One of the biggest barriers to building affordable housing in urban areas is the high cost of land. In Kuala Lumpur (KL), for example, land acquisition averages about RM570 per sq ft (psf). Combined with construction costs, a development could easily exceed the government’s capped selling prices for Residensi Madani units at less than RM300 psf.
Coupled with development costs, developers building these price-controlled homes inevitably suffer financial losses. The only current remedy is cross-subsidisation from free-market housing, which drives up prices elsewhere, defeating the purpose of affordable housing in the first place.
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