Demand for homes may taper after GST implementation

KUALA LUMPUR: Property developer, UEM Sunrise Bhd, expects demand for homes to taper off after the implementation of the goods and services tax (GST) on April 1 next year, especially in the second quarter.

Its executive director, Datuk Izzaddin Idris, said this was based on trends in countries that have implemented GST as there was a pullback in demand within the quarter of implementation.

“We believe that in this challenging market environment, we are prepared to hold back launches if necessary. We are revisiting some of our development plans to cater to current market demand and trends,” he told Bernama in an interview.

On an overall basis, Izzaddin said the company expected a slight decline in margins with rising cost pressures but there would be a transitional period as the markets would focus more on costs and margins.

He said UEM Sunrise, in anticipation of the coming GST, has made provisions to prepare for the impact as it believed that its financial impact would be reflected in the company’s future financial results.

Izzaddin said as residential properties were exempted from GST, the increase in input tax cannot be

claimed by property developers or passed on to the home buyers for residential projects already launched and sold.

He said most contractors or suppliers tendering for projects had already factored in potential cost increases pursuant to GST.

Izzaddin said it would pay to price new launches competitively and to offer the “right” products especially in a slower market to ensure good take-up rates.

Internally, he said, UEM Sunrise would strive to be more nimble and was developing a new consciousness in which all employees understood the essential to keep costs low and find ways to realise savings throughout the organisation.

UEM Sunrise, listed on the Main Market of Bursa Malaysia, is the flagship company for township and property development businesses of UEM Group Bhd and the government investment arm, Khazanah Nasional Bhd.

UEM Sunrise’s core competencies are in macro township development, high-rise residential, commercial, retail and integrated developments, as well as property management and project and construction services.

~ By THE STAR