By BUSINESS TIMES
PROPERTY developers can expect to get some goodies from Budget 2009 to help them cushion the impact of rising fuel prices and raw material costs, says the Housing and Local Government Ministry.
Minister Datuk Seri Ong Ka Chuan said while the budget will be people-centric, the ministry has proposed to the government that incentives and assistance be pro-vided to developers to minimise the blow of a possible slowdown.
“We hope the government will render some assistance, especially on tax structures, as construction cost has escalated by some 30 per cent,” he said after opening the 19th National Real Estate Convention 2008 (NREC) in Petaling Jaya yesterday.
On the 30 per cent low-cost housing quota imposed on private developers, which has impacting all players financially, Ong said it is the prerogative of the state authorities to adjust the requirement.
“There must be flexibility. It should be lower in areas with the least Bumiputera concentration and can be more if otherwise. If really there is no demand, there is no point implementing it,” he said.
The Bumiputera Property Exhibition Selangor 2008 held last month to sell unsold Bumiputera lots saw a display of RM7 billion worth of properties offered by 50 developers or 200 times more than in 2007.
FIABCI Malaysia head Datuk Richard Fong told Business Times that the low-cost housing quota needs to be addressed as developers are losing money.
The ceiling price for low-cost houses currently is RM25,000, RM35,000 and RM42,000 per unit, set 10 years ago to assist the lower income group.
“Developers lose RM15,000 for every low-cost unit they build. With the rise in raw materials by 30 per cent, which the ministry has recognised, they are bound to lose much more,” Fong said.
“The other concern is, due to the drastic increase in raw material prices, smaller developers will be in the doldrums, hence there is a strong likelihood of a dramatic rise in abandoned projects,” he said.
NREC organising chairman Pre-vindran Singhe, who is also group chief executive officer and founder of Zerin Properties, said the biggest overhang currently is for houses priced below RM250,000.
“The market for medium- to high-end houses is superb. We are experiencing a growth in this sector,” he said.
Zerin’s wish list for Budget 2009 is to see the 10 per cent withholding tax removed for Real Estate Investment Trusts and a reduction in stamp duty.