Lim urges the government to introduce initiatives to control the rising cost of raw building materials to stabilise the market price. The average price of steel bars has seen a steep increase of 20% within just a year in May 2022 to RM3,910 per tonne, from RM3,258 per tonne in the corresponding period last year.
AS a leading affordable housing developer, LBS Bina Group Berhad
calls for greater initiatives to encourage homeownership.
LBS executive chairman Tan Sri Lim Hock San highlights the current challenges faced by the property industry such as the ongoing labour shortage, rise in compliance costs, raw material prices and interest rate hikes on property developers.
These challenges directly impact property prices causing a steep increase, which burdens both homebuyers and property developers during this post-pandemic era.
Lim has proposed a series of ideas to tackle the obstacles the industry is currently facing, such as reintroducing the Home Ownership Campaign to prevent property overhang. The campaign has been proven to help stimulate property sales in 2021 when the industry registered higher volume of residential property transactions.
LBS Bina has always been highly focused on building affordable homes. With its construction arm MGB Berhad, LBS Bina has been able to achieve respectable sales figures – evidence that this product category is more prevalent than ever. Lim commends the government on their affordable home initiatives but emphasises on the need to further focus on it.
Among his recommendations are that the housing industry is an integrated ecosystem, and key stakeholders are required to provide solutions that gel with one another to ensure profit for all parties. A few proactive suggestions were brought up to the government to strengthen the property industry.
Lim urges the government to introduce initiatives to control the rising cost of raw building materials to stabilise the market price. The average price of steel bars has seen a steep increase of 20% within just a year in May 2022 to RM3,910 per tonne, from RM3,258 per tonne in the corresponding period last year. He believes government subsidies may help control volatile material prices, especially during a time when our currency is weak, resulting in raw material price increase.
Lim also suggests setting up a one-stop centre to coordinate between developers and various government utility companies, such as Tenaga Nasional Bhd, Syarikat Bekalan Air Selangor Sdn Bhd and Indah Water Konsortium.
It is understandable that in the property industry, there is no “one-size-fits-all” solution. So having a system whereby everything is integrated in one centre helps to significantly reduce operational costs for developers.
Veteran’s views
Lim was invited as a speaker at the 2022 Malaysian Housing and Property Summit, joining a distinguished panel of speakers which included Country Heights Holdings Bhd founder and chairman Tan Sri Lee Kim Yew and UDA Holdings Berhad president/chief executive officer Sr Mohd Salem Kailany, to share their views on the theme of “Building Future Homes and Properties: Key Issues and Challenges Post-Pandemic”.
As one of the prominent property players, Lim was invited to share his opinion on how the property industry rebuilt and revitalised besides shedding policy changes and support required for the current property industry amid the new normal.
With over 30 years of experience, Lim succeeded in steering LBS away from experiencing loss during the pandemic. Lim together with his lineup at the company implemented various initiatives and campaigns during the period, which attracted customers and property buyers and resulted in remarkable profits for LBS.
His insights would be beneficial for the summit participants, especially stakeholders who are relatively new in the property industry. The summit was also a good platform to share his thoughts on current incentives provided by the government as he felt that they were lacking.
As an experienced stakeholder, Lim believes the government should direct financial institutions to be more flexible in giving housing loans to provide better financial access to the lower and middle-income groups.
Lim also highlighted how developers have seen their businesses affected by the Covid-19 pandemic, with work being halted intermittently. Many to this day are still swamped with uncertainties and struggling to keep their heads above water.
He proposed that the authorities consider reducing compliance costs borne by developers such as development charges, land conversion premiums, as well as strata title application as a way to help reduce the cost of doing business.
Capital contributions and compliance costs are significant in influencing a project’s feasibility. The charges could range from 8% to 20% of the gross development value (GDV) of a property project, which contributes to reduced housing affordability. Ultimately, housing continues to be a necessity and measures should be taken to ensure it is affordable to the public.
Speaking after the roundtable discussion, Lim said: “It was a fruitful session, engaging with other peers within the housing and development industry. As expected, the same issues affect all players in our industry. The Department of Statistics Malaysia reported that the average price of steel bars increased 20% in May 2022 in the corresponding period last year. These factors will cause an increase in property prices, affecting both developers and buyers.
“Hopefully this session will shine light on the severity of the issues that the housing industry faces and the government may then consider introducing solutions to alleviate the burden of property developers and potential homeowners.
“Nevertheless, on an internal front, LBS will continue to push on strongly to take on the second half of 2022. Navigating through these turbulent times is not new to us. We are optimistic that our company will continue to perform well for the remainder of the year.”
As at July 13 this year, LBS recorded property sales of RM1bil with RM447mil of bookings in the pipeline.
The summit at Berjaya Times Square Hotel in KL was officiated by Housing and Local Government Minister Datuk Sri Reezal Merican Naina Merican and attended by over 100 participants.
In his speech, Reezal Merican said the property market is on the right track as it has recorded a slight improvement in 2021 with transactions worth RM144.87bil – a 1.5% increase in volume, and 21.7% increase in value, compared to the first year of the pandemic.
The primary market saw fewer new launches. Nearly 44,000 units were launched last year, against 47,178 units in 2020. The decline was expected as developers held back on product launches due to the softening property market and the increasing number of unsold inventories.
With the revival of consumer buying power coupled with the gradual recovery in the labour market, the property industry is anticipated to bounce back strongly.The Malaysian Housing and Property Summit provided a platform for property experts and prominent industry leaders to exchange ideas and share information, as well as insights on how to build back better in the new normal.
It enables industry players to take stock of the changing market and trends to be back on the track.
