Slowing down property market, cutting corner developers, what a combination.

A friend asked me just yesterday if she should consider buying a new condo project in Penang. It is 700 plus sf and comes with one car park. I said, ‘Huh? Only one car park?’ It was priced at RM650psf. I told her, I do not like any condo project which still gives just one car park. Makes you wonder, why? Is the developer out of touch with the condo market? Then, when she told me the developer’s name, I said, ‘I also don’t like the developer.’ Typical developer which cuts corners. Sometimes, it’s hard for tigers to change their stripes. In this case, the developer is a small one and not even considered a tiger, yet. Nevertheless, she gave me just two choices. One is this Penang project and another is a KL project from another small developer, a SOHO unit of just 550sf.
With only these two choices, I said, I would choose the Penang one. Reason being, Penang remained to be just an island and as long as growth continues at just current pace, prices of properties will only be increasing. Land prices are also increasing due to scarcity. Plus, I do not like SOHO. If the project sells well, do you think they would offer more? Another developer in Penang which was selling at RM750psf has also called some potential buyers and said that now they give extra 5% discount as a special deal. A few friends who went to a recent property show said that, ‘Nearly all the projects are existing ones!’
Let me tell you my personal opinion about developers again. If a developer has been building its brand name continuously, every time it launches a new project, at least 30% would already been easily sold. Thus, the marketing would just have to concentrate on the remaining units. For any developers who are still acting ‘dumb’ and treats all the buyers to be ‘fools’, think again. Project comparisons can now be done easily online. Price psf is now available and spread so fast that once you have announced it and you change it later, people would know about it. Developers which cut corners once, may be forgiven. Cut corners again the second time and you may fool many new buyers. if you cut corners again the third time, get ready to sell your projects much lower than every other developers if you would like to fool newer buyers because they would only buy you if you are much cheaper than others.
My friend’s decision after asking two other friends was to look for other projects. Thus, this particular developer which has not been professional from the beginning has lost yet another sale. Of course, there are a lot more other unsuspecting buyers who thinks that it is value and would buy from them, so good luck to both the buyers and the particular developer. When market is booming, any developer can sell easily without doing much marketing, without doing their best. However, when it comes to a slowing down property market, the cutting corner developers would be the ones most affected.
written on 19 April 2014
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