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Dilemma in low-cost housing

11/04/2009 The Star THE REAL ESTATE By ANGIE NG

WITH the global economic crisis still some way to go before bottoming out, developers are looking at all avenues to cut costs and stay afloat.

The softening property market is still not showing signs of abating any time soon, and developers are anxious about the effect of slow sales on their bottomline and survival.

It is not surprising that industry players are feeling the pinch of having to build low-cost homes these days, and are urging the Government to grant a two-year moratorium on this obligation.

They hope that by then, the economy and market sentiment will be back on track.

Currently, if a project size is more than 10 acres, the developer is usually required to set aside a portion of the land for low-cost housing.

However, as land matters are under the purview of the state governments, the quota for low-cost housing priced below RM50,000 differs from state to state. It is about 24% in Johor, 20% in Selangor, 30% in Penang, and ranges from 20% to 50% in other states.

Several parties are also calling on the Government to take up the role of providing low-cost housing.

They point to the fact that in many countries, public or low-cost housing is undertaken by the governments via national housing boards.

Once “free” of the responsibility, developers can focus on building more market-driven products.

Going by the scale of the plunge in sales and the poor results announced by developers for the past two quarters, it is appropriate for the Government to seriously consider the Malaysian Developers’ Council’s request for the moratorium.

The council is a tripartite affiliation of the Real Estate and Housing Developers’ Association Malaysia (Rehda), the Sabah Housing and Real Estate Developers’ Association and the Sarawak Housing and Real Estate Developers’ Association.

The appeal for a two-year nationwide exemption on the low-cost housing policy shows that developers across the length and breadth of the country are facing the wrath of the unprecedented global financial crisis and are fighting for their survival.

The RM1.44bil allocation under the two stimulus packages to build 32,000 low- and medium-cost homes through various housing programmes nationwide is certainly an encouraging sign that the Federal Government is heeding the industry’s SOS call.

Hopefully, the state governments will also throw in their support to review the low-cost requirement for developers during these challenging times.

The prices of low-cost housing units are also a point of contention among developers, who say that the current ceiling of RM42,000 a unit cannot cover the costs, which have increased over the years.

To upgrade the quality and overall environment of these affordable housing schemes, the Government should consider the industry’s desire to raise the prices to between RM60,000 and RM70,000.

Irrespective of whether a project is low, medium or high end, developers should take pride in all their projects.

They must ensure that even the low-cost components are well-designed and have the right environment for wholesome family living and are properly managed, so that the properties do not deteriorate into slums.

The projects should be built with quality and durable materials, and have the minimum amenities, including roads, schools, shops, bus and taxi stops, and playgrounds.

Meanwhile, the Government should ensure efficient public transport so that these affordable schemes will be taken up and not left vacant like some of the projects that have poor accessibility.

● Deputy news editor Angie Ng believes that upgrading our low-cost and affordable housing projects into wholesome and well-managed neighbourhoods will go a long way towards promoting a safe and promising Malaysia for the people.


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