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Shareda upbeat despite drop in new launches
Published on: Sunday, August 13, 2017

Kota Kinabalu: Sabah Housing and Real Estate Developers Association (Shareda) remains optimistic despite a 76 per cent drop in the value of new launches by Shareda members last year which forced some developers to quit the industry altogether.

Between 2009 and 2014, the real estate industry experienced a bull run, with Sabah enjoying an appreciation of 100 per cent in the residential sector and 500 per cent in the land development sector.

However, the scenario changed from 2015 due to factors such as tight credit control, and the value of new launches dropped from RM7 billion in 2012 to only RM1.7 billion last year.

Shareda President Chew Sang Hai said despite the significant drop in the volume and value of transactions, there is still a high demand for affordable properties and also in the hospitality industry.

"Hence, I strongly urge developers to explore and leverage on these two sectors despite them being capital-intensive and cost-sensitive. To address this, developers need close collaboration between all stakeholders and the regulation agencies and banking institutions," he said at the Shareda Nite 2017, here, Friday.

Chew said increasing cost of land had forced developers to develop and market high-rise and stratified tiny apartments priced below RM350,000 per unit.

"Therefore, a sustainable financial planning and positive cash flow model is a must to ensure any ongoing project is able to complete," he said.

On the main problem of tight credit control, Chew said Shareda had appealed to the Government for years to have a dialogue with all banking stakeholders to formulate a sustainable policy.

"Unfortunately, our queries were answered by a standard press release by the relevant parties without a face-to-face meeting or dialogue," he said.

He urged commercial banks to allocate a fixed amount of business loans to Sabah and Sarawak to encourage SMEs to source for funds and requested Bank Negara Malaysia to implement Fixed Regional Exposure to all commercial banks, with Sabah to be granted a 7.5 per cent loan allocation.

He said the risk and business of certain industries in Sabah differ from the peninsula, especially in the hotel and Cineplex industries where there is a huge growth potential in Sabah.

In contrast, he said, the peninsula is experiencing a glut in the supply.

"Our experience shows that many of our loan applications were rejected by the Risk Committee in Kuala Lumpur or the approval committee, despite strong recommendations presented by their respective Sabah managers.

"It is safe to say that the doubtfulness of the Risk Committee towards the Sabah business environment is largely influenced by the unfavourable outcome and experiences in the peninsula and lack of local data and knowledge on Sabah's development progress," he said.

Local Government and Housing Minister Datuk Seri Hajiji Mohd Noor, in his speech, applauded Shareda's focus to develop youths in the industry.

"Shareda's programmes and plans have benefited the State. One such plan is to forge partnership with the Malaysia-China Chamber of Commerce (MCCC) to promote business opportunities between Sabah and China, including in hotel development and manufacturing," he said. Hajiji's speech was read by his Assistant Minister Datuk Dr Joachim Gunsalam.

He said the State would benefit in Shareda's focus on real estate developments and especially in the light of a surge in demand for building materials in Sabah, especially cement, in the construction industry.

"Thus, the Government welcomes investors from China to build and operate cement manufacturing plants in Sabah based on the fact that the property and construction sectors need about 1.5 million tonnes of cement per year and that Sabah still lacks cement and clinker plant factories.

"We have to create and explore the market. It is this kind of concept of working together that I feel fundamentally binds us. Over time, we will achieve solidarity," he said.

Hajiji also promised the Government's continued support and applauded Shareda's initiative to engage his ministry, particularly in their requests to review the SPA, selling price for new housing developments, establishment of Sabah Building Society to provide end finance to housebuyers at more lenient terms and review of the Uniform Building By-Law, among others.

"I assure you that we will look into these requests proactively and engage with Shareda to seek a consensus that will work for all," he said. - Tracy Patrick

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