Freeze on Luxury Properties Aimed at Eliminating Developers Who Are Not Serious

Pavither 30 Nov 2017

Finance Minister II Datuk Seri Johari Abdul Ghani said the recent freeze on new developments of offices, serviced apartments, shopping malls and condominiums priced above RM1 million is intended to eliminate non-committal property players.

This comes as these players, which do not have property development as their core business, may kill the serious developers.

According to Johari, some of these wannabe-property developers are building unsustainable high-end residential projects, causing overhang in segments such as serviced apartments, small-office home-offices (SoHos) and studios.

“We don’t want these property players that come from the manufacturing or trading industry [for example], simply because they have a few million in cash and they start buying land and start trying to become developers,” he said at the Real Estate and Housing Developers’ Association (REHDA) Malaysia’s Annual Dinner 2017.

“These are not serious developers, but if they keep coming in like this, they will kill the serious developers in the industry. So we want the people who come into the industry [to be] very focused on the property industry.”

Noting the difficulty in building residential projects within prime areas, Johari, however, revealed that his ministry will ask the Ministry of Urban Wellbeing, Housing and Local Government to grant approvals to luxury residential projects in certain locations, like Kuala Lumpur City Centre, wherein land cost is high.

“But for offices and shopping malls, please take a break,” he said.

He noted that office spaces and shopping malls are currently in excess supply.

With a vacancy rate of more than 70 percent, newly completed projects struggle to find tenants even as they offer generous initial rental free periods.

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