EdgeProp’s Analytics: “Promising but needs more work”

When I was in high school in the 1970s, I used to bring back a school report book for my Dad to sign. These often contained entries from my teachers like “Promising student but needs to work harder”

In reviewing EdgeProp’s FREE Analytics toolkit, I feel that there are novel features such as “Profitability Analysis” and “Polynomial Trendline” that are genuinely useful to property investors, but questions over data accuracy for property price transactions in PSF used by EdgeProp Analytics prevent me from fully recommending the toolkit.

So my reluctant conclusion for my review of EdgeProp’s Analytics is : “A promising real estate financial toolkit but needs more work to be done to ensure data accuracy”.

I think but cannot be 100% certain EdgeProp gets its property transaction prices from NAPIC through an unidentified data provider. I believe but cannot be 100% certain these unintentional data errors are caused because datasets representing price transactions in PSF for condominiums with similar names were accidentally merged.

For example the EdgeProp Analytics page for Quayside Seaside Resort Condominium at Tanjung Tokong, Penang Island- a luxury residential development by E&O clearly show the inclusion of some datasets of price transactions belonging to another Quayside condominium at Butterworth. There are 4 price transactions in PSF ranging from RM236 to RM510 I suspect but cannot be 100% sure belong to the other Quayside condominium at Butterworth.

I believe Quayside Seaside Resort Condominium’s Phase I was launched at around RM600-700 psf for standard units (i.e.without extra large balconies) in 2013. According to EdgeProp Analytics, the median price for QSRC is RM989 PSF. There is no information showing the period for which the median price psf for QSRC was determined. Was it for the past 3 years? Was it for the past 7 years since 2013 when QSRC was completed. I simply do not know. Perhaps the Chief Editor of EdgeProp might care to comment?

I noticed the EdgeProp Analytics page for The Tamarind, another E&O development at Tanjung Tokong, Penang also contains datasets of price transactions in PSF from another Tamarind condominium in Sentul. Under the table Past Transactions, I see there are at least 4 transactions listed under the address “Jalan Sentul Indah” and not the Jalan Seri Tanjung Pinang (the correct address of the E&O Tamarind development at Tanjong Tokong).

If these unintentional errors are corrected, then I think EdgeProp Analytics’ polynomial trendline is a powerful tool that can be used to see if the interpolated property prices in psf for a particular condominium are rising or declining in the past . A rising property price PSF trendline for a condominium can be interpreted as the property is undervalued, ceteris paribus. This information can be used to time property purchases, together with of course professional advice from a valuer or real estate agent

If there are more condominiums where the plotted polynomial trendlines are rising compared to those that are declining in a neighborhood (e.g Tanjung Tokong) then I think this EdgeProp Analytics tool can be used to identify which neighbourhoods are likely to be the next new property “hotspot” where prices can be expected to increase.

To my eyes, EdgeProp Analytics’ polynomial trendline projection tool looks like the output from a univariate Box Jenkins ARIMA forecasting model. ARIMA statistical forecasting models are commonly used to construct a “best fitting” curves through historic data points and to project future trendlines.

EdgeProp is coy about disclosing exactly what statistical forecasting model it uses to get its polynomial trendlines. But the Box Jenkins ARIMA forecasting model has been used to project property prices for office and industrial property in Hong Kong. A discussion of how the Box Jenkins ARIMA forecasting model works is beyond the scope of this review. But for those of you who are mathematically inclined and want to know, you can check out this YouTube video that explains how the Box Jenkins ARIMA model works in just nine and half minutes.

Real estate professionals with the cash and time can of course do the same as EdgeProp. They can buy their very own Box Jenkins ARIMA forecasting model off the shelf. Then get a data feed of property price transactions from providers like Brickz.com. Forecast Pro, a software application by Massachusetts based Business Forecast Systems, Inc has a free trial where you can download their software. The company claims Forecast Pro is a leading software solution for business forecasting, with more than 40,000 users worldwide.

Note: I own a 20 year old copy of Forecast Pro that runs on the obsolete Windows 95 operating system. I paid about US$800 for my copy of Forecast Pro in 2000 . The software program was installed on a 3/4 in floppy disk. I wonder how many readers of this blog know what a 3/4 inc floppy disk and a diskette drive looks like?

Quayside Seafront Resort Condominium property transaction prices in PSF plotted against time. NOTE 4 data transactions below RM600 psf between 2017 and 2019. I believe but cannot be 100% certain these belong to the other Quayside condominium at Butterworth

Note Polynomial trendline for Quayside Seafront Resort Condominium is NOT correctly plotted because of 4 data points from another Quayside condominium in Butterworth

You might wonder if I took to heart my high school teachers’ advice to work harder ? I did. I won a prize for scoring the highest number of distinctions in the Lower Certificate of Education in my high school. I hope EdgeProp steps up its game and works harder to ensure the datasets for their Analytics Polynomial Trendline projection tool are free from unintentional errors. I believe many property investors will be delighted if they do.

Notes & disclaimer: I am not paid by EdgeProp or Business Forecast Systems to write this review. I have no connection whatsoever with EdgeProp or The Edge, save a former Chief Editor of the Edge and I were on the same editorial board of a High School Yearbook. I won't mention the name of the high school which is located in a small sleepy hollow in Peninsular Malaysia, except that the Yearbook was issued on the sesquicentennial of the school's foundation.

Mark Tan, a Tanjong Tokong area specialist, was the first REN I talked to that alerted me that no QSRC unit has ever traded as low as RM300,000-RM350,000. I then asked a Real Estate Agent in KL that I know quite well to get in touch with EdgeProp to rectify the errors sometime in June. When nothing was done, I contacted the Marketing & Communications Manager at EdgeProp in August I was assured the matter would be referred to the technical department. However, it appears there are still unintentional errors in the QSRC datasets for transaction prices in psf. I see clearly three property transactions at around RM300psf.