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Squatters In Butterworth Have Been Given Free Homes Worth RM60,000 Each.

As part of a resettlement scheme, the Penang government would provide free dwellings worth RM22.4 million to more than 300 squatters in Butterworth.

The occupants come from Kampung Ujong Batu, a historic village near the Perai river’s mouth with about 300 dwellings that was originally home to dockyard employees.

The state government has purchased 353 flats at Pangsapuri Suria, a new apartment structure being built 500 metres away at Harbour Place, according to state executive councillor Jagdeep Singh Deo.

In two years, he claimed, the settlers will get the keys to their 663 sq ft dwellings, which cost RM60,000 each.

Satees Muniandy, a Bagan Dalam assemblyman, stated the 5ha village site was swampy ground that belonged to the Penang government.

He stated that once the squatters were removed, the government had no plans to develop the area.

 

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GEORGE TOWN: More than 300 squatters in Butterworth will receive free homes from the Penang government valued at RM22.4 million as part of a resettlement project.

The residents are part of Kampung Ujong Batu — an old settlement by the mouth of the Perai river, which has about 300 houses and was once home to workers at the nearby dockyard.

State executive councillor Jagdeep Singh Deo said the state government had bought 353 flats at a new apartment building called Pangsapuri Suria, being built 500m away at Harbour Place.

He said the settlers would receive their keys to their 663 sq ft homes, costing RM60,000 each, in two years.

“We are giving these villagers a good home with all the amenities. These are apartments of high standard,” the state housing committee chairman told reporters at Komtar today.

Bagan Dalam assemblyman Satees Muniandy said the 5ha village site occupied swampy land and belonged to the Penang government.

He said the government had no plans to develop the land once the squatters cleared out.

“My office spends RM40,000 every year to repair the homes that often get damaged,” he said.

Source: Free Malaysia Today

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Housing Price Mapping Will Be Implemented As A Developer’s Guide.

According to Deputy Homes and Local Government (KPKT) Minister Datuk Seri Dr Ismail Abd Muttalib, the Housing Price Mapping initiative will be implemented as a roadmap for developers in providing affordable housing in the country.

He added that the project might also assist the public in determining the costs of homes supplied by developers based on localities around the country.

KPKT Secretary-General Datuk M Noor Azman Taib and Putrajaya Holdings Chief Executive Officer Datuk Hashimah Hashim signed the agreement. Meanwhile, Ismail announced that the Ministry had approved 275 PPAM projects totaling 57,404 residential units.

“Through the PPAM initiative, we have completed 171 projects totaling 25,267 units, with another 61 projects totaling 13,845 units in the pipeline. In addition, 43 projects with 18,292 units are in the works,” he said, noting that the PPAM projects were implemented in partnership with private housing developers on private or government land.

According to him, the current business strategy for PPAM projects on private land is to distribute facilitation payments.

“The government has made an allocation of RM1.55 billion for the PPAM programme under the 12th Malaysia Plan, with a pledge of RM1.121 billion, as a mark of appreciation for civil servants.”

Ismail also stated that the Kasturi PPAM project will be completed in June, rather than April 2024, as planned.

 

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PUTRAJAYA (April 29): The Housing Price Mapping initiative will be introduced as a guide for developers in providing affordable housing in the country, said Deputy Housing and Local Government (KPKT) Minister Datuk Seri Dr Ismail Abd Muttalib.

He said the initiative  could also help the public to identify the prices of homes offered by developers according to the localities nationwide.

“The people will be able to know the price of affordable houses in an area and developers will be able to plan on developing houses that are saleable.

“This will be able to help reduce property overhang or mismatch between demand and supply,” he said at the signing ceremony of the Kasturi Malaysian Civil Servants Housing Programme (PPAM) Facilitation Fund Agreement here on Thursday.

The agreement was signed by KPKT secretary-general Datuk M Noor Azman Taib and Putrajaya Holdings chief executive officer Datuk Hashimah Hashim.

Meanwhile, Ismail said the Ministry had approved a total of 275 PPAM projects involving 57,404 residential units.

“Through this PPAM initiative, we have been able to complete 171 projects with a total of 25,267 units while another 61 projects or 13,845 units are under construction.

“In addition, 43 projects with 18,292 units are being planned,” he said, adding that the PPAM projects were implemented by the government in collaboration with private housing developers on private land or government land.

