1. How important is SHAREDA to the real estate market players?
SHAREDA’s members consisting of 185 development companies in Sabah, brings together property developers by pooling their expertise and resources to ensure that the real estate industry is one of the key economic movers in the state. For the past few decades, SHAREDA members have sat on numerous state government bodies and their actions have shaped many real estate, housing development and government policies. They (SHAREDA members) have also created wider and better employment opportunities throughout Sabah.
The association plays a crucial role in the property market development of Sabah as 95% development in the State was contributed by SHAREDA members and the contributions from their developments has a spill-over effect towards other 165 related chain supply and job opportunities in the industry.
SHAREDA members with their innovation, foresight and risk taking spirit have made their presence felt by reshaping and enhancing Sabah’s property sector. The developments and infrastructures have contributed substantially to the State Government’s revenue especially to the retail development such as shopping malls and retail complexes and commercial centres. Due to this, Kota Kinabalu has surpassed Kuching in terms of retail commercial and shopping developments.
2. Sabah is very well-known for its richness in natural resources. Keeping that in mind, do you think enough is being done to preserve nature when it comes to the state’s rapid development?
Nowadays, most SHAREDA members are environmentally conscious, implementing sustainable and green features in their developments and caring for the preservation and safeguarding of the natural environment with green technology.
The developers would create a development that will blend in with the natural surroundings creating a more scenic and beautiful landscape. Scenic land banks have been converted towards building sustainable leisure properties to assist the tourism industry such as resort and beachside villas.
3. What are some of the initiatives SHAREDA has taken to make sure every working person in Sabah gets to own a house?
Some initiatives by SHAREDA:
1) Setting up of the Special Purpose Vehicle (SPV) specifically to build affordable housing. Under my leadership as SHAREDA President together with the members have set up a SPV known as SHAREDA Bhd to act as a vehicle to support the Sabah Government’s call to build more affordable housing projects as SHAREDA has pledged to build 10,000 units of affordable housing in the state over a five year period. The SPV has started to collect the initial capital of RM30 million that came from the contributions of its members. Most SHAREDA members are willing to subscribe shares in SHAREDA Bhd so as to build more affordable homes rather than building by themselves as affordable homes projects garner very tiny profit which is less than 10% of the total gross development value (GDV) and bearing very high marketing risks.
2) SHAREDA is persistent for Sabah Electricity Sdn Bhd (SESB) to be transparent with their capital contribution cost and to lower the capital contributions. The capital contribution has to be absorbed into the selling price of houses making it 3% higher. SHAREDA revealed that in 2014 alone, its members had paid SESB a capital contribution of a staggering RM180 million. This policy is unjust and unfair to purchasers as it is estimated that a purchaser is required to pay a capital contribution of between RM3,500 to RM8,500 for each house unit depending on the development, compared to peninsular Malaysia where the range is from RM250 to RM2000.
House purchasers and developers in Sabah were bullied into paying SESB capital contribution for its basic infrastructure to provide electricity to the developments when ultimately SESB is profiting from the utility business. Thus, SESB capital contribution must be waived or exempted for the affordable homes project.
3) SHAREDA also urge bankers to give an automatic 100% loan to first time house buyers as most applications for loans have been rejected. SHAREDA opined that for the government’s home-ownership policy to succeed, the Prime Minister (PM) must impose a loan quota for affordable housing on all of the 2,300 bank branches in Malaysia. This quota will compel the banks to perform their corporate social responsibilities by granting automatic 100% loan to first-time buyers of affordable homes.
4) Appeal made by SHAREDA to the government to expedite the approval for development plans in order for the developers to create more supply of affordable development projects. Most of the development plans take between 24 to 36 months to be approved and this delay translates into holding cost and the cost is ultimately passed to house buyers.
4. Has the implementation of GST affected the property market in Sabah? What are the measures SHAREDA has taken for the betterment of buyers?
Yes. The GST is one of the factors that has affected the property market in Sabah.
According to our mid-term report 2015, a continuous drop of 43% in property launches in Sabah was observed and listed below are the key attributed factors:
- Impact of Goods & Services Tax on market sentiments
- 30% increase in electricity tariff
- Stringent loan approval from banks
- Increase in Real Property Gain Tax
- Scraping of developers’ Interest Bearing Scheme
- Limiting purchase to no more than four units of any development by a single buyer
- RM1 million price cap on foreign purchasers
- Delay in approvals of development plans and building plans
- Delay in land conversion approvals
- Loss of confidence caused by security concerns and disastrous events
- Weakening of the Ringgit