Property Sector Can Expect Bumper Year Ahead

WEALTH CREATION

KUALA LUMPUR: Property developers can look forward to a bumper year in 2010 with more purchasers and investors expected to enter the market as economic conditions improve.

Real Estate and Housing Developers’ Association (Rehda) deputy president Datuk Michael Yam said the local property sector may see up to 450,000 potential home buyers for next year.

“Based on average household formation and population growth, there is an average demand for 150,000 units (homes) per year.

“If people have delayed buying in 2008 and this year (because of the financial crisis), you should have around 450,000 people waiting to get into the housing market in 2010,” he told reporters yesterday.

Yam was a panellist at The Time Bomb Returns – Benchmarking Management Cost seminar jointly organised by FIABCI Malaysia and the Malaysian Association for Shopping and Highrise Complex Management (PPK). Given the (high) potential demand for property next year, he said developers could face a serious supply shortage.

“I think there is going to be a shortage next year. At the end of 2007, developers, especially the members of Rehda, were making a conscious decision not to launch because construction cost went up 30%.

“And in 2008, the credit crunch hit and that really delayed the launches,” Yam said, adding that projects in Bukit Kiara, Kenny Hills, U-Thant, Bukit Pantai and Bangsar would “always sell.”

Meanwhile, PPK advisor Richard Chan in his keynote address, The complexity of share issue and maintenance charges, said developers should look into the issue of service charges prudently even before building or selling property.

“You must consider the cost of maintaining buildings today and in three to five years. Once property is old, the only income is derived from service charges. If you cannot collect a sufficient amount, you just cannot maintain the building and that is where the main problem starts. This has become the main complaint of strata owners,” he said.

Chan said service charges could include components such as electricity, water, sewerage, security, housekeeping services, advertising and promotions, servicing and maintenance, fire protection, landscaping and gardening and pest control.