Kopi and Property, Free Malaysia Today, Photo Credit to Kopi and Property, Free Malaysia Today
clock 30-08-2021
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50% Discounts on Properties - Good or Bad?

Everyone loves a good sale but when a property gives out a big discount, previous buyers of the property can't help to feel they are at a loss. 

In an article by Free Malaysia Today, KGV International Property Consultants Executive director Samuel Tan said the percentage of discount for overhang units is higher.

Recently, Chinese developer Country Garden Pacificview Sdn Bhd advertised its Danga Bay project in Johor Bahru at a 50% discount for about six weeks. This was good news for new buyers looking for a good deal but previous buyers were angry. A Singaporean buyer, Hassan (not his real name), who bought an apartment unit in 2015 for RM1.82 million, was shocked and upset. Overnight, his unit was worth about RM900,000.

Property author and founder of Kopiandproperty, Charles Tan wrote an article in response to this topic. Here is part of his article. You can read the full original article here

Current Property Market?

Generally, the property market is rather stable. Many buyers who are familiar with the market are buying undervalued properties. There were 80,000 property transactions in Q1 2021. Some needed a property, so they bought. Some needed a bigger place, so they upgraded. Some bought because of some good discounts too. That’s why there were 80,000 property transactions.

Some buyers may not be familiar with the property market

Many buyers who are not familiar with the property market continue to believe some owners would soon be selling them their dream property at their dream price. By the way, when a financial crisis do strike, there is a chance for many more owners to sell their properties at a discount to the market price. However, if a financial crisis do strike, how many would dare to buy a property? Better just stay safe… right?

Due Diligence is needed even if there’s a heavy discount

I always tell everyone that when we buy anything at all, do not look at the discount percentage but the value of the thing you are buying. Do not buy a property simply by looking at how big the discount is. For overhang units, by selling, the property developer gets cashflow. It may be more important than holding the property and having no cash.

I would buy a shirt from the brand I love (because it made me look good) and NOT buy a shirt from an unknown brand just because it came with a huge discount. Hopefully, you realise that property is so expensive that due diligence is needed. Compare the prices to all equivalent properties. If it is undervalued, that’s a good buy even if it does not come with a huge discount. Happy deciding.


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