More properties under receivership this year

PETALING JAYA: Auctioneers are seeing an increasing trend of properties under receivership this year, as more owners are expected to have financial difficulty amid the continuing global financial crisis.

They said the overall supply of auction properties in the last few months had already risen by 10% to 20% compared with normal times.

Property Auction House Sdn Bhd general manager Danny Loh said medium and low-cost houses were hit the hardest.

“The number of (auction) cases for medium-cost apartments costing RM50,000 to RM150,000 has risen by 15%, while for high-end condominiums it is up by 10%. For offices the figure is up by 20%,” he told StarBiz.

He said landed properties had the smallest increase of 5% and they were saleable.

Loh handles about 100 auctioning cases per month in the Klang Valley.

He estimated the number of bidders had also dropped by 30% because banks were more stringent on financing and buyers were careful about buying big-ticket items.

He said about 60% of bidders were investors, while the remaining were buying for their own use. Both categories were equally split during normal times.

Another auctioneer told StarBiz that her company’s auctioning activities had risen from about five cases a month before the economic crisis to between five and 10 cases now.

She said properties under auction were usually priced 20% below the market value.

In the auctioning process, bidders are required to deposit 5% or 10% of the property value. In the first auction, the property price is based on the current market value. Subsequently, the price will be reduced by 10%, and another 10% in the third auction. She said the current trend was that bidders wait for the third auction.

Successful bidders would have 120 days to settle the difference between the deposit and the final price.

J. Thilagamraj Auctioneers Sdn Bhd legal manager Nithiyawathi Subramanium, who saw a 20% jump in properties under receivership over the last two months, said demand for auction properties remained the same.

She said most of the buyers were investors, particularly real estate agencies.

“They buy for investment,” she said, pointing out that agencies would recondition purchased properties for resale or rental.

She observed that more properties in Petaling jaya, Rawang and Shah Alam were coming into the auctioning market.

By The Star (by K.C.Law) (Posted on 14/4/2009)