Young buyers flock to property market

Why millennials are flocking to real estate

Interest rate cuts, govt incentives spur buying interests

“We believe the strong growth in our young buyers is both a natural evolution and as a result of a conscious strategic effort we have made to appeal to this important customer group,"-
Datuk Chang Khim Wah

 

Eco World Development Group Bhd president and chief executive officer Datuk Chang Khim Wah told StarBiz the increase in younger buyers was due to a conscious strategic effort made by the group to appeal to this target market.

Property developers are seeing a pick up in sales, especially from younger buyers, as the numerous interest rate cuts and government incentives have spurred buying interest.

Eco World Development Group Bhd president and chief executive officer Datuk Chang Khim Wah said the increase in younger buyers was due to a conscious strategic effort made by the group to appeal to this target market.

“During our initial years of operations (circa 2015) the percentage of young buyers (below 40 years old) was around 43% and today it is more than 70%.

“We believe the strong growth in our young buyers is both a natural evolution and as a result of a conscious strategic effort we have made to appeal to this important customer group, both through the products we are offering as well as the way in which we engage them via social media and digital channels, ” he told StarBiz.

Of the 70%, Chang said around 50% are in their 30s and the remaining 20% are in their 20s. “We are particularly happy that a good number of these buyers include children of our own customers and residents in the vicinity of our development. This validates our efforts over the last few years to make a strong pivot to serve the needs of this market segment and the wider M40 group.

“Our upcoming launch of the new Duduk series of vertical townships offering semi-furnished apartments priced below RM400,000 at Eco Ardence and Eco Sanctuary, as well landed homes starting from RM500,000 at Eco Botanic 2, will enable us to further capture the hearts and minds of this very important market segment.”

Chang said the prolonged movement control order (MCO) period has really made many young people realise that the quality of home and living environment matters greatly.

Mah Sing Group Bhd chief executive officer Datuk Ho Hon Sang (pic below) said as the bulk of its projects comprised units within the affordable range segment, the majority of its buyers comprised those below 35 years of age.

“For Mah Sing, 84% of our target sales for 2020 are for residential properties priced below RM700,000 with key focus in the affordable segment. We typically see about 65% of buyers who are 35 years and below, for most of the affordable projects were launched in recent years. Hence, the majority of our buyers are first time homeowners.”

Despite the challenging market environment in view of the Covid-19 pandemic, Ho said demand continues to be resilient as property remained one of the safest forms of asset class for long-term capital protection and appreciation.

“Malaysia’s population is still very young with 66% below 40 years old and as such, household formation continues to be strong. Affordably-priced properties of good quality and at strategic locations remain highly sought after.

“This is especially for first-time home buyers, which augers well for Mah Sing’s product composition.”

Sunway Property said it is seeing increasing interest from younger buyers from 25 years to 35 years in its properties that are transit-oriented and have good facilities nearby.

“For example, our developments such as the transit-oriented Sunway Avila in Wangsa Maju, the integrated and transit-oriented Sunway Velocity TWO and the youth-focused development of Sunway Grid in Sunway Iskandar has seen enthusiastic response from younger purchasers, ” it said.

Property data, analytics and solutions provider MyProperty Data chief executive officer Thor Joe Hock said the median age for residential property transactions has gradually dropped over the years.

“When we look at the over 2.5 million residential property transactions, including serviced apartments, it appears that the median age of buyers from 2000 to 2019 has remained largely unchanged at between 34 to 35 years of age.

“However, when you break it down into landed and non-landed transactions, we start to get a clearer picture. The median age for non-landed properties has fallen from 40 years in 2000 to 28 years in 2019; while the median age for landed property purchasers marginally decreased from 40 years to 37 years over the same period.”

MyProperty Data manages a property data portal called PropertyAdvisor.

Meanwhile, Lagenda Properties Bhd managing director Datuk Jimmy Doh said more than half of its buyers are below 39 years of age.

“We believe as young people start new phases in their lives, for example getting a job or starting their own families, they prefer to stay independently and have their own space, granted that the properties are within their price range.

“Over the past few years, we have been seeing an increase in buyers. Our properties are priced below RM200,000, ” he said.

MIDF Research in a recent report said the aggressive overnight policy rate (OPR) cuts have improved home buyers’ purchasing power.

“Bank Negara cut its overnight policy rate for the fourth time this year by 25 basis points (bps) to a record low of 1.75% in July due to the severe impact of the Covid-19 pandemic on the global economy. The aggressive OPR cuts this year are positive to the sector as it improved home buyer’s purchasing power by reducing loan installments.

“We estimate monthly installments to reduce by 14%, after 125 bps cut for RM500,000 loan with a loan repayment period of 30 years, which is quite significant in our view. Hence, we think the record-low interest rate will partly help to alleviate home buyers’ issue of securing home financing, as the record low yield has boosted the affordability of home buyers.”

MIDF Research also said it expected loan demand to recover in the second half of 2020.

Citing Bank Negara’s statistics, it said total applied loan for the purchase of property improved sequentially by 52.9% month-on-month to RM13.1bil in May, after plunging by 64.8% month-on-month in April.

“Note that total applied loan recorded steep decline in April due to the disruption to business activity following the commencement of the MCO.

“Nevertheless, total applied loan in May was lower by 61.8% year-on-year while cumulative total applied loan in the first five months of 2020 was lower by 33.6% year-on-year, indicating buying interest was subdued.”

Looking ahead, the research house expected buying interest to recover in the second half of this year, spurred by incentives introduced by the government.