He said the existing business model for PPAM projects on private land was through the distribution of facilitation funds.

“As a show of  appreciation for civil servants, the government has provided an allocation of RM1.55 billion for the PPAM programme under the 12th Malaysia Plan with a commitment of RM1.121 billion.

“As such, we welcome the participation of more developers to build PPAM houses that are not only of quality but also meet the needs of the people complete with various public facilities,” he said.

Ismail added that the Kasturi PPAM project is expected to be completed this June ahead of its scheduled date in April 2024.

Source: Edge Prop

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Airbnb Claims That A Ban On Homestays In Penang Is Harmful To People’s Livelihoods.

Airbnb has requested the state government of Penang to reconsider its plan to prohibit short-term rental homes or homestays in landed and highrise properties.

According to Mich Goh, Airbnb’s head of public policy for Southeast Asia, India, Hong Kong, and Taiwan, the plan might impede economic recovery efforts, harm Penangites’ livelihoods, and jeopardise jobs “at an exceedingly vital point.”

He noted that the strategy will make it more difficult for the state to remain competitive and recruit tourists.

According to Airbnb’s own survey, 60% of Penangites believe that STRA (Short-term rental accommodations) boosts visitor revenue.

According to the survey, 80% of Penangites believe that utilising surplus unoccupied units for short-term rentals helps to reduce the property overhang.

Individual Joint Management Bodies (JMBs) and Management Corporations (MCs) should be allowed to decide whether or not to impose further STRA by-laws or regulations, according to Goh.

“This gives tenants the power to decide whether and how STRA should be implemented in their buildings,” he explained.

The homestay ban would take the shape of a “guideline,” which will be transferred to local councils for implementation, according to state executive councillor Jagdeep Singh Deo, who also chairs the housing committee.

Despite the fact that the ban’s start date has yet to be determined, he noted that the state administration has agreed to the idea after receiving numerous objections from residents’ groups in apartments, condominiums, and residential neighbourhoods.

 

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PETALING JAYA: Airbnb has urged the Penang state government to reconsider its plan to ban short-term rental homes or homestays in landed and highrise properties.

The plan would risk derailing economic recovery efforts, damage Penangites’ livelihood and put jobs at risk “at an incredibly critical juncture”, said Mich Goh, who is the Airbnb head of public policy, Southeast Asia, India, Hong Kong, and Taiwan.

“With tourism playing such a crucial role in Penang’s economy, imposing such ill-considered restrictions on short-term rental accommodation (STRA) in highrise residential buildings would negatively impact the state’s recovery momentum and long-term tourism growth,” Goh said.

The plan would make it harder for the state to remain competitive and attract tourists, he added.

In its own survey, Airbnb claimed that 60% of Penangites believe that STRA increases tourism revenue.

The survey also found that 80% of Penangites agree that using surplus vacant apartments for short-term rentals helps combat the property overhang.

Goh suggested that the government let individual Joint Management Bodies (JMBs) and Management Corporations (MCs) decide on whether to enact additional STRA by-laws or restrictions.

“This empowers residents to decide if and how STRA should be run in their buildings,” he said.

Yesterday, state executive councillor Jagdeep Singh Deo, who is the housing committee chairman, said the homestay ban would manifest in the form of a “guideline”, which will be passed to local councils for enforcement.

He added that though the starting date for the ban had not been decided, the state government has agreed with the plan, based on the numerous complaints from residents’ groups at apartments, condominiums and residential neighbourhoods.

Source: Free Malaysia Today

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RM8mil Allocation For Slope Repairs At Lorong Bukit Kukus

The state government of Penang has set aside over RM8 million for landslide repairs on the slopes of Lorong Bukit Kukus in Paya Terubong, which will commence in the third quarter of this year.

The restoration work by the Penang City Council (MBPP) will be completed in 18 months, or the first quarter of 2024, according to Zairil Khir Johari, chairman of the Penang Infrastructure and Transport Committee.

Following the events, he said, the state government was directed to recruit a certified geotechnical engineering consultant to undertake an initial research and give proposals on slope repairs along Lorong Bukit Kukus through the MBPP engineering department in the first quarter of last year.

On April 20, the state government approved roughly RM8 million in slop repairs to guarantee the safety and welfare of residents and their property, according to Zairil.

