Breaking Through Borders MHub & Juwai.com

By: Jotham Lim

To push forward in their quest for market share, Malaysia’s leading digital real estate marketplace MHub has teamed up with China’s largest international property online website Juwai.com.

Before the ink had time to dry on May 23, Entrepreneur Insight was given the opportunity to sit down with both sides, to discuss the intricacies of their collaboration, and how it will affect the property market on a global scale.

Joining us were Georg Chmiel, Chairman of the Board of Juwai.com, Quek Wee Siong, Co-founder and Chief Executive Officer of MHub, and Jason Ding, Co-founder and Chief Experience Officer of MHub.

But before we dive into the conversation, here are some quick facts that may surprise you:

• Chinese enquiries towards Malaysian properties has increased sixfold in the past two years
• Traditionally, it takes an average of about six months to complete a transaction, with the delay mostly in securing loan financing
• Chinese investors have funnelled an estimated RM9.5 billion into the Malaysian property market in 2018 alone.

How does MHub fit into the Juwai Ecosystem? What problems does it solve?

Georg:

For us, it is very important to have good and reliable partners. Malaysia is among the top 5 destinations for Chinese buyers to invest their capital in, and for the past two years, there is an increasing amount of enquiries, quarter after quarter.

In 2018 alone, the enquiry levels were three times higher than the year before, enquiries that are specifically looking for Malaysian properties.

Why Malaysian properties? Malaysia is a great place to live in. You have great infrastructure, and a well-thought-through legal system that makes buying a property fairly easy. Your development projects are also of good quality, and it is also very affordable on an international scale.

Also, as part of the One-Belt-One-Road (OBOR) initiative, Malaysia has become the centre of a lot of Chinese investment. This is especially true due to the US-China Trade war, and we have observed a shift in Chinese investment from more western countries like Australia and the United States, towards Malaysia, Thailand and Vietnam.

Chinese buyers are very passionate about property, so much that they have invested a total of RM9.5 billion ringgit into Malaysian real estate last year. China has invested about RM600 billion in overseas properties on a yearly basis. Of those RM600 billion, only about 1.5% reaches Malaysian shores. However, the percentage is growing rapidly, and Malaysia is one of the fastest growing region compared to other countries.

Why work with MHub? We do have a team based in Malaysia, but we need someone on the ground, that have existing relationships with all the key developers which we can pass on our leads to.

More often, Chinese buyers do not know the specifics of what is a good development in Malaysia, as needs differ from country to country. They are not familiar with the legal requirements and procedures as well. And being an overseas investor, they are subject to not so genuine offerings. Working with reputable local partners like MHub will allow us to give the best deals for them.

Is it compulsory to go through the MHub Platform in order to purchase homes via Juwai?

Quek:

That’s a very good question. To answer that, I think we should clarify what the partnership is all about.

Juwai.com will be the first point of contact for any inquiries. They have an extensive support and community team to help qualify the leads to see if it’s a genuine and serious buyer. Juwai.com will help understand the buyer’s needs and follow up if needed.

They also can provide advisory role, and link up the buyers to the respective parties, such as applying for the Malaysia My Second Home (MM2H) program, which is still on-going and very attractive for Chinese buyers.

Where MHub comes into play is, once the lead is qualified and captured in our database and our system, and it will be registered and be made available to the developers on our platform, which includes IJM Land, SP Setia, UM Land and many more. An agent from the developer side will then follow up and close the sale.

MHub has close to over RM40 billion worth of property inventories in our database at the moment and growing, which translates to about 10% of the total market share happening in the primary market.

Jason:

The total value of properties transacted via our platform comes up to about RM8 billion since MHub’s inception. We will also track the conversion rates, from obtaining the leads all the way to the signing of the Sales and Purchase Agreement. While compiling all of these data, we are able to make data-driven decisions.

Are there any plans to venture into the secondary market?

Quek:

In our current state, we are primarily tackling the primary real estate market. However, according to the report released by the National Property Information Centre (NAPIC), the secondary market takes up about 80% of all property transactions in Malaysia, which is about four times larger than the primary market.

We plan to roll out two new apps in 3Q 2019, one of them is called the MHub Marketplace which will be centred around sub-sale transactions. So we do have plans, and are about to capture this market within this year.

Georg, is what MHub offering unique in Malaysia? Or have you encountered similar solutions in other countries as well?

