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Saturday, February 21, 2009

How to sell in tough times

It is becoming more difficult for developers to close sales these days and the growing number of easy financing schemes and freebies being offered by developers drives home the point that the property market is becoming increasingly tough for industry players.

Buyers are taking longer to decide as the scale and severity of the global financial crisis begin to dawn on the people.

The performance statistics being rolled out by manufacturers, exporters, corporations and service providers have been pretty weak, which further create anxiety about the state of the economy.

News of major retrenchments by companies, especially multinational corporations, are unnerving to many Malaysians and they worry whether they will be the next in line.

Many are bracing for more bad news as they believe the worst has yet to unravel going by the scale of damages reported across the continents.

People are postponing purchase decisions for big ticket items, including property and cars, as they fear more bad news ahead.

The biggest challenge for developers this year is to regain buyers’ confidence and developers have to be proactive by showing their commitment to their projects, which include putting up the necessary infrastructure ahead of a project’s launch.

To encourage buyers to sign on the dotted line, developers have came up with an ingenuous plan by working with their panel of bankers to provide easy financing schemes to purchasers.

Even the top gun developers of SP Setia Bhd and Mah Sing Group Bhd have joined in the bandwagon with their 5:95 home loan packages.

Depending on whether it is a 10:90 or 5:95 scheme, buyers only have to fork out either a 10% or 5% of the purchase price as downpayment after choosing a property while the bank will release the progressive payment to the developers during the construction period.

The developers will bear all legal fees, stamp duty on the sale and purchase agreement, loan agreement and memorandum of transfer and also service the interest during the construction period.

This way, the buyers will not have to fork out money to service the loan until the property is completed and handed over, which typically takes two years for landed properties and three years for high-rise projects.

Some, like Gamuda Land, have gone the extra mile. It has accorded buyers another “honeymoon year” once they’ve taken over vacant possession, afterwhich they will have to start servicing the loans.

As property development is ultimately a business that calls for efficient cash flow management, these financing schemes will ensure developers have enough cash flow to finance their projects during the construction period.

Having buyers sign up loans for their property purchase will also lower the risk for the developers as the buyers will have to answer to the banks should they decide not to proceed with their purchase.

As for the financial institutions, the arrangement will ensure they are able to meet their loans growth target.

In fact, total loans approved for residential property purchase nationwide dropped by 23.3% to RM3.69bil last December compared with the same period in 2007.

It is imperative for buyers to put some serious thought before taking the leap to sign up for a financing facility as once a loan agreement is sealed, they are committed to the loan repayment. Important factors to bear in mind - one’s affordability, developer’s reputation and suitability of purchase.

On the other hand, it will also help if developers undertake feasibility studies to ensure there is demand for the type of products they are offering.

* Deputy news editor Angie Ng hopes to see more Malaysians having the opportunity to buy homes as a robust housing industry has huge spin offs on the country’s economy.

By The Star (by Angie Ng)

1 comment:

Mutuelle sante said...

Thanks a ton it is a fantastic support, now to sell in tough times is without a doubt simple and easy with the help of your tips. Thank you