TO KEEP AFFORDABLE HOUSING AFFORDABLE - Part 2

In every country in South East Asia and certainly  in the West, infrastructure costs are the responsibility of the utility companies.  For example, the Electricity Board would lay the wires right up to the project, the Water Board would lay pipes to the project, the telephony companies would provide these facilities as well and so will sewage.  


And so all the developer has to do is to come up with a master plan as approved by the Local Council and as soon as the facilities are in, start building them. 

But what has happened is that due to the sustained demand for property in Malaysia over the last 30 years developers are saying they cannot wait for the utilities to be built by the utility companies  and so they have paid for the infrastructure and handed it over to the Local Councils without cost.  


This has been an acceptable practice when the companies were all owned by the Government and there were budget constraints.  But today all the utility companies are large corporations with billion dollar budgets and it seems unfair the developers still have to pay the total cost of services.  


These eventually gets passed over to the consumer. It is a significant percentage of the cost of each house that is purchased.

A check on the affordable housing portfolio on a total volume of low cost housing as obtained from NAPIC records gets a picture that while we have a substantial number of low-cost and medium-cost housing, the overhang in some of the projects are such that these have been built in places where the consumer does not wish to stay for logistics reasons, such as lack of transport or lack of services.  


Such houses have been a waste of resources both by state governments and by the private sector.  Most developers looking at the object of building affordable housing under the new scheme are probably hoping that one of the ingredients would be free.  


It could be the land or it could be the infrastructure or even no duties on imported products/material used for construction or a grant.  Any of these would help to reduce the cost of construction in such a way that the house prices could become affordable.

Lets Talk About our Real Estate

MPI has had many Fund Managers come to our office seeking information on investment opportunities and data on property transactions that are current. It is not very encouraging to discover that investment funds from Japan, Korea, Hong Kong and Singapore have so little information on real estate in Malaysia.

One particular fund manager, an American Japanese fund which had invested in Singapore and had an Asian base in Singapore knew nothing of the investment opportunities in Malaysia other than what was garnered from Government pronouncements on the Iskandar region and Penang, and a little bit on the Economic Transformation Programme and the Klang Valley.

Local information is everywhere and almost every home owner in Malaysia is an expert on some aspects of Malaysian real estate. We have valuation firms providing data and analysis but they do not seem to have a market outside the country since what is published is usually a few paragraphs in the dailies or weeklies.

Our main issue is that there is a paucity of investment in large chunk real estate by large international funds. Any time we get some we do make a noise but it is only heard locally so the foreign media have no knowledge. In countries like Hong Kong or Singapore every agency disseminates information about real estate to the media and to the embassies all over the world about the latest trends in the property market. Thailand uses the Tourism Ministry to also publish trends and transactions and recent high profile investments into the country, especially in the motor industry.

We have lots of oil and gas and investment corridor information. Investment in the IT industry in Penang is growing, yet this information remains within the state or the company. It is not picked up by any of the Ministries to showcase investments done in the country. Having seen the seamless delivery of investment information in a positive way by other countries, there must be an opportunity for Malaysia to do the same. Information not only has to be topical but also in-depth and disseminated through a dedicated delivery system.