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Saturday, January 7, 2012

Will current breed of developers cater for needs of city dwellers?

The clouds of tough times are looming again and the local property market looks set to be in the path of the gathering headwinds this time.

Needless to say, the need for more affordable housing projects that offer smaller but functional homes will increase as Malaysians become more cost conscious and watch over their expenditure to avoid from over committing themselves.

Latest statistics on the people's affordability level shows that less than 5% of Malaysian households have combined income of more than RM10,000 per month.

The trend is also for fewer children and smaller households, which makes it a natural choice to opt for smaller and more basic homes. This makes the luxurious larger home market a smaller segment of the overall market although demand for such property is still there.

Besides the ease of lower maintenance needs, such housing units are also easier to upkeep.

This brings to bear the huge popularity and long queue whenever projects involving small office, home office (SOHO), and more recently the small office, versatile office (SOVO) variety are launched in the Kuala Lumpur city centre and the peripheral addresses.

There is room for more projects that offer smaller built-up area but have versatile layout plans that allow for different uses including to be used as a home office. This makes the property multi-functional which explains its huge success among young Malaysians.

Some of the super luxurious projects in the city centre with huge built-up area of more than 10,000 sq ft can also be redesigned and retrofitted to cater to this group of eager buyers. Bringing down the size and price of these units will make them more affordable.

Otherwise, the large number of unsold apartments in the city will stifle efforts to bring life to the city after office hours. The large inventory could explain why prices of luxurious condominiums in the city remain stagnated after shedding around 20% since the onset of the global financial crisis in 2008.

Coming out with more “out of the box” and versatile designs will help to pacify the needs of the market better.

Another subject of interest is the ongoing merger and acquisition (M&A) activities in a number of industries in the country that has raised concerns about whether it may clip competition and stifle the competitive spirit among industry players to outdo each other.

Most of the time, free competition has been the panacea of greater market and corporate efficiency that can result in bigger benefits to consumers.

In the spirit of the survival of the fittest, competition to excel will lead to greater effort to do better and a search for better solutions to drive costs down.

Whatever the industry or service sector may be, the presence of more than one player tends to spur a more competitive spirit that often show up with better terms, service standards, and lower prices or charges to consumers.

Ultimately, competition will benefit businesses, consumers and the overall economy as a whole.

So how will the intensifying M&As impact businesses and consumers especially if they result in more collaborative and friendly industry players?

I have a feeling that unless these M&As are managed professionally and do not sacrifice the competitive spirit among the involved parties, consumers may find themselves at the raw end of the deal. And the companies and the economy may also suffer as a result.

With consumers growing more cost conscious and hunting for better deals, naturally greater competition that sweeten the deal will be more palatable for them.

Hopefully, the ongoing M&As between a number of local property players will be able to bring forth some positive outcomes for property buyers through more exciting and ingenious projects.

In the spirit of the Competition Act 2010 that came into force on January 1 this year, developers who have taken the M&A route should preferably retain their respective competitive advantages and continue to up their ante in terms of product offerings, quality workmanship and design plans.

Keeping the competitive spirit alive will promote more competition to bring to market more viable and interesting projects at more competitive pricing.

Deputy news editor Angie Ng wishes all Malaysians a blessed and blissful 2012 with hopefully great promotional offers coming our way.

By The Star

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