Property developers say increasing house prices are due to high compliance and construction costs.

They also attribute the rising cost to government agencies, especially local authorities and utility companies, said Real Estate and Housing Developers’ Association Malaysia (Rehda) deputy secretary-general (Melaka branch) Datuk Anthony Adam Cho.

According to Cho, the total development cost of a project can be reduced by around 20 per cent if the compliance cost is lowered.

The development cost of a project is based on five factors, namely construction cost, land cost, compliance cost, interest for borrowings and developers’ profits.

In most cases, the development cost is about 70 per cent to 80 per cent of the project’s total gross development value, Cho said.

The biggest cost is construction, ranging between 50 per cent and70 per cent of the total project. Compliance cost takes up about 15 per cent to 25 per cent, he said.

Compliance cost includes levies and contribution to authorities, and building infrastructure for utility companies within the project, Cho said.

Developers are also required by Telekom Malaysia Bhd to incur between RM4,000 and RM6,000 per unit to install high-speed broadband infrastructure in their projects, or risk their development application being rejected by the Malaysia Communications and Multimedia Commission.

“Our margins are squeezed also because of the Bumiputera cross subsidies on discounts and low-cost houses. The more expensive the unit, the more discount is given. The poor is basically subsidising the rich.

“We hope the government will review the housing quotas and discounts allocated to Bumiputeras, and also look into other matters relating to property development, which can help to lower the overall cost of doing business,” Cho said at a media briefing yesterday. Sharen Kaur

Source: Business Times

Royale Infinity, part of Tambun Royale City development by Jadi Group in Bukit Minyak. It is strategically located along Jalan Perindustrian Bukit Minyak and mere minutes drive to Bukit Tambun PLUS interchange.

This development comprises 3 blocks of apartments with unit size ranging from 700 sq ft studios to 1,480 sq ft family suites. The apartments will include a breathtaking 40m cliff-hanging infinity pool in addition to a multitude of other facilities.

Property Project : Royale Infinity
Location : Bukit Minyak, Penang
Property Type : Residential Development
Built-up Area: 700 sq.ft. – 1,480 sq.ft.
Developer : Jadi Group

Measures to curb speculation in the property market and cross-subsidisation do not make for a healthy property sector in the medium to long term, according to the Real Estate and Housing Developers’ Association of Malaysia (Rehda).

Rehda president Datuk Seri Michael Yam drew attention to the affordable housing segment, which suffers the brunt of such measures like the real property gains tax (RPGT) as well as the impact of cross-subsidisation from the low-cost segment.

“Property speculation is in hotspots, not among the affordable housing community, but if the Government continues to have tightening measures, then it could affect 95% of the market,” he said at Rehda’s 2013 first-half property industry survey, noting that the secondary property market, for example, would not be able to sell well.

“We need to examine carefully the various categories of buyers and speculators and prescribe a more focused action plan against the right people,” he said, explaining that the broad brush-stroke approach of dealing with speculators had unjustly impacted other asset classes as well.

Past president Datuk Ng Seing Liong added that the hoo-hah about property price hikes was not reflective of the whole market, as steep rising prices occurred only in certain hotspots.

“Price hikes in these hotspots were reflected in the media and then caught by house buyer associations, which started asking the Government to clamp down on property speculation via the RPGT and other tightening measures,” he said, “Remember, these people are buying into a lifestyle, and hence, the price has to go up.” Ng noted that there were reasonably priced basic houses out there and that there was supply in the secondary property market. “The choice is still with the buyer, they should not just claim that prices keep going up.”

He also commented on the build-then-sell (BTS) mechanism, which he believes will negatively affect house buyers in the end, as supply falls subsequently.

“With BTS, when we start restricting supply, house prices would go up.”

Aside from the curbing measures, Yam also pointed out a need to revise the cross-subsidisation, which has also led to swelling property prices across the board.

“The low-cost subsidised housing is sold for RM42,000 when the building cost is RM100,000. So, who is paying the difference? The subsidy is passed through to other housing categories and subsequently, those who buy in these other categories,” Yam said, adding, “Thus, prices have gone up.”

To address this issue, he recommended that the Government focus on affordable housing, which could be built without a loss so that developers need not pass the cost to other buyers. “Now that low-cost housing is no longer required, the Government should focus on affordable housing, be it through the 1Malaysia Housing Programme, or PR1MA, or even developers,” he said.

Source: StarProperty.my

An image of a Neo Designer Suite in Tropicana 218 Macalister.

A NEW high-rise development project along Macalister Road in Penang is poised to become the talk of the town when launched at the end of next month.

