According to Jimmy Doh Jee Ming, Managing Director of Lagenda Properties, the property market has been soft for the past many years, and the Covid-19 pandemic has only delayed any further demand for housing.
The market, Jimmy says, has been impacted through the softening economy and affordability of pricing in Malaysia, only to be made worse by the pandemic this time around. However, even in the pre-Covid world, the Managing Director says salaries have not grown as much as the GDP to help Malaysians afford homes.
“People misunderstand the average total salary of Malaysians. The central bank has reported that the average Malaysian affordable housing price is about RM282,000, while the average salary is between RM4,000 and RM5,000,”
“However, Sitiawan is an example where salaries stay at RM2,000 but houses are above RM300,000. This is the reason behind the overhang,” Jimmy tells BusinessToday. “Developers look at the national data and start developing properties around RM300,000 but even that’s too high. It needs to be around RM200,000,” he stressed.
He highlights developers need to consider the culture of places they are looking to build properties at. High-rises for instance is not substantial in areas such as Sitiawan, where Jimmy is from.
While he hopes that the average income will rise with time, Jimmy says developers such as himself will find solutions and continue to drive efficiency. Even as raw material pricing and labour costs will increase, Jimmy believes developers can maintain certain production qualities.
“We can redesign housing to fit lower costs and if by repeating the process, surely we should get better at it,” he says.
“Back then, we would only provide 1 plug point per room. These days however, with an increase in gadgets, electronics, and devices, this no longer suits the case.”
The Managing Director says designs need to also change with the times, but affordability and a fit with living necessities needs to be always prioritised. He welcomes his customers to go for an upgrade down the road as Lagenda Properties offers terrace houses and Semi-Ds that start at RM200,000.
“It’s important to understand house buyers,” he says.
As he regular communicates with them, Jimmy shares that many find maintaining a big house a hassle and as such its important for developers to adapt to that demand and look for what is needed for each segment.
“For example, retirees want everything simple. A single-storey house with some land to plant some vegetation and to avoid climbing the stairs. This got us into building Semi-Ds or bungalows, which allows them 10 feet on both sides of their homes,” he says.
Trends in 2021
Lagenda Properties’ buyers are first timers where home ownership is considered a big step for them. “Owning a house is a big step for them because for many, it is beyond reach. First-time buyers also don’t have high expectations as upgraders and we also found that during the lockdown period, living with parents isn’t ideal. This got many younger Malaysians wanting to move out,” he says.
Jimmy has also highlighted that the demand for affordable housing has increased. The property developer recently signed a Memorandum of Understanding (MoU) in Sungai Petani, Kedah due to the demand that attracts Penangites.
“As we move forward, we realise this demand is everywhere in the country, from small places with lower salaries to bigger cities with higher average salaries,” he says.
Suitable locations have also contributed to the demand with places like Ipoh continuing to attract higher number of retirees.
“You could reasonably get a high-rise unit in Ipoh, but it may not be what people want. We are launching our single-story terraces there are RM140,000, semi-Ds at RM170,000 and bungalows at RM190,000,” Jimmy tells BusinessToday.
Lagenda Properties recently bought five parcels of leasehold agriculture land in Tapah for UEM Sunrise for RM1.10 per sq ft totaling RM29.86 million.
Jimmy’s aim to give back by providing additional land to retirees also highlights issues retirees face in the country. The crisis for affordable housing in the country, he says, has only worsened. With several homebuyers in their 40s and 50s never having owned a house, Jimmy says every major city may come with higher salaries but also higher housing prices.
“It’s only gotten worse with time. From government servant’s point of view, the 1.6 million government servants in the country, half of them don’t get government loans, despite these loans being easily approved.
In Selangor and KL, where houses are easily above RM300,000, many don’t own a house even in their 40s and 50s really,” Jimmy says.
70 percent of Lagenda Properties buyers are government servants with stable incomes who are less affected with fewer termination risks. According to the developer, banks are usually able to give 100 percent of loans to these house buyers.
Backlog
“I have been trying to solve the backlog problem that has been there for many years. If I don’t build houses below RM200,000 in Sitiawan, people in their 40s and 50s will not be able to own homes.
“Covid-19 has only delayed the cycle of life and led to many postponements. While these cycles will improve when vaccinations begin, the backlog problem might just be too severe to be solved anytime soon,” he says.
Jimmy points out that there are Sabahans who would fly over to the peninsular to own a home priced between RM150,000 to RM200,000. This has prompted the developer to act fast as he notices the demand comes from new parents, newly married couples as well as retirees to buy their first home.
However, he realises that to keep helping Malaysians nationwide, the government would have to play a role as well. While the developer has welcomed existing initiatives, he is hopeful for Putrajaya to give developers in the affordable market “a green lane” and expedite their approvals.
The year ahead
“I have also found that with the pandemic, we can be more efficient by signing sales and purchase agreements virtually. However, the challenge in developing exclusively for the affordable segment is to make sure the costs are low,” he says.
Lagenda Properties will launch their Tapah project this year and hopes to acquire more land banks to ensure they can reach out to more population nationwide.
Having delivered 4,000 homes to buyers in 2020, the property developer has constructed 12,000 houses in the last 5 years and is committed to build more affordable homes for Malaysians.
