The temporary freeze on approvals of luxury projects will offer a much-needed relief for owners or landlords of office and residential buildings, said Veena Loh, Associate Director of Research and Consultancy at JLL Malaysia.
This comes as the freeze order will allow the market to absorb the existing large supply via urbanisation, rising population growth and migration to cities, she said.
Loh said the freeze was likely a one-off action by the government to temporarily bring down the unsold units to a manageable level.
Knight Frank Malaysia, however, described the government’s decision as a misguided move.
“I believe the government reasoning for this move is misguided, they should not interfere in the running of a free market,” said Sarkunan Subramaniam, Managing Director at Knight Frank Malaysia.
Sarkunan said the government should allow developers to make their own decisions since they would conduct the necessary research in planning a new project.
“In my opinion, direct intervention by the approving authority should not be the way to address the problem. The solution lies in the financing on non-feasible projects; banks review projects and finance those that are deemed feasible,” he said.
“My suggestion is to remove this freeze and let the market dictate through the banks’ prudence in financing. Even without the freeze, the market has been self-correcting to find its equilibrium as developers are holding back and delaying launches and also re-planning their products to cater to a changing market and buyers’ profile.”
Meanwhile, Finance Minister II Datuk Seri Johari Abdul Ghani slammed reports that the government had made a “U-turn” on its decision to freeze approvals for high-end properties.
And while the government has not yet ascertained on how long it would be in effect, he explained that the freeze applies to development projects such as offices, shopping malls and condominiums above RM1 million that are yet to be approved.
“There is no such thing as a u-turn. This is a cabinet’s decision. Unless there is something that is significant, we will look at it,” said Johari at the sidelines of the Malaysian Institute of Economic Research’s (MIER’s) National Economic Outlook 2018-19.
“This is an issue that should not be u-turned. They cannot send wrong signals to people. If we don’t regulate on what has been advised by Bank Negara Malaysia(BNM), it will affect the banking sector.”
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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