Additional costs in the property sector caused by steep hikes in building materials, cost of labour and redundant policies imposed on the industry might be too punitive for development projects to become economically viable, said Real Estate and Housing Developers’ Association (Rehda) Malaysia president Datuk NK Tong.
He said that while property developers might have been able to absorb the increased costs in the past, the various challenges and impositions in recent times had led to a breach of the tolerance level on the part of developers.
“In some cases, the additional costs may be too punitive for development projects to become economically viable.
“I am sure developers would agree with me that undertaking development in Malaysia is not as straightforward as the industry is highly regulated by over 50 laws,” he said in his speech at Rehda’s 50th anniversary dinner here on Wednesday.
Tong said private sector housing development in Malaysia is not limited to the mere provision of building houses but include extensive requirements such as providing infrastructure and amenities, ensuring proper maintenance and management, especially for strata schemes, prioritising safety, and promoting community living.
“Hence, more often than not, developers have become the ‘target’ to pay or contribute to any new compliance imposed by the authorities or private utility companies,” he added.
Tong said the Rehda Property Industry Survey for the second half of 2022 reported more than 20% in the average price increase in cement, steel, aluminium, and bricks, as well as an annual average increase of 17% in construction costs.
“The Department of Statistics Malaysia also recorded that the unit price index for cement increased 9.6% in February 2023 compared to February 2022, with other materials likely increasing dramatically over the pandemic as well,” he said.