Under the Short-Term Economic Recovery Plan (Penjana), which was announced in June, the government reintroduced the Home Ownership Campaign (HOC). Under the HOC, stamp duty exemption will be provided on the transfer of property and loan agreement for the purchase of home priced between RM300,000 and RM2.5mil.

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Do we still need an office?

Millennials now make up over a third of the workplace and overwhelmingly value flexibility in where, when and how to work. And top talent has been increasingly clustering in dense urban areas and has been unwilling to commute to suburban office parks

We found that data availability and transparency in the real estate sector is less than what we were used to when we were

Do we still need an office?

Millennials now make up over a third of the workplace and overwhelmingly value flexibility in where, when and how to work. And top talent has been increasingly clustering in dense urban areas and has been unwilling to commute to suburban office parks

The pandemic virus has dramatically accelerated a trend towards remote work that was already underway over the last decade.With social distancing, many of the office workers have not seen their desks for some time.

BUSINESSES depend on people and knowledge to operate successfully.

Office space is the primary place where the transfer of knowledge occurs, and it is second only to salaries as the largest expense for most organisations.

And that is rapidly changing even before the outbreak of Covid-19.

The rapid development of technology provided a significant impact on the way one operates today.

One can work from any location so long the individual can have access to cell phone signal.

Young people entering the work force are not using office space the way their seniors did.

Big office is no longer the perk it once was. Instead, what is important to the young generation is the quality of their interaction.

They increasingly are evolving today’s workplace by defining how, when, where, and with whom they want to work.

Meanwhile, the pandemic virus has dramatically accelerated a trend towards remote work that was already underway over the last decade.

With social distancing, many of the office workers have not seen their desks for some time.

Even when coronavirus lockdowns have started to ease, there may be fewer desks to return to.

Many may prefer to work from home out of caution or convenience. And businesses facing a sudden need to cut costs, it now appears that property portfolios look like a good place to start, especially with the businesses having adapted to remote set-ups.

By now it is clear that the pandemic virus will change the way we work in offices – perhaps indefinitely.

Less certain is the impact these physical and structural changes will have on corporate culture.

Anthony Dass

Besides, corporate culture can be described as the warm feeling employees have or the high expectations of a company’s management team.

Corporate culture is the essences that builds the loyalty and trust workers have for their employer and defines the nature of an organisation.

Up until recently, it was built within the confines of a company’s office.

But the pandemic virus is likely to bring about a turning point in corporate culture as businesses contend with a more remote workforce that lack the ability to connect in one room or even, in some circumstances, face-to-face.

While it may keep workers safe, it will likely feel more unproductive, less connected and perhaps involve fewer chances for employees to grow.

And so, the office of the future post-pandemic may resemble more of a place out of a movie, leaving some to worry this may have a massive impact on employee morale and corporate culture.

One aspect about work post-pandemic that appears to be universally agreed upon is that employees are unlikely to come back all at once.

They need to stage it in teams or staggered. This may create frustration.

It is going to be a long haul and will be difficult to keep people’s spirits up in the long-term, especially those who have been impacted by the illness.

There is risk of experiencing inefficiencies of working from home and missing the connectivity and productivity an office environment.

The daily work environment, the daily interaction, the social energy that is created and makes working for a company part and parcel of why one wants to get up every day and give it all is something that just cannot replicate working from home.

But others believe the new normal will be more positive.

And so, it is important to extend the office culture into the work-from-home culture.

By encouraging casual Zoom coffee breaks to check in and see how people are doing, or getting creative with birthday celebrations and events that might have played a big role in the company culture pre-Covid are ways to improve corporate culture.

And the question now is whether we need office?

The answer is, yes, but with a greater focus on flexibility, wellness, and collaboration.

As employees increasingly have a choice of where to work, the office must both coexist and compete with the safety of staying home, the comfort of a favorite cafe, or the convenience of a coworking space.

The result is much more variability in when and how offices are used along with increased employee expectations of the workplace.

Millennials now make up over a third of the workplace and overwhelmingly value flexibility in where, when and how to work. And top talent has been increasingly clustering in dense urban areas and has been unwilling to commute to suburban office parks.

Employees have come to expect the same level of technology in their personal and work lives.

For corporations, this poses a complex challenge. How to cost-effectively provide the right kind of office space. When and where it is needed. Solving this problem creates a wealth of opportunity for property-tech in several broad areas.

First is on the core needs where it creates big opportunities for innovation and allow rethinking of how building controllers are built, installed, and programmed with an emphasis on ease of installation and automated control.

Next is on the security systems control access to offices, elevators, turnstiles, data centres, and other secured spaces.

Focus will also have to be on the space needs.

Facing the twin pressures of providing high-quality space in expensive urban centers and supporting employees with flexibility in where they work, companies need new tools to understand how space is used, manage utilisation, and provide new locations cost effectively.

And lastly it is on the productivity needs. Engaged and inspired employees are more productive and drive better financial results.

The workplace plays a key role in employee engagement and employee productivity.

Workplace apps will extend to focus on even more aspects of our workday including fostering collaboration, building community and providing “quantified self” feedback on how we work.

The bottom line is that while Covid-19 has disrupted the real estate business today, it will largely accelerate trends and create more opportunities for property-tech as businesses reopen.

There are opportunities from broadly applicable core needs to higher-value productivity needs. And successful companies will emerge.

Office would have a future, albeit in different forms.

The views expressed here are the writer’s own.

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