The mixed integrated Tropicana 218 Macalister project, to be developed by Tropicana Corp Bhd (formerly Dijaya Corp Bhd), includes an international brand hotel with 200 rooms.

According to Tropicana Corp marketing and sales executive director Pam Loh, the project consists of two 33-storey blocks and has a total estimated gross development value of RM300mil.

Slated for completion in 2017, it will also have 211 designer suites, 88 serviced residences and 20 retail spaces besides the hotel which will be located in one of the blocks called Tower A.

“The project is on a 0.85ha plot in the centre of the George Town business district.

“It is within walking distance of Komtar and nearby are plenty of hawker stalls,” Loh said.

Residents of Tropicana 218 Macalister will enjoy facilities like an aqua gym and a garden. There will be areas set aside for rock climbing and holding barbeque parties.

To ensure privacy, there will be separate entrances for residents and hotel guests.

A 24-hour security infrastructure will be put in place, integrating an intercom and three-tier security system with card access, CCTV surveillance and alarm.

The suites, called Neo Designer Suites, with 140 units in Tower A and 71 units in Tower B, have a built-up area of between 683sq ft and 1,299sq ft each.

The 88 serviced units in Tower B are of similar size range.

The 20 retail spaces, occupying two storeys in Tower A and facing the main road, are between 378sq ft and 1,312sq ft.

Another interesting feature of the development will be a refurbished double-storey heritage bungalow that will be turned into a cafe or restaurant.

A sky lounge atop Tower A will be a relaxing hangout spot offering a breathtaking view of the sea.

The suites will be sold for RM1,000 per sq ft and the retail spaces for RM2,000 per sq ft. Prices for the residences have yet to be confirmed.

Home buyers can have their choice of sea view or city view when buying the residential units which come with at least one car park each.

Eight levels of car parking lots are included for the suites and residences while there will be two dedicated basement parking spaces for the retail outlets and hotel.

Loh said that only the 71 suites in Tower B, at eight units per floor, will be open for registration under the first phase of the launch.

She said that 18 of the units, with a built-up area of 1,299sq ft, would have the dual-key concept whereby they come with a smaller attached multi-purpose unit.

“The smaller unit of 340sq ft can be rented out or used as a SOHO (small office / home office) or turned into an extra bedroom,” she said.

She added that the completed units would be partly furnished with kitchen cabinets and electrical items.

For details and registration, contact Tropicana’s Penang sales gallery at 04-2105888 or visit www.tropicana218macalister.com.my.

Source: StarProperty.my

Hunza Properties Bhd plans to launch three projects with a combined gross development value (GDV) of RM1.4 billion over the next four years, said its executive chairman Datuk Khor Teng Tong.

He said the three projects – which will be Hunza’s focus for the coming years – include an integrated development on 14.9ha in Juru worth RM700 million in GDV; Alila II, a high-rise green building project (RM500 million GDV) and Bandar Putra Bertam in Kepala Batas (RM200 million GDV).

“The planning ratio at Juru is expected to be 75% for high-rise residential and 25% for commercial (held by Hunza),” he told reporters after announcing the group’s financial results ended June 30, 2013 here today.

He said the integrated development in Juru would feature a four-star hotel, hypermarket and recreational facilities covering about 500,000 sq ft (about 46,451 sq m), which will be owned and managed by Hunza.

The group plans to submit the proposal to the relevant authorities by September or October this year, he added.

Khor said the hotel with about 300 rooms is expected to be another revenue stream for the group after its premier lifestyle shopping mall Gurney Paragon Mall, which opened on July 23 this year.

On Alila II, Khor said the project, comprising two tower blocks of high-end condominiums sited on the Alila in Tanjung Bungah, is likely to be launched soon as it is currently awaiting final approval from the relevant authorities.

For the RM200 million GDV in Kepala Batas, he said it would be the remaining phases after the 128 double-storey semi-detached houses of Phase 3 launched in May 2012 are completed and fully sold.

“Phase 3, featuring 173 double-storey terrace houses launched in the third quarter of financial year 2013, has to date achieved more than 50% sales,” he added.

On Hunza’s multi-billion ringgit integrated development in Bayan Baru, Khor said the group hopes to start the project in 2016 with earthworks for the low-cost units for the resettlement of the squatters in progress.

Asked to comment on the possibility of increasing the real property gains tax (RPGT) to stabilise the prices of houses, Khor said: “I don’t agree that the government always changes its policies.”

“More houses should instead be built if supply was short to stabilise the prices, while changing the policies would affect the industry’s growth,” he said. – Bernama

Source: TheSunDaily