Property investors’ clubs (PICs) are distorting the Malaysian housing market, says an analyst.
In assessing purchasing trends, Foo Gee Jen, president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants told the Malay Mail Online that while these clubs initially comprised rich individuals, recent data suggested membership among lower- or middle-income earners.
PICs are known to distort the market by creating artificial demand when buying properties en bloc, usually with discounts of up to a fourth below market price.
These individuals exploit procedural loopholes to acquire properties without deposits and then flipping them at highly inflated prices on the back of supply shortages which they themselves create through a practice called “hogging.”
Hogging is a practice whereby speculators hog or keep the properties bought through bloc purchases to create artificial shortage and leverage on high demand to inflate the price.
They will eventually release the units into the market to flip for profit, usually at around 15% to 20% higher than retail, or up to 40% if discounts given by developers are factored in. Despite consistent complaints about their activities, PICs remain unregulated.