By THE STAR
While the property scene for high-end projects seems to be quite bouyant with both foreign and local high nett-worth individuals snapping up the best in the market, there are developments that could pose problems for would-be buyers.
Two recent factors instituted by the Federal Government have boosted the demand for top-end residential properties. The lifting of the need for FIC approval for foreigners buying homes costing RM250,000 or more – from Dec 20 last year – and the exemption of Real Property Gains Tax – effective from April 1 this year – have spurred property purchases.
In recent months, developers can’t seem to be building high-end condominium towers fast enough to meet the demand for units of at least 2,500sq ft or more. Some highly optimistic developers have even priced their units above RM700 per sq ft, even in less desirable locations.
It is not just foreigners and foreign-based Malaysians who are snapping up properties in prime residential areas, as equally affluent locals are jostling for the best units.
Besides the “empty-nesters” generation of middle-aged couples who want to live in an environment safer than landed properties, there are also parents who buy for their adult children who prefer a more modern lifestyle.
One veteran property agent – who declined to be named – also attributes the local demand to the surge in the number of directors in newly-listed companies whose share prices have shot up sharply in recent months.
“You just count the number of companies that got listed in the past 12 months and how much their share prices have gone up,” rationalises the agent, “And it is not inconceivable that the new millionaires created, would want to upgrade their lifestyle and residence.”
If one were to combine the influx of money from foreign high nett-worth individuals looking at bargain-priced luxury properties in Kuala Lumpur – compared to Singapore and Bangkok property prices – and the local demand for residences that offers top-notch security features and good infrastructure, it isn’t hard to fathom why prime residential properties are now in great demand.
Every property developer would have you believe that their latest project is the best available. Go to any property fair or sales exhibition, there are at least 50 exhibitors touting how fantastic their developments will be.
The norm for marketing properties in Malaysia is to “sell-then-build” while there are a handful of developers who are trying out the “build-then-sell” concept.
There are obvious advantages of the latter concept. But developers with less-then-prime locations would probably not want to do that.
The top executive of a public-listed property company remarks that there are still loopholes in the law that allow developers to get away with late delivery.
“Under the HDA (Housing Developers Control and LicensingAct), it is stipulated that only the Minister (Housing and Local Government) can allow an extension of the delivery deadline. But so far, he hasn’t allowed any extension. But yet, there have been buyers who complain to me that 10 months after the stipulated completion date of their project, they haven’t gotten delivery of their units.
“How’s that? That’s because the buyers entered into a Sales & Purchase Agreement under the willing-buyer-willing-seller basis. There is a clause in that particular agreement that allows the architect to have an extension of time due to whatever factors such as shortage of building material. So the buyers may not have any recourse.
“But there should be greater discipline among developers as such a case will affect the reputation of Malaysian developers as a whole, especially in a common development area.”
The top executive also reveals that a foreign prospective buyer recently emailed him with regard to a project undertaken by another company having a similar name to his company.
“I told the buyer that the project is undertakend by a reputable developer and whose company has the resources to complete the project and deliver on time.
“But the development site is located close to high tension wires and a sewage treatment plant. On paper, the artist’s impression of the property gives an image of a very green environment but across the road is another story. Yet the property is priced about RM800 per square foot.
“The foreign buyer initially didn’t understand what I meant about ‘HT’ wires till she searched the Internet and found out the implications. But as a developer, I’m happy that the other development is priced much higher than my project. That means, that my development is comparatively under-priced when buyers compare what they are actually getting.
“But shouldn’t there be more honesty or transparency in a property developer’s sales campaign?”
Meanwhile, more high-end properties are being launched or waiting to be launched to fuel a seemingly unsatiable demand for properties priced at least RM600 per sq ft or more.