According to him, slope restoration work in the area spans 3.5 hectares, and netting has been in place at the site since 2019 as a preventative measure to prevent significant landslides.

He went on to say that the state administration had ordered all local governments to monitor hill slopes on a regular basis and to take any legal action necessary against landowners, including farmers, in certain regions.

 

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GEORGE TOWN, April 25 —  The Penang state government has approved a RM7.9 million hill slope restoration project near the residential area along the perilous Lorong Bukit Kukus where several rockfall incidents had taken place.

State exco Zairil Khir Johari said the hill slope restoration works for the 8.3 acres site will start in the third quarter of this year.

“The restoration works will be implemented by the Penang Island City Council and is expected to take 18 months so it will be completed by the first quarter of 2024,” he said.

The state infrastructure and transport committee chairman said the restoration works will include rock bolting, soil nailing, installation of flexible rockfall barriers, installation of rockfall netting, drainage and road resurfacing.

He said the full RM7.9 million costs will be funded by the state and it is inclusive of consultation fees and reimbursable costs.

For many years, residents in the area, particularly at Grandview Heights and Bukit Saujana, have been facing rockfalls from the hill slopes just across from the apartments.

Zairil said they had experienced rockfalls almost annually.

The state exco approved the hill slope restoration proposal in April 20, he said.

 

Source: The Malay Mail

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Mall And Office Space Vacancy Rates Are Rising

According to the National Property Information Centre (Napic) report for 2021, occupancy rates for purpose-built office and retail premises are down even as supply has grown.

The Malay Mail stated on April 25 that a five-year occupancy rate trend for office and retail sectors showed a significant fall. The former segment’s take-up rate fell to 78.3 percent in 2021 from 83.3 percent in 2017.

Meanwhile, mall vacancies have been relatively stable over the last five years, but the addition of new, generally larger complexes has brought the occupancy rate down from 81.3 percent in 2017 to 76.3 percent last year.

The total occupancy rate in 2021 was 18.762 million square metres, up from 18.59 million square metres in 2020. Despite a minor increase in these offices’ take-up rates, the total occupancy rate fell about 2% to 78.3 percent in 2021.

Last year, total retail space was 17.281 million square metres, up from 16,853 million square metres in 2020. More vendors were recoded, filling up the premises, resulting in a total occupancy rate of 13.193 million sq m in 2021, up from 13.056 million sq m the previous year.

However, like in the case of purpose-built offices, the rise was insufficient to offset the increase. The retail occupancy rate in 2021 declined by more than 1% to 76.3 percent, down from 77.5 percent in 2020.

According to the Malay Mail, the latest Napic data underscores warnings about a real estate market bubble that could break soon as developers add more supply to these areas amid sluggish demand. According to the report, financial expert Pankaj C Kumar, who wrote a column for The Star, the surplus could grow to 436,000 units worth RM222 billion by 2030 if developers keep adding to the glut at their current 10% annual growth rate.

 

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KUALA LUMPUR (Apr 27): Occupancy rates for purpose-built office and retail spaces are dropping even though the supply has increased in 2021, according to the National Property Information Centre (Napic) report for 2021.

For office and retail spaces, a five-year occupancy rate trend showed a marked decline, reported Malay Mail on Apr 25. The take-up rate in the former segment dropped to 78.3% in 2021 from 83.3% in 2017.

Meanwhile, vacancies in malls have more or less stagnated within the same five-year period, but the additions of new and often bigger complexes have dragged the occupancy rate down from 81.3% in 2017 to 76.3% last year.

Last year saw the addition of 70,000 sq m of purpose-built office space, bringing it to a total of 23.969 million sq m compared to 23.179 million sq m in 2020.

The total occupancy rate for 2021 stood at 18.762 million sq m compared to 18.59 million sq m in 2020. Despite the slight increase in take-up rates for these offices, the total occupancy rate dropped nearly 2% in 2021 to 78.3%.

As for the retail sector, the total space stood at 17.281 million sq m last year, up from 16,853 million sq m in 2020. More vendors were recoded filling up the spaces, with the total occupancy rate in 2021 increasing to 13.193 million sq m from 13.056 million sq m from the previous year.

However, like the purpose-built office sector, the increase could not offset the addition. The occupancy rate for retail spaces in 2021 fell more than 1% to 76.3% from 77.5% in 2020.

