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Review luxury properties approval freeze, says Rehda

 | November 22, 2017

While the association says it is impractical to build properties above RM1 million in certain areas, an analyst says temporary freeze will benefit landlords.

rehda-1

KUALA LUMPUR: The Real Estate and Housing Developers’ Association Malaysia (Rehda) wants the government to reconsider its freeze on approvals for shopping complexes, offices and condominiums with units priced above RM1 million.

Rehda said in a statement yesterday this was impractical for certain areas in the country where land prices were high.

It said: “Furthermore, in certain locations across the city, there is still demand for high-end properties and the free market should prevail.”

Finance Minister II Johari Abdul Ghani said on Nov 19 that the government had frozen approvals for luxury property developments from Nov 1.

This, he said, was to control the oversupply of luxury projects from adversely affecting the economy.

Therefore, Johari had said, the cabinet had decided to temporarily stop the development of shopping malls, commercial complexes and condominiums whose units were sold for above RM1 million.

Saying the main reason for the oversupply in the property market was the mismatch in supply and demand, Rehda called for comprehensive data to establish the demand and supply of properties in the right location.

It urged the government and Bank Negara Malaysia to work together in utilising and streamlining the data available.

“The availability of the data will help give a more accurate picture of where demands are located the most, and which areas require less, thus preventing oversupply.”

However, JLL Malaysia associate director for research and consultancy, Veena Loh, told The Edge Property that the freeze on approvals would be a much-needed relief for landlords or owners of office and residential buildings.

This is because it will allow the market to absorb the existing large supply through rising population growth, urbanisation and migration to cities.

“Depending on the location, connectivity and quality of the building, the impact can vary. However, there is no exact timeline of how long the freeze will last. So, the full extent of the impact is still unclear.

“While the exact mechanism on how the freeze will be done, or the boundary that it will cover is still unclear, analysts are of the view that this should not be a permanent fixture. The supply and demand relationship in the open market will always adjust itself,” she was quoted as saying.

She noted that the vacancy rates for office space in the Klang Valley would face pressure in the next few years, due to the incoming supply from mega projects such as the Tun Razak Exchange, Merdeka PNB 118, KL Eco City, Pavillion Damansara Heights and KL Metropolis.

JLL is a global professional services firm that specialises in real estate and investment management.


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