In the past one week, I have received several calls from real estate brokers peddling some “below market value” commercial properties to me. Most of the properties are not that exciting because they are either in lousy locations or occupied by questionable tenants. Some of them even suggest that I buy the property and increase the rent because the tenancy is going to end soon. Really? Aren’t most landlords struggling to just maintain the rental now?

In the end, I had a rather long conversation with one of the more experienced brokers mainly because I wanted to get more market insights. The conclusion was, she would call me back towards the end of the year when we get to know who is swimming naked after the tide recedes.

“I know what all of you Chinese bastards are thinking right now. I’ll call you again with good news probably sometime in December,” she said to me. By the way, she’s a Chinese lady and no, I’m not offended at all by her seemingly racist remarks. That’s probably the single most important piece of market intelligence I managed to pick up from her – everyone can smell blood in the water.

Thinking back on our conversation, I’ve made a few observations to conclude that it’s very hard to see meaningful property transactions for the next few months due to the following reasons:

1. Even if you are not a desperate seller, everyone will assume you are and the potential buyer will likely lowball you with a very insulting offer price.

2. If you are a desperate seller who accepts the insulting offer price, the potential buyer will probably find a reason to back out because he/she want to lowball you further in a few more months.

When you talk to property investors now, most of them are quietly singing “Wake Me Up When September Ends” (check out Green Day). All the loan repayment moratorium in our country will end in September 2020 and that’s when most banks will start seeing how bad their loan book will turn.

Right now, there are a lot of businesses trying to shore up their cash reserve by refinancing their assets or selling their shares. The problem with refinancing is that banks are very reluctant to lend because they don’t want to be caught swimming naked too when September ends. By the way, I know a few banks have blacklisted several industries such as oil and gas, entertainment, construction and anything related to tourism. Selling shares? I just think it’s too time consuming given the limited chance of success.

Suffice to say that the most straightforward option is selling non-core assets and usually that means investment properties. People generally won’t sell the factory they operate or the house that their whole family is living in. But hang on. If most investors are waiting to pounce, isn’t there a ready pool of buyers to prevent a sharp fall in property prices?

I still think the price will fall badly and the logic is very simple – this pool of buyers will be significantly outnumbered by desperate sellers. The pinch will come in September and slowly transform into wounds that start oozing blood in December. No, this is not my random prediction because I’m just trying to decode the underlying message from the broker when she said she will call me back in December. After all, I assume she’s more experienced than me in this.

I think everyone can smell blood now but hardly anyone will pounce until blood is all over the place. Stay tuned.