13 June 2015

Developer says bumi quota tough to achieve

  13 June 2015

THE recent changes in Negri Sembilan’s affordable housing policy and increase in the bumiputra quota for new residential schemes have received mixed reception from property developers and research analysts.

A senior executive from a major property developer says Negri Sembilan’s increase in the bumiputra quota, from 30% to 50%, would be tough to achieve for small developments.

“However, for larger developments or townships, it might be possible to achieve – we need to look at the bigger picture. There is no one-size-fits-all solution,” says the executive, who spoke anonymously as he says property developers need to be on “friendly terms” with the authorities.

He also says while more clarity is needed on the new state housing policy in Negri Sembilan, property developers would still build homes based on “market demand and compliance with state regulations.”

The executive also welcomes the Mentri Besar’s statement that authorities would be flexible if developers could not dispose of bumiputra units.

“Basically, concerning unsold bumiputra units, we have to do roadshows and put advertisements in Malay-language newspapers, as well as pay a penalty equivalent to the discount from the units sold to non-bumiputras.

“So, it involves a lot of extra costs and efforts on our part.”

Meanwhile, a bank-backed property analyst lauded the move by the Negri Sembilan state government.

“It is clever and calculated to prevent the overcrowding of high-end developments in the market,” says the analyst, who noted that recent transactions in areas such as IJM Land Bhd’s 2,300-acre Seremban 2 flagship township had been on the high side.

His view is based on a recent market report from property consultancy C H Williams Talhar & Wong (WTW), which notes that based on 2014 data, Seremban’s landed residential sector has continued to be bullish.

“The average transacted price is on an upward trend due to good response from purchasers from the Klang Valley. The average price for double-storey terraced houses and semi-detached houses in Seremban recorded around 9% appreciation in terms of capital value, while yields remained unchanged at 4.5%,” said the WTW report.

The WTW report also pointed out attractive returns from shop offices in some areas in Negri Sembilan.

“Existing shop offices at Pusat Komersial Senawang are generating attractive returns; monthly rentals fetch between RM5,000 and RM6,000 – higher than those in other areas in Senawang, i.e. RM2,000 to RM3,000 per month.”

Meanwhile, the bank-backed property analyst also says developers who are new in Negri Sembilan will have problems, as their land acquisition cost is high compared with conglomerates like Sime Darby Bhd and IJM Land that had bought land in the state years ago.

“The older developers, with their relatively low land acquisition costs, should not have problems meeting the requirements and still make good money.”

Another property analyst concurred, and cited Matrix Concepts Holdings Bhd’s 5,233-acre flagship development Bandar Sri Sendayan as an example.

Recently, starproperty.my reported that Bandar Sri Sendayan, located in the key area of Seremban, is 57% completed with a total of 5,833 units of homes and shop offices built to-date since 2006.

The entire township is designed to cater for 10,000 units of residential and commercial developments.

“We understand that Matrix Concepts is known for its affordable homes priced below RM500,000 and thus should have no issues meeting the new state housing regulations,” says the analyst.

Under a new state housing policy announced by Mentri Besar Datuk Seri Mohamad Hasan recently, 15% of new houses constructed in the state should cost less than RM80,000.

Each house must have three rooms and two bathrooms, and measure at least 112 sq m, with half of the houses reserved for bumiputras.

The Star had reported Mohamad as saying that bumiputras who bought these units would not be given discounts.

“We are colour blind when it comes to poverty. These RM80,000 units will be open to everyone,” he said, adding that low-cost houses would be built by Government agencies.

Mohamad said another 15% of the new houses should cost less than RM250,000, while another 20% should cost less than RM400,000.

“Since developers have agreed to comply with our request that 50% of all units they build come under the affordable homes category, the remaining 50% can be high-end units,” he said.

Mohamad added that bumiputras would be eligible for a discount of between 5% and 10% for all houses costing more than RM80,000. - The Star
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