KUALA LUMPUR: Ministers, developers, government officials and real estate agents continue to talk about the supply of properties having outstripped demand.
The government has even announced a freeze on the construction of what it terms “luxury” properties – shopping complexes, offices, serviced apartments and luxury condominiums priced above RM1 million.
Who is to blame for this property glut?
The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) is pointing the finger at developers and government approving authorities.
Theedgemarkets.com quoted PEPS as putting the blame on indiscriminate building of properties by developers, a lack of market studies and financial feasibility studies prior to building, a lack of coordination in planning among local authorities, and indiscriminate approvals.
“Other causes include the delay in gazetting of local plans that leads to uncontrolled development and higher cost as well as artificial demand created by members of the public for fear of losing out on choice properties,” it added.
PEPS said this in welcoming the government’s decision to freeze approvals for luxury property projects from Nov 1. It said this would serve as a wake-up call to developers not to overbuild and buyers to be more discerning and selective in their choice of purchase.
However, PEPS said, according to theedgemarkets.com, the freeze should not be country wide.
Rather, it said, tthe freeze should take into consideration the sector, location and effective demand and supply.
“PEPS recommends that there should be a moratorium of one year for those developers who have submitted their planning applications to get the approval within one year. During the moratorium, an in-depth market and feasibility study should be conducted for all projects submitted for approval,” it said.
According to PEPS, there are RM35 billion worth of unsold and unutilised buildings, comprising residential development, purpose-built offices and shopping centres. This, it said, was a waste of financial resources.
“There are 13 billion sq ft of purpose built offices for 2018 and 2019 and 44 million sq ft of incoming supply in Greater Kuala Lumpur alone from 2017. Every effort must be made to absorb this incoming supply before the freeze is to be lifted,” it said.
Noting that the property industry had linkages to more than 120 industries and collectively accounted for 10% of gross domestic product, PEPS cautioned that any severe property market imbalance and overbuilding would affect the stability of the financial system. -Mkini
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