Georg:

You will be surprised. We do have different partners in different countries, but from my personal experience, Malaysia is quite advanced when it comes to new developments and advancements. The MHub solution is very unique and valuable to the marketplace.

Jason:

This prop tech solution is still fairly new and unfamiliar, not just in Malaysia but everywhere in the world. When developing this platform, there is no strong precedence that we can reference. Essentially, we are breaking new grounds, to make it easier for domestic and overseas buyers.

Technology in many other sectors have changed and revolutionise the entire industry. So it makes sense to do the same here as well.

Was investing in Malaysian properties a hassle for Chinese buyers prior to the existence of MHub?

Georg:

Without MHub, buying an overseas property will be a much more individualized approach. Buyers would have to approach developer by developer, and as a consumer, it is difficult to approach these developers individually.

It is much more efficient to just have a subset of developers that fit in your criteria. There is always a constant need to have a faster search and filtering process, and an easy way to get in touch with all of them.

Another point to make is that securing financing has always been a major issue for many Chinese buyers. We need a partner that is able to help service and facilitate the process, not just for financing, but for the legal procedures, such as changing the title of ownership of the property as well.

Jason:

There are gaps in the market. And gaps translate to time, and time means money. On average, it takes about six months plus to finalize a property transaction. What we do here in MHub, is trying to close the gaps with apps. We give every stakeholder in the entire ecosystem tools that allows them to do their work faster, easier and with more transparency in order to quicken the progress.

Georg:

Time is critical for property developers because developing projects is a massive capital investment. The goal is to sell as fast as possible at the right price.

Quek:

Currently, we are able to reduce the time needed from six months down to less than a month. The bottleneck of the entire process is actually securing the mortgage loan. There are many applicants that cancelled their booking, got turned down by banks and fail to get the proper finance for the property, slowing down the entire process.

In order to fix this, we digitise the entire loan application process, removing the need for pen and paper. We connect all the stakeholders into a single platform, allowing all parties to monitor the transaction progress, Reducing the entire transaction cycle down to less than a month.

Digitisation is one thing, but we are also working towards automation as well. With the emergence of neobanks, and blockchain technology, we are well placed to work with other partners who are working towards the fourth industrial revolution.

Other than the marketplace app previously mentioned, we are also rolling out our Buyer Focus app to address the slow loan application problem. We have inked a partnership with Tongdun, a Chinese facial recognition and detection app. With the buyer’s consent, the system will allow homebuyers to actually get their loan approved in mere minutes.

Jason:

What this app does is to give comfort to the banks and lenders, to let them know that this is a genuine application, along with their CCRIS score. Once comfortable, banks are much more willing to issue loans.

How does facial recognition inspire confidence amongst banks?

Quek:

We are dealing with very sensitive data, and in order to collect the buyer’s CCRIS and CTOS report, we are required to have prior consent from the applicants. Facial recognition will help speed up the entire process. Facial recognition is even widely accepted in China.

Georg:

This is true. If you’d like to clock into a building, you do not longer need to swipe a card, and just use facial recognition to identify yourself.

How does OBOR and the US-China trade war translate to more interest towards Malaysian properties?

Georg:

The Chinese government has a vested interest in many mega infrastructure projects which are currently underway. The prices for residential and commercial property in the area will rise hand in hand with the increased value in the surrounding area.

There are only a few countries can say that they have benefited from the US-China trade war, and those are Thailand, Vietnam and Malaysia. This is because Malaysia has a solid automotive and technological industry.

Affordability does play a significant role as well. When Chinese buyers plan to invest on a global scale, they are looking at the vehicles that will offer the best returns.

Chinese buyers are also concerned with their child’s education, and Malaysia offers a great education system. Coupled with medical tourism and all sort of things, it makes Malaysia very attractive.

How does the domestic market compare?

Quek:

Our main focus is still on the local users, and our services are tailored for local users anyways. But there will be quite a number of transactions coming from overseas buyers, especially in the Kuala Lumpur “Golden Triangle” region, and also Malacca and Penang.

We have also engaged with local authorities and partners. For example, PR1MA has agreed to use our solution. Buyers interested in buying PR1MA homes will be funnelled into our system, where we will pre-qualify them based on their real-time CCRIS and CTOS data.

There are about 65 projects launching from June onwards. If everything goes according to plan, our market share will increase from 10% to about 50%.

MHub will be our Entrepreneur of the Month for our July 2019 issue.