Privatising the home affordability issue
Published on: Monday, October 12, 2015
Kota Kinabalu: Sabah, or parts of its urban areas (especially here and in Tawau), have the unfortunate reputation of having among the highest home prices in the country since some years ago into the 21st century, a fact loved by profit-motivated property speculators and developers who dared to acquire land banks at exorbitant prices for further development.This has led the Sabah State Government's move to impose a 30 per cent low-cost or affordable housing development quota on any new housing project development a few years ago that was subsequently rescinded or suspended after it led to a power tussle in the Sabah Housing and Real Estate Developers Association (Shareda) whereby the winning faction persuaded the Minister that it would build 10,000 affordable homes to help the State to provide affordable homes.Hap Seng in Tawau with massive land bank has priced its new township development housing within reasonably affordable range and is reflective of the role plantation companies and planters play in the dynamics of the local property market.
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Shareda wants the State government to provide land for developers to build affordable homes and construct the infrastructure like roads to open up more land areas currently inaccessible to lower land costs for housing development. It calls for the capital contributions to utility bodies to commensurate with what developers in West Malaysia pay so that prices could be moderated.Now, the Sabah Ministry of Housing and Local Government moves to curb home price escalation by asking developers to lower their new home pricing by a certain percentage, and this again has riled members of Shareda insisting on free market forces to prevail on business matters.At a Shareda Night function a few years ago, the guest of honour in his address before dinner, remarked that he knew of developers making more than 100 per cent profit. This was never refuted on the spot that night or thereafter. Silence could mean it was true.To some, the government's meddling is seen as privatising the home affordability issue to private developers when it fails to provide any meaningful social housing programmes over the years, but to those in need, any measure is welcome to lower home pricing.
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The Kota Kinabalu Municipal Council used to build housing like Taman Sempelang in Sembulan, LPPB at Kepayan Low-Cost Housing on its own, but not anymore especially into the 21st century, except for some expensive joint ventures focusing more on expensive real estate with a small portion of lower cost housing. The same too, in the case of Sandakan and Tawau on provision of low-cost housing.The past Auditor General's Report stating that delay in completing three Public Housing Projects (PPR) in Sabah had affected the target group from enjoying the benefits on time - Pekan Kinarut PPR in Papar; Kampung Semarak PPR in Tawau and Lintas Sibuga PPR in Sandakan, involving a total of 1,725 units of housing and a combined cost of RM140.99 million.
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The three projects were completed with an extension of time (EOT), between 624 and 2,504 days resulted in delays in completing the projects and providing benefits to the target group since a project took more than six years from the original date of completion shows the kind of risk developers or contractors face if they are not prepared for contingencies or competent.The report also stated that the quality of work done by the contractors was unsatisfactory, but corrective action has been done after the auditor's visit and the observation report issued.According to the report, some of the construction design approved by the superintending officer and executed by the contractors were impractical, incomplete and inappropriate.The report recommended that Sabah and Sarawak region and the Urban Well-being, Housing and Local Government Ministry monitored and supervised the progress of work done by all contractors in order to ensure quality of work.It also proposed that all project specifications and designs be refined in order to avoid further incomplete, inappropriate or impractical specifications resulting in additional government expenses.Coordination between related government departments and utilities agencies should also be improved to avoid delay in completion of the project, the report suggested.Tenant selection process should also be implemented and the list should be finalised earlier to enable immediate occupation by tenants right after the submission of PPR.To avoid all this incompetence, it is easier to privatise social housing, and the public can discern the prong is currently upon the Federal Government to fund affordable homes under some fancy named schemes instead of a single housing task agency focus. The urgency to provide has even forced change of prime urban recreation park land zoning usage here to realise the pressing need.A member of Shareda's top brass, Ben Kong, said last week to resolve the price reduction directive issue, "We are prepared to go to court."He denied that developers are profiteering from a five per cent annualised margin in a high rise business venture with weakening ringgit, especially in a globalised environment when the costs of building material like a steel bar is standardised and cement supplied by a monopoly in the State are easy to calculate. Any profiteer would stand out conspicuously in returns filed with the Inland Revenue Board, he opined.Kong wanted the authorities to resolve woes face by developers and contractors like labour shortage and costs of maintaining a workforce plagued by pinching of workers lured by offers of higher wages, which also led to delays, higher business costs, in addition to the minimum wage saga.Promising to bring the first "HDB-like strata housing development in Sabah" to be sited in the Kingfisher Kuala Inanam area next year or so, Kong's company is one of the developers to watch, fresh after the completion of the Riverson development project in Kota Kinabalu South, which he described as the Bukit Bintang of the state capital where tourists would throng after they have done their mountaineering, diving, forest nature or island escapades and whatever they planned.Kong is a firm believer in special locality development: "If I put Riverson in Lintas (Luyang), it may not be very successful."Stay up-to-date by following Daily Express’s Telegram channel.
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