Amid the bewildering pandemic, job losses and a lower affordability level, the local rental demand has also shifted and witnessed a rising trend.
GFG Group and iBilik CEO Ken Lee says in an email: “The demand for rooms [versus whole units] has increased in the market. The requirement for the locations has changed; [we have clients who prefer] to get away from the crowd, and be closer to work, amenities and transport.”
“We are seeing the rental in central KL area dropping significantly. For example, you can rent a studio unit (300 sq ft) in KL city for as low as RM1,000 per month,” he continues.
“For the key suburban areas, the highest demand is for rental rates of RM350 to RM600 per month.Many more are looking for lower [rent] and with zero deposits. For key education hub areas like Sunway,monthly rent for the whole 3-bedroom (1,100 sq ft) unit has gone from RM3,250 to as low as RM1,600.”
For a bit of background, iBilik is recognised as a one-stop rental property management services platform that includes property management, affordable zero deposit insurance, renovation and fit-out services, and the generation of rental income. iBilik forms part of the property investment and management company of GFG Group.
To date, GFG Group is managing over 6,500 rooms with an occupancy rate of around 85%. “Our average tenancy is 12 months. So on an annual basis, we would have easily matched over 5,000 roomswith tenants. iBilik has a database of over 100,000 owners. A majority of them have five units and below,” says Lee.
He addresses the affordability issue as a key consideration: “Affordability has also played a big part in the selection of location. More people are trying to stay further away from prime areas to get a cheaper rental rate. But they require places that are closer to public transport so that they can leverage that.
“Home has become more than just a roof over your head. The demand [for] and utilisation of spacehave changed significantly; they need to be configured differently.”
According to Lee, proper ventilation and lighting have been factored into the new demands. “Due totenants looking to use the space for various functions including work, there is a need to look at providing a better balance in the furnishing aspects. Workspace and wellness spaces such as home office, indoor gym, and yoga and dance studios have become an important part of a property.”
“Despite our abundance of space compared with major cities like Japan, in some ways, we need tolearn from them in making space more compact. This helps in managing the customers’ cost expectations and, at the same time, allows better physical segregation (social distancing).”
“The demand for rooms [versus whole units] has increased in the market. The requirement for thelocations has changed.” Ken Lee
Meanwhile, there are several challenges that have emerged in the rental market. “The biggest issuewe are seeing is the property owners’ inability to pivot and turn their property around quickly tosustain their return on investments (ROI). This, in turn, leads to hasty sell-off or trying to rent outthe whole unit. However, this is not what the market wants. This is where the mismatch happens,resulting in properties going vacant,” says Lee.
Nonetheless, he notes that property buyers are still in the market. “They just need a better ROI plan for them to commit, given the economic situation and dipping bank loan approval rates. “We have seen hotels closing, with 120 hotels (over 108,000 rooms) having closed temporarilyor permanently in Malaysia in the past 12 to 24 months. Property developers have over RM18 billionworth of overhang properties. In the commercial sector, there are over 50 million sq ft of vacant office space,” he observes.
“We have created various plans and strategies to help all the stakeholders to ensure their supplies can be turned into income-generating assets, and to meet the rising demand for affordable rooms.This is where our end-to-end service can cater for the needs of the renters and owners in these post-pandemic times.”
“For property owners, converting their properties to room-by-room rental versus the whole unit will help to improve the overall rental and be able to meet the demand for affordable rental,” says Lee.
“For developers, instead of focusing on selling their properties, they should provide investors withan end-to-end solution to help generate a stream of income for them. This, in turn, will also help their property to have better appreciation. With the help of property managers, they can repackage their products to make them more attractive.”
As for hotel owners, with almost zero tourists now, he suggests that “they should convert theirspaces to mid- to long-term co-living or co-working offerings. Their existing assets are readily capable of providing for these. It’s a matter of changing their target customers and business model”.
Meanwhile, for commercial office spaces, Lee says “they should convert [them] to smaller dedicated offices versus hot desks or large open spaces. The way the co-working space has been designed in the past to capitalise on community engagement is no longer working out due to the new norms”.
A fresh approach
As a platform, Lee highlights that iBilik has altered its approach to suit the current demands. “For those [properties that] we manage on behalf of the owners, we are changing the way we operateand interact with our tenants to provide the same level of services yet ensuring the health and safetyof our team as well as the tenants.”
The group, he says, intends to educate the market on ways to manage the tenants’ expectations due to the changing norms. “We need to balance between affordability and safety, especially in a co-living or co-working environment.”
Meanwhile, in terms of the Centralised Labour Quarters (CLQs), the group is working with partners to ensure they are meeting the new amendments to Act 446: Employees’ Minimum Standards of Housing, Accommodations and Amenities Act 1990.
CLQ is initiated by the Construction Industry Development Board (CIDB) Malaysia. The board has worked closely with the Ministry of Human Resources to enhance safety and health for workers, which has resulted in amendments to Act 446 that was passed in parliament in July 2019.
The amended Act 446 makes it compulsory for employers in all industrial sectors, including construction, to provide accommodation for workers that meets minimum standards as outlined in the Act. Some of the common facilities include gated-and-guarded accommodation along with features such as kitchen, medical and recreational spaces.
Moving forward, Lee highlights the rise of property technology or proptech. “We are investingheavily in proptech. It will enable and cater for a lot of the requirements and demands. iBilik is investing in integrating it into our ecosystem and will continue to accelerate [its] adoption across the market.”
GFG Group offer comfortable working & living environments for everyone (co-working & co-living), meanwhile we help property owners to convert their property into profitable income asset to providing unbeatable values to the room rental market.
11 January 2022, Tuesday – We are glad to announce the Grand Opening of our HQ Office at GFG Tower located in the heart of Klang, a royal city in the state of Selangor. The Grand Opening Ceremony is officiated by Chairman Lee, CEO Ken Lee and Director Vince Yong with a ribbon cutting ceremony. Other Grand Opening activities also include a VIPs red-carpet walk-in, lion dance, inspiring speech by Group CEO Ken Lee, and followed by a delicious luncheon for all attendees.
GFG Group has started from a humble beginning in 2012, with just a small team of less than 10 members. Over 10 years, GFG Group has grown to be the largest accommodation provider in Malaysia offering over 6,000 rooms. Recently, we have acquired iBilik from the Star Media Group and we believe that iBilik will fuel the next stage of growth for our Group.
Due to our rapid business expansion over the years, we have identified a new location and decided to move our HQ Office to GFG Tower in Klang. Our new HQ Office serves as a key milestones in our business growth, and as an enabler for us to expand across South East Asia and also Internationally.