by Dr Alan Poon
The curtain is drawing to a close for the year 2020. Looking back, they were many lessons learnt and therefore we can expect to put them into good use as we move ahead for 2021.
As the ongoing pandemic timeline evolves with plausible vaccinations, cases are still nowhere to be seen reducing globally and our local economy is very much uncertain to say the least as the country borders are still closed.
In critical times as such, extraordinary measures are pivotal to the changing landscape everyone wishes to see happening in almost every field of the economy. Real estate industry is no different.
While the bottoming of the market is here, we should continue to see much heightened ‘activities’ for there are plenty of opportunities where one can take position in the business world as well as the real estate sector.
As much as businesses requiring venues to operate – from hotel buildings, office towers, retail outlets to various layout in shoplots – many landlords do not see beyond just the rental of the demised premise from a tenant’s business.
Their focus hinges on immediate monetization alone. Very rare would the owner get involved in the business to ensure the sustainability of their rental yield.
Then, there is corporate real estate where the buildings are built for need-based usages such as those in the form of factories, warehouses, logistic hubs and even shopping malls, all which can be seen as those managed by Real Estate Investment Trust (REITs).
Now, imagine if these owners can see beyond just the landlord-tenant relationship and get themselves to cooperate with creative entrepreneurs who do not mind sharing their revenues in return.
Wouldn’t these synergies be a step forward to ensure sustainability for the performance of the rental income?
By implementing cooperation strategy between business and real estate owners, a whole new paradigm can be unlocked, and wonders can happen.
Asset Turnaround: A New Normal Trend
Many of us have seen how spaces can be converted such as those warehouse sales in unexpected locations.
In recent years, we have started to see a lot of traditional hotel buildings being turned into co-living accommodation where rooms are rented with common facilities but for longer term for the occupants.
In short, there is a need to reorder and to redraw the real estate industry into unlocking its own value or even more, by redeveloping the internal structure and of course the necessary business model from inside out!
There can be an untapped market where assets can be repurposed for a niche market, thereby unlocking a pandora of opportunities once these real estate buildings have been repurposed to yield better business profitability.
For example, a different perspective to turn negatives into positives ideas such as the heightened pandemic awareness could bode useful for wellness real estate as a potential sub-sector in the real estate scene in Malaysia.
From the above, it is evident that there is need for a paradigm shift between owners (developer/landlord) and occupants (homebuyer/tenant) as it takes two to clap.
Some major key success factors for asset turnaround consists of criteria as follow:
- Asset owner is willing to understand and explore new business models
- Occupants are able to enjoy asset owner’s participation and monetary support for ease of doing business
- Both parties maintain a high level of trust to ensure healthy Gross Turn Over (GTO) sharing
Businesses: The Lifeline To Real Estate
In today’s economic climate where changes and uncertainties persist, real estate demand is highly linked to business viability, especially in the commercial sub-sector.
It is no longer just a hypothetical view or theory but a reality in today fast-moving world where extraordinary approaches become the new normal.
The matter of fact is we need to tackle livelihood issues immediately by acknowledging this bottleneck and revamping approaches to business conducts through methodologies and processes.
When the economy is crippled, business revenue drops to dangerous levels and employees are affected naturally.
Soon after businesses closed down, the premise it occupied before becomes untenanted and the onus lies on the owner landlord to search for the next immediate tenant closest to the usage where the demised premise is designed and furnished with.
Any downtime of occupant could bring more burden to the landlord. A wise property owner should have his/her real estate negotiators (REN) ready for such eventuality and a wiser REN would even target the upcoming tenant from a need-based point of view.
The question is WHO can sustain the identified unit, especially at times of uncertainty such as now where businesses are hard hit the most?
There’s Always Second Chance
We have seen how the COVID-19 pandemic had brought most global economies to its knees.
At the same time, we are also seeing the light at the end of the tunnel, with news of the much-awaited vaccines and their effectiveness coming to fruition as mankind never fail to resolve the much-needed woes when they matter most.
Every crisis presents an opportunity and I truly believe this once a lifetime pandemic had shown us that how one can actually grab the chance to rise after taking a beating in the shocking and unprecedented event that happen since early this year.
The DNA of property investment has always remained as a visionary one where one should be taking position long before the market or economy recovers.
Asset turnaround is key to ensure sustainability as laid out above for any types of real estate and market around the world.
Henceforth, the saying: “There’s always solution to every single problem!”
Even in light of death, we find solace in passing when some religion views that as being called ‘home’ by our creator instead. As morbid as this sounds, the underlying but unconventional truth is because we, as humans, tend to be solution-centric and getting out of the rut is inevitable.
Business and real estate are inseparable. Period.
About Dr Alan Poon
Dr Alan sees himself as a futurist and strategist when it comes to thriving in the world of business and investment. He is an award-winning international speaker, serial entrepreneur and author of the three “Good Tenant, Great Tenant” books series on tenant management. As founder and CEO of SuperiorWealth Resources, a business advisory firm specializing in real estate solutions ranging from events, education, investment and asset turnaround, he is also a media influencer for his contrarian insights and market observations of the property industry. Dr Alan is also on board the Industrial Advisory Panel for SEGi University. Feel free to connect with him at his www.facebook.com/AlanPoonOfficial or firstname.lastname@example.org