Time to re-think about demand driven development
Property market and the pandemic! 2020 will be remembered in history, and future generation will study and analyze it, as the year of the worst ever worldwide pandemic, the great lockdown, the new normal and possibly, as the year in which developers, at least the majority of them here in Malaysia, started listening to the demand side and acting consequently. In other words, the year of walking the talk!
It is a fact that, starting from the first quarter of 2020, with the first wave of covid-19 in full swing and the great lockdown taking place, we all have had time to think, and re-think our way of doing business. In fact, delivering what the market looks for and not what we think it wants, it pays off and generate faster sales of whichever product or service you are dealing with!
The Majority of property developers which, for the two past decades, has mostly planned their projects on the base of their architects and their own concept and ideas of conducive townships, connectivity and last but not least profitability, have had time to reconsider their planning, design and deliverable products.
Understanding what precisely the market wants is a good strategic approach to a successful development and now, even more, looking at the precise and direct demand from property seekers will help generating more conducive and definitely sustainable developments.
In the next few paragraphs, we will analyze together numbers and facts to derive a more precise direction for future planning of developments guaranteeing faster sales and happier buyers.
Supporting Facts and Numbers
In the new normal, needs of people in Malaysia as far as around the world have radically changed, above all those of the middle class! Let’s the numbers making the talk, it will all be much clearer at the end!
The Department of Statistics Malaysia, on September 11th, 2020 released workforce statistic data (can see the infographic here) showing that a total 15.82 million Malaysians were employed as at July 2020.
Another very reliable source of statistics and researches, Statista, affirmed that a whopping 63% of the Malaysian workforce is employed by the service sector.
A number of sources, supporting their affirmations with data from government, private industry and big data providers, have been highlighting that, as of September 2020, almost 70% of the Malaysians employed by the service industry has been and is going to keep working from home.
By doing a bit of calculations out of the numbers above, the stunning finding is that there are 7 million Malaysians that are and will keep working from home. Apparently, the majority of those who have been forced, in 2020, to adopt a WFH (Work from home) mode have, at the end, decided that they liked it and would like to keep on with it!
Property oversupply, shortfall or…?
It is a well-known piece of information that Malaysia has a shortfall of almost 1 million dwellings priced between RM250k and RM800k.
For the past decade, majority of developers have been “addressing” this demand with the “mass development” of micro-studio-units, sized between 450 and 600 sq.ft. and selling them as “affordable homes”, nearby the city center, within walking distance from public transportation, trendy design and so on. It was a trend which has been catching home-seekers, mostly still with a bachelor status and working in the proximities of the chosen development.
Then early last year, the covid-19 pandemic stroked and forced the majority of people, at least the ones employed or related to the service industry, to embrace the Work-From-Home mode!
Suddenly what in the past appeared to be a nice and trendy home, has now became a small and unlivable jail cell and, in case the bachelors were no more such, the space has been further reduced resulting in laptops fighting with onions and nasi lemak and file holders stealing space to cloths! The young “previous-bachelors” have been realizing that it is really impossible to live-work-play from home when, what it is called home, is such a small unit!
The post-pandemic property demand shift
The above statements are supported by the outcomes of most surveys on market sentiments and buyers searching parameters which have been showing a growing demand for bigger units, floor area above 900 sq. ft. Surveys are also confirming that the need-of-the-past for a place to call home nearby the working place, has become history.
Since June 2020, right after the end of the Malaysian MCO, small single or double storey terrace houses and high-raise condominiums, priced below RM700,000 (for Greater KL area) and located in the outskirt of Kuala Lumpur, have been targeted by highly motivated buyers!
All the above gives a, hopefully clear, image of what the demand is all about nowadays and, of course, few more particulars need to be considered. After analyzing the Malaysian workforce data, we now need to look at them from an age viewpoint.
The average age of Malaysians is 30.3 years from the 2019 data from the Department of Statistics Malaysia. This means almost 70% Malaysians are aged below 40 years and can be classified as GenY, Millennials and GenZ. What kind of expectation do they have when it comes to buying a property? What kind of “experience” will they like the most in terms of buying journey and also features in the new dwelling?
Experts from all around the world keep repeating that “providing unique experience” is the winning factor when comes to final decision-making process. When the above is applied to property, let’s analyze where and how the new experience could be designed, engineered and realized.
Digital Transformation Is No Longer An Option
Data are showing that 50/55% of those 7 million Malaysians who have adopted WFH are young professionals mostly ICT (Information and Communication Technologies) savvy and digitally predisposed. Their likes, in terms of properties, are for state of the art “plug-and-play” soft infrastructures, smart homes, digitalized property buying journey and environment-friendly & sustainable dwellings.
Developers should leave aside the “brick-and-mortar” development model, as many have been doing in the past 12 months and embrace as fast as possible the digital transformation wave that has been disrupting, in a very positive way, the property industry.
The digital world is that open space where the property seekers I’ve been talking of above, are very familiar with!
Last but not least, the infrastructures and features offered in a development project could often be the final decision-making factor for digitalized buyers. Optical fibres, high-speed internet, smart-homes features (the real ones besides the digital thumbprint front door lock) are a must have together with a truthful respect for the environment by developing eco-friendly homes with a green soul! Universal design encompasses all of the above and should become a norm using it since planning stage!
Even though supported by facts and numbers, being this my style, the above are the Propenomist readings and forecasts of a foreseeable future. Both developers and home seekers, let us know what you think on the above, we love to hear from you with a comment below or dropping us a message here. Stay safe and healthy and see you all soon!