Relocation firms take too big a bite


Property Talk: A weekly column by S.C. Cheah

MANY real estate agents specialising in the expatriate housing and rental market are a glum lot these days. 

According to them, the expatriates are coming back although not the same level as before. 

They are seeing a new threat to their livelihood: the relocation companies which are taking a bigger slice of the business and may put them out of business with their “one-stop” package of securing accommodation, moving the belongings, and offering an orientation programme for the expatriate. 

“We have lost a lot of our long-standing clients,” said Carey Properties principal Nixon Paul. “Five to six years ago, about 90% of my business was generated from the expatriate market. Today it is down to 20%. We're moving out of this market, as we cannot fight them. They are too big and have international tie-ups with the multinational companies.” 

In the past he would be happy to pay between 10% and 20% of the fees to the relocation companies for helping to bring in some clients and moving the expatriate's belongings, but now they are asking for 50% of the fees, said Paul. “There's nothing we can do. They are expanding and eating into our business. The situation is very rampant and getting out of hand,” he lamented. 

He said many multinational companies (MNCs) have international affiliations with the relocation companies, both foreign and locals.  

“We cannot do a deal with them (MNCs) as they are contractually tied to these relocation companies. In the past if a company wants us to look for a house for its expatriate and we do not have one, we could look for another agency to help us find a house and then share the fees, but now we don't have that opportunity as at least 60% of the expatriates are going to the relocation companies. The only way to fight them is for the registered real estate agents to be more united and not to give in to these people,” he added. 

He sees a major influx of expatriates, especially from the American and European oil and gas industries and some from the manufacturing sector. There has also been a large number of Japanese and Koreans coming in but on a smaller housing allowance. 

Paul said generally one would see expatriate movements twice a year: July/August during the summer holidays when expatriates might take advantage of the school holidays to relocate, and the December school break. 

Expatriates are considered better paymasters and could afford to pay much higher rentals. Prime locations in the Klang Valley like Mont' Kiara (where there are two international schools), Damansara Heights, Bangsar, Kenny Hills, Taman Duta, and Taman TAR/Ukay Heights (where the International School of Kuala Lumpur is located) are among the popular choices for expatriates. 

With the expatriate market recovering, owners whose condominiums are much sought-after by expatriates can expect 10% to 12% return on their investment. As Paul puts it: “On an average one can expect 7% to 8% return as compared to 3% to 4% on fixed deposits. Investing in these condominiums is a very sound investment,” he said. 

The Japan Club of Kuala Lumpur office manager Lim Joo Hock feels that there are not as many Japanese expatriates in Malaysia compared to the heyday of the early 1990s as many of them have returned to Japan or gone to China and Vietnam. He said some Japanese expatriates were on a tight budget in view of Japan's sluggish economy. 

Lim said the Japanese still preferred such places as Mont' Kiara where there are some 800 Japanese families and the Saujana Resort in Subang where some 400 Japanese families live in the Saujana Villa and Bunga Raya condominiums. He said when the Japanese school was moved from Taman Seputeh to Saujana Resort in 1993, many Japanese families also relocated to Saujana. 

He said many Japanese also stayed in Section 16 Petaling Jaya in condominiums like the Universiti Towers (the school bus plies this route to go to the Japanese school). Lim said the Japanese like to stay together, prefer a quiet life and with security as their priority. “They are good paymasters too,” he added. 

Another expert on expatriate housing is Previndran Singhe, chief executive officer of Zerin Properties, who sees more expatriates from such industries as oil and gas, specialised manufacturing, infrastructure, construction, and financial/services coming to Malaysia. This has also to do with the promotion of Malaysia as an operational headquarters and Malaysia's booming economy. 

He said the expatriate rental budget would range from RM5,000 to RM10,000 for mid management, RM10,000 to RM20,000 for senior management and RM20,000 to RM30,000 for top management. Location, security, quality finishes and homes with character are important criteria. 

Their choice locations would include Mont' Kiara, Ampang, Bangsar, Damansara Heights, Kenny Hills and Taman Duta as they are near the expatriates' office and along the school bus routes.  

The newer choices include Tropicana because the houses are new and modern. 

He advised those wishing to let out their units to expatriates to ensure that their property is in good condition and the fittings are of good quality.  

“If you intend to redesign your home for the expatriate market, go with the classic theme, tropical or modern designs. The classic white is everlasting and at present the tropical and modern designs are hot sellers,” he said. 

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