Developers are supportive of the move by the Federal Government to regulate the sale of serviced apartments. This, they said, would eliminate unscrupulous companies from undertaking such projects that would tarnish the image of the industry.

Saujana Triangle Sdn Bhd chief operating officer Peter Chan said his company looks forward to the possibility of the Housing Development (Control and Licensing) Act 1966 (the Act) being amended to include serviced apartments.

“The proposal to regulate serviced apartments is not an issue for the company and we fully support the Government’s stand,” said Chan who also suggested that such properties be treated as though they are condominiums.

Echoing support for the move announced by housing minister Datuk Seri Ong Ka Ting recently, is Malton Bhd director of sales and marketing Steven Lim.

“The Government’s intention to regulate the sale of serviced apartments is good as it will provide some form of control. The proposal will protect buyers’ rights and eradicate unscrupulous developers as well,” he said.

Henry Butcher Malaysia Sdn Bhd marketing director Tang Chee Meng said “established developers have nothing to fear” insofar as regulation is concerned.

On the question of abuse, Tang said regulation would curb this to an extent.

“Currently, a developer does not need a license or an advertising permit and need not comply with any payment schedule as opposed to those properties under the Act.

“With regulation, developers may be better motivated to meet the deadlines stated in the Sale and Purchase Agreement and will not compromise on quality because their image will be at stake,” said Tang.

The Government’s proposal is also seen as timely due to the increasing number of such properties in the market and their vulnerability to abuse.

Malton’s Lim is of the view that “serviced apartments are the latest craze in the housing industry today and everyone is jumping on the bandwagon to make a quick buck”.

Serviced apartments cater to buyers such as single young professionals and expatriates who prefer smaller living units such as studio and one-bedroom apartments ranging between 400sq ft and 500sq ft. This sounds like a niche market, and if so, why are there so many of them?

Henry Butcher’s Tang explained that this situation arose due to the glut of office space in the market.

“Serviced apartments are built on land zoned for commercial use. Due to the oversupply of office space, developers’ only other profitable alternative is to build serviced apartments,” said Tang.

Besides appealing to individual purchasers (for occupation or investment), serviced apartments also find favour with multi-national corporations that acquire them to accommodate overseas staff, as they are more economical than hotels.

Developers also stand to gain from such projects as they often retain a certain portion of the project for rental by them or their operators.

The level of returns a purchaser or developer can obtain depends on the location of the project and its “star-rating”.

“If it is in a prime location such as Jalan Tun Razak for instance, then it will command a better price and rent,” said Lim.