Exclusive Round Table Discussion at MajlisProfesor Negara (part 1)
(From left: Nordin, Founding Chairman of MGBF; Dr Daniele, CEO of REI; Shanthi, ExecutiveDirector and Principal Consultant of Perception Management; Gunaprasath, Chairman of TheMPPA Awards; Prof Datuk Dr Raduan, CEO of MPN; Prof Dato’ Dr Alias, Head of Cluster ofEngineering, Technology & Built Environment, MPN; Chang Kim Loong AMN, HonorarySecretary-General of HBA; Dato’ Kamal, CEO of DPZ Asia and HjAbiSofian, Executive Directorof CILT during the MPPA Roundtable Discussion.
The Malaysian Property Press Awards (MPPA), an initiative by strategic property content provider Terra Value SdnBhd, is an annual awards ceremony that recognises the outstanding achievements of participants within the property industry via a unique format. Now in its eighth year, the MPPA is proud to be the only property awards ceremony that is adjudicated exclusively by senior members of the press.
This year, the MPPA has strategically partnered with MajlisProfesor Negara (MPN), the Malaysian Global Business Forum (MGBF) as well as Perception Management SdnBhd (PMSB), and is fully supported by Zerin Properties and the Chartered Institute of Logistics and Transportation Malaysia (CILT), to be known as “The Malaysian Property Press Zerin Properties Awards 2016/2017 in collaboration with the Chartered Institute of Logistics & Transportation Malaysia”.
As a precursor to the award ceremony at the end of this year, the MPPA held a Roundtable Discussion on Creative Home Ownership Post Budget 2018 last Friday at the MPN office.
The discussion was aligned with the focus of the Awards this year on the issue of inclusive home ownership. The panel discussion addressed the issue of home ownership among Malaysians, including the question of affordability for the younger generation, what property developers can do to help young Malaysians get a foot into the property market and the importance of housing for improving productivity.
The Roundtable discussion was moderated by Nordin Abdullah, Founding Chairman of the Malaysian Global Business Forum. The panelists included thought leaders and stakeholders in the property and communications spheres: myself, Gunaprasath; Prof Datuk Dr RaduanChe Rose, CEO of MPN; Chang Kim Loong AMN, Honorary Secretary-General of National House Buyers Association; Dr Daniele Gambero, CEO of REI Group of Companies; HjAbiSofian Abdul Hamid; Executive Director of CILT Venture; Dato’ Kamal, CEO of DPZ Asia; ShanthiThiruchelvam, Executive Director and Principal Consultant of Perception Management; and Prof Dato’ Dr Alias Abdullah, Head of Cluster of Engineering, Technology & Built Environment, MPN.
This issue of Real Reserve will carry the framework of the discussion, then in the next issue,we shall go in depth with deeper thoughts of each panellist.
Nordin began the session by saying that it is meant to be a frank discussion that digs into what happened with the Budget and clearly understand what the future for the property industry post budget 2018 is.
Prof Datuk Dr Raduan opened the discussion panel by saying that affordable housing is an ongoing discussion not just for Budget 2018, but also for a long time. “I am still not comfortable with the correct definition of affordable homes. The price factor, eligibility or entitlement is not in sync and doesn’t allow people to afford homes,” he said.
The discussion intro
Professor DatukDr.Raduan highlighted at the discussion that he had just returned from UniversitiPertahananNasional Malaysia (UPNM) discussing the issues the county is facing with regards to logistics and transportation. These issues include that of the rail-based transportation and we as a country; have to face all these issues as we aspire to be a developed nation. Similarly, we have to address a fundamental issue in the property industry as well. The issue of affordability has been on going and how we address this issue is what will make a difference.
He also said that it is crucial that affordable homes are set up at the correct location with property transportation. Just in Klang Valley, majority people commute using public transport. Good public transportation, connecting the city centre to outer urban areas is crucial for people to consider moving to more affordable locations.
Malaysia has witnessed a very rapid process of urbanization. 60 per cent of the Malaysian population lives in urban areas. We have to really look into a new model with the government to assure that these people’s housing needs are taken care of. At the same time, we also need to set the base line on where we are, that is the only way we could move forward and address the gaps.
I feel that many people were taken aback with the recent Budget 2018 announcement, as there were not many ‘goodies’ for the property industry.
Though many people felt that there were not much given to the property industry, I would like to highlight that there were actually quite a few initiatives that were announced, especially that of the affordable housing bracket. However, looking into the other aspects of the budget such as the announcements on the public sector, the green initiatives as well as neighborhood, there are a lot of ‘goodies’ announced in these areas that are linked back to the property industry.
So, we have to take into consideration all of this and look beyond just the property sector. So, with these initiatives given out by the government, we would very much like to see the government work hand in hand with developers to once and for all bring this ‘affordable housing’ chapter to a complete full stop”, he added.
Being the head of built environment at Majlis professor Negara, Professor Dato’ Dr. Alias said that the provision of houses especially in the affordable bracket is the question that most people are querying on, for the simple reason that affordable means being able to buy.
The current economy is rather a challenge because there has been a lot of a change in policies, the way things are being done and the way problems are being looked at. Many people within the industry are currently trying to adjust themselves within this framework, and it is truly a challenge.