 

Latent bubble burst

The latest Napic data highlights the warnings about a real estate market bubble that could soon burst as developers add more supply to these spaces amid stagnant demand, said Malay Mail. The article also quoted investment analyst Pankaj C Kumar, who in his column with The Star, estimated that the oversupply could increase to 436,000 units valued at RM222 billion by 2030 if developers continued to add to the glut at the present 10% annual growth rate.

“Even as early 2018, market watchers were out with the red flags; but today, from the level we were four years ago, it is rather shocking that the market’s overhang in terms of volume has doubled, while in terms of value, it is up by almost 120%,” said Pankaj. He further added that overhang within the high-rise segment (which includes residential high-rise, commercial serviced apartments and Small-office Home-office units) stood at a new record high of 44,800 units worth some RM33.32 billion.

These three subsectors formed two thirds of the overall market overhang in terms of volume and nearly three quarters of the total value.

The total number of units under the three segments that remained unsold and under construction in 2021 was 111,804 units valued at RM60.6 billion — bringing a total overhang for those under this category to 167,104 units worth some RM101.4 billion.

The total number of units that remained unsold and under construction rose 10.1% to 183,918 units in just a year, Napic data showed. Total overhang value from the segments jumped by a huge 8.1% to RM109.7 billion.

“It took just four years for the overhang to double in the market – with the value of those under construction at 150% of overhang,” Pankaj noted.

“As developers and financiers pour more money into development-related activities and if we see a sustained increase in unsold properties, especially units that are completed but remain unsold, the key risk for developers is rising inventories,” he warned, adding that if the developers are not financially strong enough, they will have to resort to more external funding.

Source: Edge Prop

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When It Comes To Buying A Property, People Are Now Looking For More Recreational Amenities.

More recreational facilities are being sought for by buyers for inclusion in their house developments. “The days of property owners merely wanting a roof over their heads are long gone,” said Chan Ai Cheng, president of the Malaysian Institute of Estate Agents.

According to Chan, the top three amenities that buyers are looking for are a swimming pool, a well-equipped gym, and a games court. In addition to security, walk trails and cycling tracks, and lavish landscaping in a gated and guarded neighbourhood, buyers want a “resort atmosphere,” she said.

Extensive facilities, such as rooftop gardens, car parks, spectacular entrance statements, and lift lobbies, are highly sought after inside a high-rise structure. Developers are developing new and better facilities to impress buyers.

“In terms of the quantity of facilities within a development, developers are setting a new standard. They are critical in luring would-be homeowners, and as a result, developers will go to great lengths to wow buyers,” she explained.

However, recreational facilities may not be sufficient, according to Chan, particularly for teenagers who require more space for games and sports.

“There is a trade-off between giving more facilities and making homes more affordable,” said Datuk NK Tong, interim president of the Real Estate and Housing Developers’ Association Malaysia (Rehda). According to Tong, the amenities have ongoing upkeep expenditures.

“We don’t want to put in something that will be too expensive to maintain,” Tong added, noting that open green spaces have remained a popular demand among homeowners. Trends change all the time, but open parks are still highly popular with young families,” he said

The authorities require developers of landed developments to provide parks, but there are also developers of larger townships that go above and above by providing additional amenities, he said.

 

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PETALING JAYA: Buyers are going for more recreational facilities to be included in their housing projects.

“Environment and lifestyle now play a big part in their decision-making process.

“Gone are the days when home owners only want a roof over their heads,” said Malaysian Institute of Estate Agents president Chan Ai Cheng.

The top three facilities buyers would look for are a swimming pool, well-equipped gymnasium and games court, according to Chan.

In a gated and guarded community, buyers also want security, walk paths and cycling tracks, and extensive landscaping for that “resort feel”, she said.

Within a high-rise development, extensive facilities including rooftop gardens, car parks, impressive entrance statements and lift lobbies are much sought after.

To impress buyers, developers are building new and improved facilities.

“Developers are setting a new standard in terms of the number of facilities within a development.

“They are the key in attracting would-be home owners and as such, developers would go all out to impress buyers,” she said.

However, Chan said recreational facilities may not be enough, especially for teenagers who need more space for games and sports.

In the city, there is an issue of space due to high land cost, she said.

