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Monday, August 29, 2005
Auctioned units going for a song
By S.C. Cheah
RM10,000 for a freehold 718-sq ft office unit?! Is this a joke?
Many people will find this hard to believe as RM10,000 cannot buy you many things these days.
For this ''indecent'' price (as my friend S.K. Brothers CEO Charlie Chan jokingly puts it), you cannot go wrong.
You probably cannot buy a second-hand car at that price. Even a designer reclining chair at Starhill Gallery costs RM18,000. But, maybe the amount is just enough to do a new car porch for a terrace house.
This property is located in Bukit Sentosa in Rawang, Selangor.
There are so many completed and empty properties, including houses, apartments, shop offices and factories, in Bukit Sentosa and the adjacent Bandar Bukit Beruntung that many auctioned properties are going for a song.
The property in question is located in the rear portion of the third floor of a row of shop offices in Jalan Seroja 1A, Section BS6 of Bukit Sentosa, about 20km from Rawang town.
It was sold at an auction on July 28, about 20% more than the reserved price of RM8,472.94. The auctioneer Lawrence Tan of Tancorp (M) Sdn Bhd exclaimed: ''Am I reading the figures right? RM8,472? Why, you canít even buy a Kancil!'' He rounded up the reserved price and started the first bid at RM10,000.
There were three bidders. I was the successful bidder.
''What do you want to do with it?'' asked a friend with a sneer. ''Nothing. Keep lor,'' I replied. ''But you have to keep it for a long, long time,'' came his reply. ''Itís OK,'' I answered. Well, it cannot be worse than buying a brand new luxury car where the depreciation can be RM20,000 to RM30,000 a year!
I reckon that my holding cost (on the purchase price) will add up to only about RM26,000 (at 5% compound interest) over 20 years. The developerís price in 1997 was RM43,500. At RM13.90 psf, it is way below construction cost. It is even cheaper than the 786-sq-ft freehold second floor office unit in Bandar Country Homes, Rawang, that I bought at a reserved price of RM35,872 at an auction two years ago. The front portion unit was sold at a developerís price of RM75,800 in 1997.
Indeed, with the electrical wires ripped off and the blocks behind badly vandalised, chances of finding a tenant for the Jalan Seroja unit are zero. Thankfully, the unitís condition is new with the window panes still intact, and there is even a pantry area.
Another friend, Vincent, who shares my optimism (he bought a front portion of 812-sq-ft freehold office unit in the Jalan Kemboja area in Bukit Sentosa for RM17,000 about two years ago), believes that things may improve with more developments coming this way.
The trouble with developments like Bukit Sentosa is that nobody seems to care about the worsening situation of the vacant units. A recent check shows that many single-storey terrace factories in the Jalan Kamunting area are concrete hulks as scrapped metal thieves have stripped off the metal roofing as well!
So, why put good money into a ''lousy'' property in these areas where there is no guarantee of it ever appreciating, given the sad state of affairs? People will rather invest in properties in good locations or at least in places where there are better chances of them being disposed of or rented out.
Well, I suppose it is a gut feeling that when no one wants something, it may be worth picking up, especially when it is dirt-cheap.
A Malay guy seated next to me had a better deal. He was the only bidder for a 773-sq-ft, three-bedroom medium-cost leasehold apartment in Bandar Tasik Puteri in Kundang, Selangor. The reserved price for the Birchwood Court unit is a steal at RM26,151.15, compared with the developerís price of about RM75,000.
''I plan to rent it out to my brother,'' said the chap, who lives in a terrace house in Bandar Tasik Puteri.
Developers will rather build something new than carry somebodyís ''abandoned baby''. I have seen many cases where the original developers just move on, rather than get entangled in the mess they have created.
The local councils continue to send assessment notices while developers continue to levy maintenance charges on owners of vacant units, although no services have been rendered. Everyone seems to turn a blind eye to this ''rape'' of properties that has been going on for too long.
Meanwhile, some owners desperate to get some returns have converted their office units into homes for swifts.
While some residents in places like Manjung are against such activities in residential units, the authorities have been urged to consider encouraging this lucrative birdsí nest business for certain vacant commercial properties.
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