KUALA LUMPUR: Property developers are facing eroding margins as rising construction costs collide with homebuyers’ affordability constraints, leaving little room to raise selling prices.
Glomac Bhd
group managing director and chief executive officer Datuk Seri FD Iskandar Mohamed Mansor said mounting cost pressures following the Middle East crisis had prompted developers to revisit project concepts and consider higher density to offset rising expenses.
“For landed properties, costs have increased by 5% to 9%, while high-rise developments have seen increases of about 15%. The impact is even greater for earthworks and infrastructure, which are heavily reliant on diesel, with costs rising by about 30%,” he said.
Developers were absorbing as much of the increases as possible, but passing some costs on to buyers remained inevitable, he added.
“In the past, a profit margin of less than 30% would have been considered unacceptable. Over time, expectations fell to 25%, then 20%, and now even the larger developers are looking at single-digit margins,” he noted.
That said, FD Iskandar called for more government incentives to support homebuyers’ financing capabilities, including extending stamp duty exemptions to those who own a property but plan to sell it to upgrade.
“They still own only one property, but under the current arrangements, they may not qualify for incentives available to first-time buyers,” he said, citing the example of homeowners selling an apartment to purchase a landed property as their families grow.
He added that first-time buyers needed more assistance with initial deposits, which remained a major barrier to homeownership even when monthly installments were manageable.
“We hope there will be a mid-term review for Budget 2027 to extend the stamp duty exemption, whether for properties priced at RM500,000, RM750,000 or RM1mil, to those who own only one property at a time,” he said.
In a market largely driven by Malaysian buyers especially, such measures would help sustain demand.
According to FD Iskandar, demand for landed residential properties remained resilient, while shoplots had also gained traction.
Meanwhile, he noted that high-rise developments were challenging as developers needed to secure sufficient take-up before proceeding with projects amid rising construction costs.
