People looking to own a house any time soon will have to pay at least 10% more for their dream home, according to developers.

They said the increase was due to the double whammy that has hit the construction industry – higher costs of building materials resulting from the 20 sen rise in the price of RON95 petrol and diesel and absenteeism among foreign workers because of the nationwide crackdown on illegal immigrants.

Real Estate and Housing Developers Association of Malaysia president Datuk Seri Michael Yam Kong Choy said the failure of foreigners to turn up for work was causing delays, thus adding to costs which contractors were certain to push to consumers.

He added: “The raids on construction sites have frightened even legitimate migrant workers who are staying away.

“This also happened in past raids, Legitimate migrant workers simply did not turn up for work or delayed their return from their country until the storm blew over.

“Because of the shrinking supply of workers, developers have to pay more for labour to meet contractual deadlines, failing which they will be penalised.”

Developers are bound by the Sales and Purchase Agreement and will have to pay compensation to buyers for late delivery, Yam said, adding that contracts in the private sector were awarded with no provisions for price adjustments.

While acknowledging the need to flush out illegal immigrants, he said any reduction in the number of workers would hurt developers.

On the fuel price hike, Yam said it affected the supply chain of the construction industry, involving more than 100 types of business.

Master Builders Association of Malaysia president Matthew Tee said members were complaining that their legal workers whose documents were being processed were staying away for fear of being arrested.

“Our understanding is that all foreign workers will be detained unless they can prove that they have proper documentation,” he said.

“This can be difficult as their documents may still be with their employer or immigration pending the affixing visa of stickers by the authorities.”

He added that there had been cases in the past of legal workers being detained for up to 14 days.

Tee hoped that there would be no recurrence of such instances, and warned against a repeat of the situation in 2002 when the construction industry was brought to a standstill due to a shortage of workers.

In George Town, the Penang Master Builders and Building Materials Dealers Association says it expected construction costs to rise by 3% to 5%.

Association president Datuk Lim Kai Seng said the cost of transportation was likely to rise 10% to 20%, and the prices of sand and cement by between 5% and 10%.

He said that cement now cost RM17.50 per 50kg while sand sold for RM70 per cubic metre.

Source: StarProperty.my

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