KUALA LUMPUR: The Association of Real Estate and Property Developers (Rehda) suggests that an in-depth study be undertaken on the overhanging units in the country, before making the decision to recover them or write them off completely.
It was proposed at the 14th Malaysian Real Estate Summit 2021 last week that the government plans to buy and reallocate overhanging properties in mature areas and turn them into affordable housing.
However, in a virtual briefing yesterday, Rehda chairman Datuk Soam Heng Choon said such a move would not get to the root of the problem.
“Converting overhanging housing to affordable housing and getting the government to buy it back is good exercise, but you need to be aware that it will also involve taxpayer dollars.
“If the projects are not well placed, is it a waste of taxpayers’ money? I think we need to do a thorough study to find out where and why the property is not being sold; and what actions can be taken.
Soam added, however, that it would be right if the properties were in a good location and there was a good demand for them.
“In this situation, taxpayer money can be used to buy these overhead units.
“But for high-end units, such as those located in the KLCC area, how can you turn them into affordable units? “
Soam has also answered the call for the use of the ‘build then sell’ (BTS) system, which many believe will eliminate various problems in the industry.
“BTS and sell then build (STB) systems exist side by side in Malaysia. The STB system is the current model that we are undertaking; while the secondary market uses the BTS system.
Soam noted that many overhang and unsold units are a product of the BTS system.
“When groups proposed that BTS be the preferred method, the government responded that only four developers in Malaysia can undertake this. The reason is that in order for developers to do this, they need to have a huge balance sheet and cash flow. “
Soam warned that if this happened, the volume would drop dramatically and prices would increase dramatically.
“That’s because a developer then wouldn’t want to sell until they’re done and if there is a lot of demand, that will drive up prices.
“Here, it’s up to the developer to decide whether to sell at the price they want.”
According to the latest Rehda real estate market survey, which included 180 participants from across Peninsular Malaysia, 82% of those surveyed said they had less than 30% unsold residential units in the first half of 2021. Of those, 43% included units priced between RM250, RM001 and RM700,000.
Meanwhile, 58% of those surveyed said they had unsold completed residential units in the past one to three years, with a final finance loan rejection, unreleased bumiputra units, and mismatched prices cited as the three main reasons.
Respondents facing final financing issues stand at 88%, mainly due to ineligibility due to buyers’ income.
According to the National Property Information Center, a total of 31,112 overhang units worth RM20.09 billion were recorded in the first half of 2021. This is an increase of 5.2 % and 6.2% in volume and value, respectively, compared to the previous half.