well as in high-tech industrial parks that serve as centers of data, primarily due to the boom in the e-commerce sector during the pandemic,” says Loh.
Loh highlights three commercial properties in the Klang Valley that have been auctioned off this year: two office units in UOA Business Park (Pusat Perniagaan UOA) in Shah Alam and a ground floor shop in Jalan Ampang Putra in Ampang Jaya, Ampang.
The first unit of UOA Business Park is 2,292 square feet. She was auctioned on March 24 at a reserve price of RM1.62 million and was offered up to RM2.3 million.
The second unit has a similar area of 2,290 square feet. It was auctioned on the same day as the first unit, at a reserve price of RM1.668 million. It was offered up to RM2.31 million.
The UOA Business Park, which comprises 11 boutique office blocks, including a strata office block, a 3-story retail podium and a row of prominent retail stores along the Federal Highway in Shah Alam, is a good location for businesses that need maximum visibility along the highway.
UOA Business Park offices have facilities such as large halls as well as dual entrances and drop off points. There are different sizes available for sale and rental, with naming rights for individual buildings. The commercial podium as well as the 3 and 4 floors
retail stores offer a wide variety of F&B outlets and retail amenities.
Besides, UOA Business Park offers easy access to major highways such as Federal Highway, Damansara-Puchong Highway, New Klang Valley Highway and New Pantai Highway. There is also a pedestrian bridge directly connecting the development to the Subang Jaya KTM-LRT interchange station.
The third recently sold commercial property was auctioned on March 2 at a reserve price of RM1.08 million. It has an area of 1,221 square feet and was sold for RM1.21 million.
Jalan Ampang Putra in the Ampang Jaya region consists mainly of leasehold properties. Landmark buildings on the street include Ampang Putra Residency, D’Suria, Duta Suria, Excella Business Park, Fawina Court, PPR Hiliran Ampang, Pangsapuri Kenanga and Tiara Duta.
Jalan Ampang Putra commercial properties have builds ranging from 1,600 to 5,670 square feet. They are well supported by the densely populated area, as well as other nearby projects such as Duta Suria, Sri Ampang Mas, Taman Ampang Utama, Taman Angsana Hilir, Taman Cahaya, Taman Cempaka, Taman Dagang, Taman Dagang Avenue, Taman Dato Ahmad Razali and Taman Nirwana.
Loh thinks now is the time to invest.
“Now is the time to invest in real estate. The low interest rate and the constant increase in the costs of building and construction materials have [prompted] many watch the auction market. The replacement cost of these properties is still higher than the auction price, so it’s a good buy,” he shares.
As for commercial properties, he thinks retail land and offices could see weaker activity as more people get used to working from home. Large facilities such as factories and warehouses, however, will continue to be welcomed.
“Working from home and shopping online may become the norm, so large office and retail spaces may not be needed as much. However, there is buying interest in the logistics and warehousing segment, driven by the e-commerce business model. Interest will continue to support the segment,” says Loh.