THE current glut in the property market has not been easy for anyone – be it on buyers and investors, or developers trying to generate sales.
For members of the Real Estate and Housing Developers Association (Rehda) Youth, the present environment can be trying – but is also a good time to gain valuable experience.
“One challenge being a young developer would be the lack of company brand presence and personal reputation compared to the more experienced and established developer,” says Rehda Youth member and Suntrack Development Sdn Bhd chief executive officer James Tan.
However, he says that the company has never viewed this as a stumbling block for growth.
“Rome was not built in a day. Our company as much as our brand and reputation has to be built and developed – one project at a time, day by day.
“We earn our reputation by delivering value to our customers and by having our efforts recognised in awards that we have received over the years.”
Meanwhile, former Rehda Youth chairman and Ken Holdings Bhd group managing director Sam Tan believes that in these trying times, there should be mechanisms to help first-time buyers with their payments.
Sam emphasises, however, that Ken Holdings is not supportive of the developers interest bearing scheme (DIBS).
“Personally, we have never used or promoted DIBS; there are variants to provide easy payment schemes,” he says.
“Cash flow is important when it comes to buying a house, which is why we feel that easy payments should be made available. Everyone has commitments and it’s not easy to come up with upfront cash.”
Rehda recently proposed to reintroduce DIBS for first-time buyers to boost the sector.
The move followed a “wish list” that Rehda had submitted to the government ahead of Budget 2016. The policy was shelved last year among other measures launched since 2013 to curb speculation. Developers absorb mortgage interest during the property’s construction.
AmResearch in a recent report, said the demand for affordable houses exceeds supply, more so in urban areas with a young population base.
It was reported that Perbadanan PR1MA Malaysia’s recent finding showed that one million people in the middle income group, who earn RM2,500-RM10,000 a month, had yet to own a home. Of this number, 450,000 lived in the Klang Valley.
According to AmResearch, the reintroduction of DIBS, along with inventory liquidation initiatives by developers could kick start a recovery in transaction volumes.
Another challenge, says Sam, is that land was getting scarcer in the country. He says Malaysia should consider adopting the system practised by Singapore’s Urban Redevelopment Authority (URA), which periodically tendered out land for development.
“The URA has control over land and it has parcels of land to tender. In Malaysia, it’s trickier because there are multiple states. The states should work together to provide affordable homes.”
Rehda Youth acting chairman and Hedgeford Sdn Bhd director Carrie Fong says being a developer is team effort. While input from specialists and consultants are crucial, the overall direction the company takes must be specific and conveyed to team members, whether one is a young or old developer.
She states that one can’t really place a designation on a person and define them as a “young or old developer.”
“You can be aged 50 before you decide to start a development company. Whereas some have been in the industry since their 20s. I’d like to say that experience counts more than age.
“Also, you gain experience in the types of developments you choose to do, whether it be residential high-rise, low-rise, commercial or mixed development. The challenges in the business landscape is also the same whether you are young or old.”
Nevertheless, being a young developer, Fong says it’s important to be able to balance best practices from people who are most experienced - while at the same time incorporating new ideas.
“This applies especially to designs and layouts of the product. Much like our cultural makeup, we need to balance traditional values and cutting-edge technology.
“It is a competitive market now. Some developers have the resources to invest in a lot of infrastructure upfront and/or have strategic partnerships with international brands. Smaller companies will need to find their niche to make an impact and attract buyers. Buyers expectations are also high due to the high exposure to established developers and overseas properties. Malaysians are now investing globally and have gained tremendous amount of experience in what they want.”
Did you find this article insightful?