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Thursday, July 17, 2008

Developers holding back projects amid rising costs

The housing sector will suffer from a lack of new products as developers are holding back projects amid rising costs.

The number of projects abandoned by developers may also rise as they are not able to sustain the development cost, said the Malaysian head of Fiabci, an international real estate federation.

"While some developers are increasing selling price by 30 per cent due to higher costs, others may build smaller homes, or one third of the current size and maintain prices, to remain profitable," said Datuk Richard Fong, who is also Glomac Bhd group executive vice-chairman.

Fong: A slowdown in the housing sector will have a cascading effect

Fong was briefing the media on the upcoming 19th Real Estate Convention Conference (NREC 2008).

Besides cement price, which has gone up by 50 per cent in the last three months, and steel, which has doubled to RM4,000 per tonne, developers are burdened with more expensive copper wires, cables and transport charges.

"Some developers are taking the stand to postpone launches until prices stabilise," he added.

Fong said a slowdown in the housing sector, which encompasses 140 sub-sectors, will have a cascading effect on real estate, engineers, architects and consultants.

Banks and transport firms will also suffer unless the market improves, he said.

"The market is still sound. It's a good time to buy houses which have been launched as the next time a developer launches a new project, it will cost 30 per cent more," added Fong.

Institution of Surveyors Malaysia immediate past-president Datuk S.R. Abdullah Thalith Md Thani said new launches will slow down unless prices in the secondary real market rises, encouraging developers to launch again.

"The current scenario is an opportunity for the industry to innovate. In these challenging times, the government should revise the quota for low-cost housing and Bumiputera ownership," he said.

"The country is not facing a recession but cash flow problem," he added.

NREC 2008, which will be held at One World Hotel from August 26 to August 27, is organised by Fiabci, ISM and the Association of Valuers and Property Consultants in Private Practice, Malaysia.

It will address current industry concerns and strategies, among others.

More than 600 local and foreign delegates are due to attend the event, which will be launched by Minister of Housing and Local Government Datuk Ong Ka Chuan.

By New Straits Times (by Sharen Kaur)

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