More and more properties being auctioned

KUALA LMPUR: The number of real estate foreclosures in the country is rising, and it is expected to continue into next year, mainly due to the economic situation.

There was a 10.93% increase in real estate foreclosures in the first nine months of the year (9M17), with the total standing at 21,258. For the same period last year, it was 19,163.

The total value of these cases grew by 31% to RM9.2 billion from RM7 billion, The Edge reported.

Of the 21,258 foreclosures, 694 were land cases worth a total of RM1.268 billion, slightly higher than the 639 cases worth RM1.192 billion observed over the same period last year – an increase of 8.61% in volume and 6.38% in value.

The Edge quoted AuctionGuru.com.my executive director Gary Chia as saying he expected the rising trend in foreclosures to continue next year.

The central region of KL, Selangor and Negeri Sembilan has continuously recorded the highest number of real estate auction cases in Malaysia. In 9M17, the region saw 11,297 auction cases worth RM5.79 billion in total.

“The rising number of auction cases can be attributed to the buying frenzy during the past property market upcycle. Those parties that have engaged in this prior aggressive buying of property via bank financing may be caught in the current situation of property market restraint,” Chia told The Edge.

Quoting AuctionGuru.com.my, the report said Johor and Melaka recorded a significant increase in land auctions in the first nine months of 2017 compared with the same period last year.

Land auctions in Johor and Melaka for 9M17 rose to 186 cases worth RM463 million, an increase of 124.1% in volume and 110% in value from the 83 cases worth RM221 million recorded in 9M16.

Chia said: “Commercial land has been difficult to dispose of in the past one to two years due to concerns of oversupply of commercial projects in the southern region.”

In Johor, there were 92 land auction cases worth RM413 million in 9M17 compared with 67 cases worth RM206 million over the same period last year, an increase of 37.31% in volume and 100.5% in value.

Melaka recorded 94 land auction cases worth RM50 million up till September this year, an increase of almost five-fold in volume and 251% in value. The report said there were only 16 cases worth RM15.4 million over the same period in 2016.

However, all other regions saw a decrease in the number of land cases. The central region (Kuala Lumpur, Selangor and Negeri Sembilan), for instance, registered a total of 150 land cases worth RM491 million in 9M17, down 13.3% from the 173 cases worth RM591 million last year.

The report said the northern region (Perlis, Kedah, Penang and Perak) saw a decrease from 189 cases to 171 cases in 9M17 with total value down 36.12% to RM168 million.

Despite this, Chia told The Edge, the overall demand for vacant land in the country was relatively resilient. -FMT