Cheaper homes if faster approval
Published on: Tuesday, February 10, 2015
KOTA KINABALU: A plan by builders and experts to shorten the time to approve development plans by up to a year may see property prices drop some 10 per cent. This will mean savings amounting to tens of thousands of ringgit for residential properties or millions in the case of mega projects. Sabah Housing and Real Estate Developers Association (Shareda) President Datuk Francis Goh said introducing measures to do away with the builders' 30-month waiting period at present will see construction costs lowered and consequently property prices. As such, by reducing the waiting period by six or 12 months, property prices can be reduced by 5 per cent and another 2 per cent through the reduction of capital cost and overheads incurred by builders.
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"Another 3 per cent if the Government waives the cost for capital contribution charged by the Sabah Electricity Sdn Bhd," he said ahead of Shareda's Annual General Meeting, here. At the moment, Goh pointed out developers need to use their own finances to obtain development orders while waiting for development plans to be approved under the 30-month timeframe. "All these are considered overheads, whether the purchaser likes it or not, part of the cost will be passed down to the property selling prices." Sabah house prices are expected to rise by some eight per cent annually, with price increases expected on all property segments.
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According to him, the plan would include the consent of the Institute of Engineers Malaysia, Association of Consulting Engineers of Malaysia, Malaysian Architect Association and Sabah Engineers Association, before it is presented to the State Government. It would take them at least one-and-a-half months before this is done.
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All parties concurred that such measures must be carried out following a meeting towards this end ahead of Shareda's AGM on March 7. "That is why if we can get the cooperation of the government and its understanding, it will not only relieve us from the higher cost, but also pass down this reduction to buyers," he added.Meanwhile, Sabah property launches experienced a sharp decrease of 50 per cent from RM7.56 billion in 2013 to RM3.47 billion last year. According to Shareda's annual report, this was attributed to several "cooling measures" imposed under the 2014 Budget and the jitters brought by the Goods and Services Tax (GST). It concluded that such measures led to a "wait-and-see" attitude among developers throughout 2014. The factors include the Real Property Gain Tax, abolishment of the Developers Investment Bearing Scheme, RM1 million cap for foreign purchases, restriction of four units per buyer and exclusion of selling price from discount and incentive offered by developers. Goh said the report concluded that Budget 2014 had "failed" to curb property prices from soaring, adding that such drop in launches had already been anticipated. "If you want to reduce the property prices, you have to increase the amount of property launches. "These measures introduced under the 2014 Budget were only successful in stopping developers from launching new projects," he said. The real estate body accounted for 98 per cent of the number of developers in the State. Only industrial development reported a 154 per cent increase. Other types of developments landed property (-50 per cent), condominiums and apartments (-39 per cent), commercial (52 per cent) and mixed development (-76 per cent) recorded deficits. Stay up-to-date by following Daily Express’s Telegram channel.
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