Marketing Plan for a Realtor Part 4 - Historical Transactions

Go back to Part 3, Part 2 or Part 1, Part 0.

Analysis of Property Market - Historical Transactions
This section is about sales performance in transaction number and value over 2013 and 2014 (projected).

Analysis on Transaction Numbers (Figures from JPPH NAPIC)

From the 2014 Annual Property Market Report, the total transaction for the year 2014 was 384,060. The various sub-sectors were:

• Residential - 247,251
• Commercial - 35,528
• Industrial - 8,100
• Agricultural - 72,104 (Mainly corporation involving in plantation business)
• Development land - 21,040

From the sub categories analysis, we understands that Estate Agents are more productive if they were to concentrate in Residential and Commercial properties, rather than the less frequent transacted categories like Industrial, Agriculture (mainly by big plantation business which is government linked) or Development Land (which requires private-public coordination and approval, etc).

Further divided into major States, the transaction figures are as below:

The above analysis suggests that transactions during 2014 for the top three States (Selangor, Johor and Perak) constituted 47.6% of the whole nation. That is nearly half of the whole country!

In terms of transaction numbers, Sarawak ranked No.4 after Selangor, Johor and Perak. However, in value, Sarawak ranked No.7. This is an interesting phenomenon. Please see Discussion section for argument on this.

Analysis on Transaction Values (Figures from JPPH NAPIC)

The top three States in value (Selangor, Johor and KL) constituted 64% of the total country. These are the "Hot Spots" of the Property Industry.

Hence, if you want to handle big client, these are the states! These are areas of big commission pay out!

At a glance:

Findings

There are three scenarios:

1. The transaction volume grew and value also grew - Selangor, Johor, KL, Penang, Ng S. These are the "Hot Spots"
2. The transaction volume dropped but value grew - Perak, Sarawak & Pahang
3. The transaction volume dropped and value also dropped - Sabah

From the above categories, it seems that the heavy weights (big value big transactions) withstood the slow down very well. Whereas, the light weights (small value small transactions) showed a dip.

Discussion

1. The trading activity corresponds with performance of the real estate, hence increased in transaction would likely fuel better value. (Similar concept like share trading) These are the "Hot Spots" regions.
2. Although there may be slow down of transaction, value can still increase. This may be because of inflation and scarcity of property at certain area, thus prices maintained. The slow down can be due to measures introduced to curb overheating.
3. Urban regions (dense) would see heavier trading and but not necessarily higher growth in value. Negeri Sembilan had biggest growth (25%) in value but not growth (only 6%) in transaction compared to Selangor (19%) or Johor (11%). This are potential future growth areas as people are pushing up the value.
4. Even negative growth on transaction may have increase in value like Perak (1%), Sarawak (7%) and Pahang (7%). This can be due to recent increase in property prices.
5. Although Sarawak ranked No.4 in transaction numbers, it only ranked No.7 in value. This can be due to lower property prices as it is very much a closed-door immigration state.
6. Conversely, KL ranked No.8 in transaction number, but ranked No.3 in value. This can be due to high value of property transacted in KL - commercial and offices rather than residential.

Conclusion

This chapter of the Marketing Plan is rather complicated with multiple facets of the performance figures. As we analyze the two most important parameters of property market - 1. trading activities or transaction number, and 2. value of transaction,  we realize that they do not always move in tandem.

The trading activity would be an important factor for consideration in estate agency practice because it is this activity that will provide commission payment. No activity means no business! Top 4 regions are Selangor, Johor, Perak and Sarawak.

Value of transaction is also very important to the estate agent because of commission calculation. It is paid as a percentage of the value transacted. Thus, top 4 regions for consideration are Selangor, KL, Johor and Penang.

Value of transaction can be due to types of property. Especially in major cities, value transaction is tremendously influenced by commercial properties and offices.

In one sentence, marketing strategy of an estate agency firm should be driven by both transaction number and value. Hence, Selangor, Johor and Penang would be three major areas where any real estate agency firm should concentrate its focus and energy on.

Continue to Part 5 here.

Ref:

JPPH NAPIC Annual Property Market Report, 2014 available at,
http://napic.jpph.gov.my/portal/web/guest/publication?p_p_id=ViewPublishings_WAR_ViewPublishingsportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_count=1&_ViewPublishings_WAR_ViewPublishingsportlet_action=renderReportPeriodScreen&publishingId=445&pageno=1&language=