“This is where games centres could come into play.

“The centres could house tennis or badminton courts, swimming pools and other activities under one roof,” said Chan.

Real Estate and Housing Developers’ Association Malaysia (Rehda) acting president Datuk NK Tong said: “There is a trade-off between providing more facilities and making homes more affordable.”

Tong said the amenities have maintenance costs as well.

“We don’t want to put in something that is too expensive to maintain,” said Tong, adding that open green spaces have remained a popular requirement among homebuyers.

“Trends are changing all the time but for young families, open parks are still very popular,” he said.

For landed development, developers are required by the authorities to provide parks but there are also developers of bigger townships that go the extra mile by offering extra facilities, he said.

For development in city centres such as Kuala Lumpur, Tong said there were many public amenities such as the KLCC Park, Perdana Botanical Garden and Titiwangsa Park.

“Our parks are usually not crowded and recreational facilities are there for people.

“Our cities are not lacking in green and open spaces so it is up to people to take advantage of them,” he said.

Source: The Star Online

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TTM Technologies Will Build A US$130 Million Facility In Penang.

TTM Technologies Inc, a Nasdaq-listed manufacturer of printed circuit boards (PCBs), radio frequency (RF) components, and RF microwave/microelectronic assemblies, is investing US$130 million (about RM550 million) at a plant in Penang.

The Malaysian Investment Development Authority (MIDA), InvestPenang, and TTM said in a joint statement released on Monday (April 25) in conjunction with the plant’s ground-breaking ceremony that the latter’s expansion to Penang is in direct response to customer demands for advanced technology PCB supply chain resiliency and diversification in regions other than China.

TTM chose Penang as the site for this new factory after conducting an exhaustive evaluation of different nations, taking into account investment and operational costs, customer proximity, and supply chain support, according to the company.

Penang’s well-established electrical and electronics (E&E) sector ecosystem is especially appealing.

TTM’s global commercial markets will be served by the new factory, which will include networking communications, data centre computing, medical, industrial, and instrumentation.

Penang Chief Minister Chow Kon Yeow stated that the state of Penang is recognised as a prominent player in the worldwide semiconductor sector, notably in the fields of assembly and testing, as well as equipment manufacture.

TTM president and CEO Thomas Edman said the plant represents the start of a new chapter in the company’s global effort to provide clients with differentiated high-value-add engineering and PCB product solutions.

 

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KUALA LUMPUR (April 25): Nasdaq-listed printed circuit boards (PCBs), radio frequency (RF) components and RF microwave/microelectronic assemblies manufacturer TTM Technologies Inc is investing US$130 million (about RM550 million) to set up a plant in Penang.

In a joint statement on Monday (April 25) in conjunction with the plant’s ground-breaking ceremony, Malaysian Investment Development Authority (MIDA), InvestPenang and TTM said the latter’s expansion to Penang is in direct response to customer requirements for advanced technology PCB supply chain resiliency and diversification in regions beyond China.

They said TTM selected Penang as the location for this new plant after an extensive review of multiple countries with careful consideration of investment and operating costs, customer proximity and supply chain support.

Penang is also attractive due to its well-established electrical and electronics (E&E) industry ecosystem.

The new plant will serve TTM’s global commercial markets including networking communications, data center computing, and medical, industrial, and instrumentation.

Penang Chief Minister Chow Kon Yeow said Penang is recognised as one of the major players in the global semiconductor industry, particularly in the areas of assembly and test as well as equipment manufacturing.

“The state, via InvestPenang, strives to bolster our efforts to outpace investors’ expectations by providing continuous facilitation and utmost support along the journey,” he said.

This state-of-the-art, highly automated plant will be built upon approximately 27 acres of industrial land at Penang Science Park.

Construction is expected to take 12 to 15 months followed by equipment installations in mid-2023.

Pilot production is targeted to begin in the second half of 2023, with volume production commencing in 2024 and gradually ramping up to full Phase 1 capacity in 2025.

TTM expects the new plant to achieve full run rate revenue of approximately US$180 million (approximately RM761.5 million) in 2025.

The factory has also been planned to support a 25% upside Phase 2 expansion.

TTM president and chief executive officer Thomas Edman said the plant marks the start of an important new chapter to support customers with differentiated high value-add engineering and PCB product solutions on a global basis.

