Automatic release mechanism could also help developers figure out their cost of doing business

By RAHIMI YUNUS / Pic By ISMAIL CHE RUS

Property developers want all states to implement the automatic release mechanism for unsold Bumiputera lots to mitigate the rise of unsold properties.

Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Soam Heng Choon said the automatic release of Bumiputera units after a predesignated period is already implemented in Selangor and Penang.

“It will be great if every state can follow Selangor and Penang in the sense that developers will know that after a certain time frame, they can get the release and what sort of contribution they need to give to the government,” he said at a briefing in Kelana Jaya on Rehda’s property industry survey for the first half of the year (1H18) and market outlook.

Soam said the automatic release mechanism could help developers have a clearer picture of their cost of doing business and reduce unsold inventories. Presently, developers can apply to remove the Bumiputera quota on a case-by-case basis six months after the date of their first advertisement in Malay newspapers.

Soam said any affirmative policy must be transparent, so that developers can calculate the impact on their business.

Rehda’s survey, which is based on 152 respondents among its members, showed that 75% of them have unsold units in 1H18, up 9% from 66% in 2H17.

The survey also identified that a majority of the developers have up to 30% unsold stocks.

It also identified that 24% of the unsold units are in the price range of RM250,001 to RM500,000 (mostly in Kuantan and Alor Setar), 22% between RM500,001 and RM700,000 (mostly in Johor Baru and Shah Alam) and 23% within the range of RM700,001 to RM1 million (mostly in Johor Baru and Puchong).

Rehda singled out three main factors behind the high unsold units — end-financing problems, unreleased Bumiputera units and low demand or interest.

The survey showed that the number of respondents facing end-financing issues increased from 82% in 2H17 to 89% in 1H18, with 39% of loans rejected (including given lower margins) involving properties below RM500,000.

The survey also showed 40% of the respondents launched new projects during 1H18 involving 13,233 units. But almost half or 6,484 units are still waiting for buyers.

Residential units accounted for 95% of the total launches with 12,522 units, while the remaining 5% or 711 units were commercial properties.

Strata launches outnumbered landed units 56% to 44% respectively, with double- and triple-storey terrace houses the top picks among buyers.

Most launches in Kelantan, Melaka and Pahang were below RM250,000. Projects in Kuala Lumpur and Selangor were mostly between RM500,001 and RM700,000.

On the affordable housing front, 47% of the respondents were reported to have affordable housing components in their development and the figure rose from 41% in 2H17 and 37% in 1H17.

Rehda called on the government to offer three main incentives to reduce property prices — reducing development charges, lowering land conversion premium and exempting capital contribution.

He said combined efforts involving developers, the state and federal governments, financial institutions and utility companies are required to reduce house prices.

“Different states have different policies and to purely ask the developers to reduce prices alone may not be good enough. Everyone has to play their role and we hope the new government has the political will to do this,” he added.

Soam said the industry is hoping that the worst is over as they are aligning their businesses to meet the demands of buyers.