Issue # 3
38
PROPERTY360DIGEST
PROPERTY360DIGEST
Issue # 3
39
to the Government. Do something now or
Malaysia could see similar protest, which
we pray will not happen, in the near future.
COLUMNIST
Plight of victims of abandoned projects
Datuk Chang Kim Loong
says that the Putrajaya solution on
unsold high-end properties
glut may suffer
consequences
According to HBA
HBA refers to the reports on the possibility of marketing RM100
billion of unsold high-end properties to buyers in China and
Hong Kong by the Honourable Minister for Housing and Local
Government, YB Menteri Zuraidah Kamaruddin.
Although at first glance, such a proposal appears to help resolve/
reduce the issue of overhang properties in Malaysia, there could be
some possible implications that the Honourable Minister should be
made aware of.
Encourage Developers to continue
building high-end properties instead of
Affordable Properties
The reason why there are so many
unsold high-end properties is due to the
fact that housing developers in Malaysia
are not building what the Rakyat wants
which is ‘Affordable Properties’ (defined as
costing below RM300,000). Market forces
are now punishing these Developers
resulting in large overhang of unsold
high-end properties and hopefully, this will
force developers to build more Affordable
Properties in the future.
However, if the Government suddenly
wants to market these unsold ‘overhang’
high-end properties to foreign buyers
from China and Hong Kong, this will only
encourage developers to continue building
more high-end properties in the future and
even abandon/ shun building Affordable
Properties all together. This will result in
more Malaysians being unable to afford
their first house. What would become of
our Prime Minister’s aspiration of building
one (1) million affordable home within 10
years which equates to 100,000 units a
year?
Selling unsold high-end properties to
foreign buyers must not involve the
Government
The steps and initiatives to resolve the
issue of unsold high-end properties should
be left to the respective Developers as
these are private projects and all profits
derived goes back to the Developers and
their shareholders. Any steps to market
these unsold high-end properties to
foreign buyers must be undertaken directly
by the Developers and not involve any
Government machinery or funds.
The Government must not be seen in
any way endorsing the viability of these
unsold ‘overhang’ high-end properties
to foreign buyers. Else, if anything goes
wrong with these projects in the future,
this can potentially affect the credibility of
the Government and even affect bilateral
relationships. Similarly, we have time and
again reminded the Honourable Minister
not becoming a marketing tool for the
industry players.
She should not be a publicity tool for
housing developers to exploit during the
launching of their products and should
only support developers who have proven
their sense of responsibility and who have
impeccable track records. The fact that
the Minister ‘cuts the ribbon’ to launch a
new housing project means that she has
‘blessed’ and acknowledged that the project
will not fail.
The fact that the Minister ‘cuts the ribbon’ to launch a new housing
project means that she has ‘blessed’ and acknowledged that the
project will not fail.
“The MM2H is not a programme for
people to buy properties per se but for
foreigners who have reached retirement
age and choose Malaysia as a place to
stay under the ‘silver-hair’ scheme”. “It has
never been MM2H’s objective for people
to buy Malaysian properties,” - YBhg Datuk
Isham Ishak, Secretary-General, Ministry of
Tourism, Arts and Culture (MOTAC)
Allow Market Forces to determine
the selling prices of unsold high-end
properties
The Government should not intervene
when it comes to high-end properties as
this segment is best left to market forces to
determine as the segment is only a small
segment of the population.
As for the existing stock of unsold
‘overhang’ high-end properties, with lower
demand of such properties, Developers
should lower the selling price to reflect
the new equilibrium of a lowered
demand and refrain from launching further
high-end properties until the market
stabilizes. Its’ common sense, that if a
product cannot sell at RM1,200,000 surely
the vendor would sell at a discounted
rate or even further until successfully
disposed of. Its’ merely a case of dollar and
sense. Take a ‘hair-cut’ objectively to sell
instead of decay and rot. It can reduce and
eliminate borrowings. If one suffers the
fate of public auction the prices will be even
worse. Reduce the sales price and that’s
elementary economics.
In the meantime, developers should
Malaysia My Second Home (MM2H)
scheme
When the Government somehow
successfully convinced the foreigners to
‘buy’ in Malaysia will the foreigners be
buying under MM2H scheme or granted PR
which some unscrupulous developers or
their sales agents would market (to make
a sale)?
The MM2H is not a programme for
people to buy properties per se but for
foreigners who have reached retirement
age and choose Malaysia as a place to
stay under the ‘silver-hair’ scheme.
focus on building more Affordable
Properties where there is currently a very
strong demand.
Social problem if Rakyat cannot afford
to buy Home
HBA agrees with the statement by the
Honourable Housing Minister that part of
the ongoing protest in Hong Kong might be
related to high property prices in the island
city. However, instead of trying to promote
unsold high-end properties to Hong Kong
residents, HBA would urge the Honourable
Housing Minister to focus closer to home
as Malaysia also faces a similar problem
of high property prices resulting in the
majority of the Rakyat unable to buy their
first home.
HBA has been raising alarm bells since
2012 that property prices were increasing
too rapidly due to excessive speculation
fuelled by various gimmicks promoted by
Developers’ such as DIBS and Zero Entry
Cost schemes. HBA had warned that if left
unchecked, this can cause a “Homeless
Generation” comprising an entire
generation of our younger population
and especially the low and even middle-
income segment being unable to buy their
first home. HBA too have alerted to the
current Government that Crowdfunding
or P2P is not a home ownership scheme
but an investment platform and may fuel
speculation.
When too many of our Rakyat cannot
afford to buy their first home, this can lead
to many unwanted social problems and it is
something that the Government recognizes
this potential “ticking time bomb” and take
all necessary steps to address.
Granted that Malaysia has more land
available for development and property
prices in Malaysia are nowhere near as high
as Hong Kong, this problem is only relative
as credible research from Bank Negara
Malaysia and Khazanah Research Institute
also shows that the median property price
is beyond the reach of the majority of the
Rakyat.
Hence, the statement by the Honourable
Housing Minister that the ongoing protest
in Hong Kong can be linked to high
property prices should be a ‘wakeup call’
The role and duties of the Ministry of
Housing & Local Government is to ‘regulate.
licence and monitor housing developers
and to formulate policies for the protection
of house buyers’. The Government should
concentrate on its’ efforts to ‘save’ the
victims of abandoned projects. They
should make unexhausted efforts to revive
abandoned and problematic housing
projects that has plagued the housing
industry.
The Honourable Minister should
seriously look at the plight and nightmares
faced by thousands of innocent and
unwary house buyers who have lumbered
themselves with problems created by
errant and unscrupulous developers,
and ensure their legitimate rights are not
short-changed. She should seek immediate
solutions to resolve such unsatisfactory
state of affairs and not, with due respect,
shirk her duty:- by exercising and invoking
the relevant sections (Sections 10, 11 & 12
of the Housing Development (Control &
Licensing) Act, 1966) to protect the naive
and innocent buyers/ victims. Isn’t this
more meaningful?
PS: To ‘open the market’ to foreign buyers
would indirectly cause a bad trend to follow.
Australia and New Zealand did this before,
saw house prices go up the roof due to
speculative buyers from China and HK. New
Zealand has since reversed its open policy and
stopped this scheme.
n YBhg Datuk Chang Kim Loong DSPN
AMN is the founder and holds the
position of the Honorary Secretary-
General of the National House Buyers
Association – in short “HBA”; which is
a voluntary, non-profit, non-political
organisation manned by volunteers-
members of various professions.
The Organisation operates purely on
volunteer workers’ benevolence and
continues to be until to-date.