“As an early-mover into Southeast Asia for the production of advanced technology PCBs, TTM is responding to our customers’ needs for supply chain resiliency, regional diversification and growth capacity,” he said.

Source: The Edge Markets

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Industrial Assets Will Drive Axis Reit’s Earnings Growth

The earnings outlook for Axis Real Estate Investment Trust (Axis Reit) is projected to continue good, according to MIDF Research.

This will be aided by continuous growth in industrial assets, which will be bolstered by strong demand for industrial space.

“The contribution from possible asset acquisitions target with a total estimated value of RM120 million is also projected to enhance (Axis Reit’s) profitability growth,” it said.

Axis-core Reit’s net earnings of RM39.1 million in the first quarter of FY22 came in within forecasts, according to MIDF Research, thanks to contributions from three newly acquired assets.

In addition, favourable rental reversion fueled earnings growth as industrial space demand remained stable.

The RM39.1 million represented 27.6% and 26.1 percent of the company’s and consensus full-year earnings projections, respectively. MIDF Research has kept its “Buy” recommendation on the stock, with a target price of RM2.08.

“We keep our Buy recommendation on Axis Reit because of their exposure to industrial properties, which we believe will produce consistent earnings growth. Meanwhile, the distribution yield is expected to be 4.6% “It was stated.

  

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KUALA LUMPUR: Axis Real Estate Investment Trust’s (Axis Reit) earnings outlook is expected to remain positive, said MIDF Research.

This will be supported by steady growth for industrial assets on the back of solid demand for industrial space.

“(Axis Reit’s) earnings growth is also expected to be driven by contribution from potential asset acquisitions target with a total estimated value of RM120 million,” it said.

MIDF Research said Axis-Reit’s first quarter (Q1) FY22 core net earnings of RM39.1 million came in within expectations, due to contributions from three newly-acquired assets.

Besides, earnings growth was also driven by positive rental reversion as demand for industrial space remains stable.

The firm said the RM39.1 million made up 27.6 per cent and 26.1 per cent of its and consensus full-year earnings estimates respectively.

MIDF Research has maintained its “Buy” call on the stock with an unchanged target price of RM2.08.

“We maintain our Buy call on Axis Reit as we like their exposure to industrial assets which will drive steady earnings growth. Meanwhile, distribution yield is estimated at 4.6 per cent,” it said

Source: NST Online

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Singapore’s HDB To Be Used As A Model For Developing Affordable Housing

The Housing and Development Board (HDB) of Singapore development idea would be the model for the Johor State Housing Development Corporation (PKPJ) in providing comprehensive affordable housing development planning in every district in the state.

To achieve this, Menteri Besar Datuk Onn Hafiz Ghazi stated that PKPJ will need to take drastic measures by collaborating with other agencies such as local governments, the Ministry of Finance, PR1MA Corporation Malaysia, the Town and Country Planning Department (PLANMalaysia), and banks to create a detailed and focused housing development planning database.

He added that PKPJ will be in charge of ensuring that all development plans are carried out according to schedule and timeline, allowing for the creation of affordable housing to meet local demand.

Onn Hafiz also stated that he has visited the HDB in Singapore, which has constructed around 1.2 million affordable housing units since its founding in 1960.

He went on to say that his four-day working visit to Singapore, which began on Saturday, was an effort to deepen connections between the two countries.

 

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JOHOR BARU (April 20): The Johor State Housing Development Corporation (PKPJ) will make the implementation of the Housing and Development Board (HDB) of Singapore development concept its benchmark in providing comprehensive affordable housing development planning in every district in the state.

Menteri Besar Datuk Onn Hafiz Ghazi said to do this, PKPJ will need to take drastic action by having a detailed and focused housing development planning database with other agencies such as the local authorities, the Ministry of Finance, PR1MA Corporation Malaysia, the Town and Country Planning Department  (PLANMalaysia) and the banks.

He said PKPJ will also undertake the role of ensuring all development plans are implemented according to the schedule and timeline so that the provision of affordable houses can be provided and meet local demand.

“InsyaAllah, [with] the state administration that was formed with the strength of PKPJ and coordination with other departments, this intention and commitment will be successfully realised,” he said on his Facebook page on Tuesday (April 19).

Onn Hafiz also said he had visited the HDB in Singapore, which had built about 1.2 million affordable homes since it was established in 1960.