Chang Kim Loong AMN, Honorary Secretary-General of National House Buyers Association acknowledged the challenges faced by our Prime Minister in presenting his Budget 2018 in view of the slowdown in the global and regional economy as well as the steep drop of our Ringgit.
Despite the challenges faced by Prime Minister, HBA is glad that he did not heed the advice of business groups with vested interests who were trying to bring back the banned (DIBS) Developer Interest Bearing Scheme. This was a scheme that was prohibited by Bank Negara some three years back, where developers will absorb the interest payable during the construction period. This is an issue of interest capitalization that has been outlawed, he explained.
He also added that after the DIBS, there was the idea to bring in the ‘Housing Guarantee Scheme’ on the pretext of wanting to save house buyers from abandoned projects. This is a scheme whereby buyers buy a property and pay a premium to make sure their project doesn’t get abandoned. This would have meant that house prices would increase with the loading for the premium.
Form January 2018, stamp duty payable on transfers of property will be one per cent for the first RM100,000, subsequently up to RM500,000 at two per cent, more than RM500,000 up to RM1 million at three per cent and anything more than RM1 million will be at four per cent. He said that he is glad that the four per cent implementation on price tags above RM1 million has gotten the green light to go ahead next year despite calls for it not to take place. This will allow house prices to be curbed. This way, the rich pay more stamp duty – the more you buy, the more you pay”
Nordinadded that he is optimistic and agrees with Chang that the status quo of this budget has remained and is glad that more affordable housing has come into play and the government has come up with more proposals for affordable housing units.
The chairman of the Chartered Institute of Logistics & Transportation Malaysia (CILT) Ventures, Tuan HjAbiSofian Abdul Hamid believes that the budget is still work in progress.
If we look into the past few years, we would realize that the budget is always formed to assist people in affording housing. In this case, CILT’s perspective is that the transportation aspect it is not very clearly affected in this budget for housing. For example, there is allocation in the logistics sector, but different allocations in the housing sector.
What we should be looking at should be a body that could look at this aspect in totality to gauge the cost of price structure of housing developments. These days most developers engage a third party marketing company to handle their marketing and sales, Haji Abi believes that this will add to the cost of the said property and reflect in the final price tag.
He also explained that another issue that should be looked at is the question – why are homes developed close to transportation hubs such as Transit Oriented Developments (TODs) used as a marketing gimmick to add a premium to the price of the said property?
This is in total contradiction of the purpose these amenities have been developed. Instead of being of assistance to the ‘rakyat’, it is being used to fetch higher prices.
Dato’ Kamal od DPZ Asia said that looking at housing, especially creative home ownership, we have to look at the four segments of housing, which are the pre-family which mainly consists of students and workers, new families, full-fledged families and empty nesters. Since there is a lot of housing stock in this country, we need to look beyond the traditional communities, where people would live above shop houses and include mobility to create new avenues for people to venture into.
Dr. Daniele Gambero, CEO of REI Group of Companies, took the mic to say that marketing is the communicating tool for developers. Sales and marketing is the communication hub where the market is replying to the information that is spread by developers and the government.
Talking about affordability, we should look into the definition given by the United Nations, where an affordable house was defined as the mortgage paid back to the bank for the property that is purchased is not more than 35 per cent of a household income.
Gambero went on to say that Affordable Housing is not a low cost problem. It’s a mass problem. Developing countries such as Malaysia needs to come up with a good policy in facilitating the private sector to develop affordable housing. He feels that the government of Malaysia shouldn’t be focusing fully on this. Though he praises the government for the many efforts they have been doing all these years, but their efforts should be concentrated mainly into the bottom 20 (B20) or the bottom 40 (B40) of the population, as these are the segments that need more shelter that cannot be purchased. This is the social responsibility of the government.
He also explained that when we talk about properties that are priced between RM200,000 and RM600,000, which include the values of affordable prices throughout the country based on the 35 per cent context spoken earlier. Private developers have been developing houses in this price range but at show box sizes of around 600 sqft catered towards bachelors. However, bachelors of today will have families tomorrow. What happens then?
Regarding the budget, Daniele said that after conducting in depth research and scrutinizing the budget thoroughly, he believes that this is a budget that spurs economic growth. Economic growth generates higher income. Higher income generates higher purchasing power in the ‘Rakyat’ and with proper policies to control the costing of construction would define houses becoming lesser and lesser unaffordable.
ShanthiThiruchelvam, Executive Director and Principal Consultant of Perception Management strongly feel that the government should have a well-coordinated housing policy to ensure that affordable housing reaches the right target market.
A single authority should be established to ensure a more efficient provision is in place. The government should engage with the property industry to streamline the eligibility criteria and conduct a perception audit to gauge the perception with relevant stakeholders. This will help narrow some of the perception gaps and ensure the right strategies and key messages are in place.
The two hour session ended with lots of complaints, ideas, possible solutions and creative implementations that hopefully the correct authority will pick up to ensure the housing issues of the ‘rakyat’ is addressed. We shall dwell into this in the next Real Reserve issue.