Projects would be handed to private developers
By ALIFAH ZAINUDDIN & SHAZNI ONG/ pic by MUHD AMIN NAHARUL
FIVE 1MALAYSIA People’s Housing Programme (PR1MA) projects in Melaka, Perak and Perlis are among the developments that have been cancelled as debilitating financial position forces the state-owned developer to cease their construction.
According to a source familiar with the matter, the projects that have been axed are in Tanjung Kling, Bukit Katil and Alor Gajah in Melaka Sungai Siput, Perak, and Kuala Perlis, Perlis.
These cancellations are part of the 56 development projects valued at RM9.98 billion which have been terminated by PR1MA after the government conducted feasibility and financial test on the government-backed developer. The source said these projects would be handed to private developers.
“The (said) projects which are in the final (stage) — are either to be terminated or sold back to the developers. Some of the other projects (troubled, difficult to sell) are in the middle of being finalised. They are either being sold back to the developers or (to) find other developers to continue,” the source told The Malaysian Reserve (TMR).
PR1MA had planned to build about 48,500 units in these three states, including 23,000 affordable units in Melaka with a gross development value of RM4.6 billion. Construction started for about 50% of the total units as of April 2017.
In Perak, over 20,000 units were approved as of April last year with 4,350 units completed while 8,071 units were in various stages of construction.
Perlis was also promised 5,500 affordable homes under the 11th Malaysia Plan. It was reported that construction started on 1,100 units as of April 2017.
CBRE-WTW (CBRE Group Inc and CH Williams Talhar & Wong Sdn Bhd) MD Foo Gee Jen said the sites for developments acquired by the previous administration were done “too fast and too soon. It is good that the government has put a stop to it,” Foo told TMR.
“I don’t think at that point in time, a proper study had been done on the site they had acquired. That has contributed to the mismatch in terms of location and product. There is no infrastructure. So, how can you build affordable homes or low-cost homes at these locations?” he added.
The Housing and Local Government Ministry recently disclosed that a total of 56 development projects valued at RM9.98 billion under PR1MA have been cancelled. The ministry said the amount is part of the 131 projects that have earlier been planned with a total value of RM25.64 billion.
A comprehensive audit on PR1MA’s policies, finances and business model found that the state-linked agency had to improve its financial situation to continue the existing projects.
The evaluation showed only 75 phases were viable and could be continued. Constructions for all ongoing projects are now at over 50% and have Advertising Permit and Developer Licences.
Foo said the cancellation of the PR1MA projects will contribute to a rebalance in the property sector given that a significant number of overhang units involved priced between RM200,000 and RM300,000.
“If you look at the current situation, I think a lot of them (overhang units) are coming from this segment. So, they have to make sure they get it right. You cannot simply support it just because it is in the affordable bracket. Every other factor has to be considered,” he said.
PR1MA was previously parked under the Prime Minister’s Office. But after the government change in May 2018, the agency has been put under the supervision of the KPKT.
A Special Parliamentary Select Committee report listed PR1MA with a RM5 billion debt. The debt papers will mature between next year and 2024.