He added that the four-day working visit to Singapore which began last Saturday was a move to strengthen ties between the state and the republic.

Source: Edge Prop

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Soaring Material Costs Are Putting Builders Out Of Business & MBAM Calls On The Government To Intervene.

The Malaysian Master Builders Association (MBAM) has voiced concern over excessive building material prices and urged the Malaysian government to ease the price pressures that contractors face.

The MBAM said in a statement on Friday (April 15) that the pandemic-induced spike in material prices, as well as rising material and energy costs, has harmed contractors working on both government and private projects.

The MBAM pointed out that the price of steel bars was RM2,680 per metric tonne (MT) in February 2021, but soared 30.6 percent to RM3,500 per MT in April 2022, illustrating the challenge contractors confront.

According to the association, bulk cement prices increased by 40% to RM350 per MT in April this year, from RM210 per MT in February 2021.

Diesel prices, for example, have risen by 128.4% to RM4.34 per litre in the previous month, from RM1.90 per litre in February last year, according to the report.

Many contractors are at risk of going out of business as a result of the pricing squeeze, according to the MBAM, and some are considering cancelling bids for local government projects due to the way contracts are generally written, which it claims puts too much risk on contractors.

The shortage of materials and people is exacerbating the pricing squeeze, delaying project completion and exposing builders to additional risks. As a result, the MBAM has urged for immediate government assistance to aid the construction industry.

It also proposed a number of solutions to help contractors deal with the current price pressures, such as locking in prices for current projects, reviewing the VOP rate in government contracts, staggering price increases over three to six months, and providing government assistance in the form of raw material import duty exemptions, subsidies, or grants.

It also asked the government for a 12-month exemption from the Construction Industry Development Board Malaysia payment levy and for building material pricing to be tied to international prices.

 

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KUALA LUMPUR (April 18): The Master Builders Association Malaysia (MBAM) has expressed their concern about high building material prices and called on the Malaysian government to alleviate the price pressures contractors face.

In a statement on Friday (April 15), the MBAM said the rise in material prices, induced by the pandemic as well as rise of material and energy costs, has negatively impacted contractors handling both government and private projects.

“Contractors handling government projects are being forced out of business as price index from the Department of Statistics Malaysia (DOSM) meant to protect contractors handling government projects from volatile markets is unable to capture the full and true prices of raw materials skyrocketing costs.

“The problem is even more acute in private sector projects, many of which do not include provisions to account for hiked prices of raw materials in terms of a variation of price (VOP) clause,” it said.

To illustrate the problem contractors face, the MBAM highlighted that the price of steel bars in February 2021 stood at RM2,680 per metric ton (MT), but jumped 30.6% to RM3,500 per MT in April 2022.

Likewise, bulk cement price, which was at RM210 per MT in February 2021, climbed 40% to RM350 per MT in April this year, according to the association.

Notably, diesel price has jumped 128.4% to RM4.34 per litre as of last month, from RM1.90 per litre in February last year, it said.

The MBAM said many contractors are at risk of going out of business due to the price crunch, while some are considering stopping their bids for projects by local authorities due to the way contracts are often structured, which it said places too much risk on contractors.

“The disparity between prices tendered and actual current prices needs to be corrected. They are inaccurate and do not reliably reflect market volatility,” it added.

The price crunch issue is being further compounded by the shortage of materials and manpower, which delays the completion of projects and exposes builders to more risks.

Hence, the MBAM called on the government’s immediate intervention to help the construction industry.

It also proposed a series of solutions to alleviate the price pressures contractors currently face, including locking in prices for existing current projects, reviewing the VOP rate in government contracts, staggering price increase over three to six months, and providing government assistance via raw material import duty exemption and subsidy or grants.

It also appealed to the government for building material prices to be pegged against international prices, and a 12-month exemption for the Construction Industry Development Board Malaysia payment levy.

It is also seeking at least a one-year deferment of contribution to the Human Resources Development Fund from the construction industry.

“It is standard for contractors to attempt to factor price volatility and risk into price quotes, but intense market turmoil over the last several years has made it significantly difficult to estimate how to account for those rapid changes.

“The much-needed assistance by the government will help contractors complete projects in a timely manner and avoid termination or abandoned projects,” the MBAM added.

Source: Edge Prop