KUALA LUMPUR: Property players are desperately seeking more information following contradictory statements on the temporary freeze on the development of shopping malls, commercial complexes and condominiums valued above RM1 million.
Jones Lang Wootton executive director Prem Kumar said while property players were aware of the announcement, there were insufficient details.
He was referring to the announcement on the freeze by Second Finance Minister Johari Abdul Ghani after a Bank Negara Malaysia (BNM) report warning that unsold residential properties were at a decade-high level.
He had said the freeze to stop the four types of development, valued above RM1 million, was temporary until the excess supply had been cleared.
However, Works Minister Fadhillah Yusof later said the policy was not a blanket freeze and that approvals would be evaluated on a case-by-case basis, noting that more expensive properties near choice locations like KLCC would still find buyers.
This prompted Johari to say that there would be no U-turn on the government’s decision.
Johari had said the cabinet decided on the freeze after scrutinising the BNM report on the real estate glut.
“The Bank Negara report takes into account high-rise condominiums, shopping malls and commercial units, including those that are valued at more than RM1 million.”
Prem said the freeze was definitely going to have an impact on land values at the end of the day.
Speaking from the perspective of a professional valuation consultant, Prem said when a freeze like this was imposed on a certain segment of the market, land valuations would become tricky.
How this would impact valuations, especially for funding purposes, would be critical, Prem said during a question-and-answer session at the PropertyGuru 2018 Property Outlook Forum here today.
“This has not been addressed as yet. There will be a cascading effect, because when that segment at the top starts to have some sort of impact from the freeze, it will trickle down to land in other segments below.
“When fair market valuation comes into the picture, and land values have to be reduced due to the freeze, which from a theoretical perspective of a valuer will happen, there is an overnight impact on land value.
“But the intent of controlling the supply of properties above the RM1 million mark seems to be the general direction and objective.
“I believe more details will be coming in order to make it very clear how it will be dealt with.”
Prem said there could be many permutations, with Real Estate Housing Developers Association (Rehda) and other stakeholders having looked at the freeze from different perspectives and speculating in terms of the impact of the freeze.
“I hope for greater clarity in the coming weeks.
“There are people coming out in the media giving their views. Hopefully, that will create some kind of rethink on whether they need to tweak the freeze in some way or another.”
As for PropertyGuru Malaysia country manager Sheldon Fernandez, he said the question from their point of view was: “What problem are we trying to solve?
“If it is overhang, and if part of the 40% overhang relates to the segment, then maybe yes, it is a good thing to do.
“But I always go back to the objective of such a policy or initiative. What are we trying to achieve?”