Search Articles

Find tips, tools and how-to guides on every aspect of property

ABM says banks not to blame for retail, office space glut


ABM says banks not to blame for retail, office space glut

PETALING JAYA, 11 September: The Association of Banks in Malaysia (ABM) has refuted the claim that banks are responsible for the glut in supply of retail and office space in the Klang Valley.

In a statement released, ABM also objected the allegation that banks had been giving out loans for the development of commercial properties without due diligence.

ABM reiterated that its member banks have engaged stringent processes for credit risk assessment supported by sound lending and valuation practices, adding thorough credit analysis is performed before any financing for commercial properties is granted.

ABM said this may include, but are not limited to, conducting project feasibility studies performed by independent parties or in-house commercial property experts, marketability and competitors’ analysis, assessment of economic and market developments, as well as repayment capability.

In cases where the borrowers engage independent valuers/consultants to prepare a feasibility study as part of the submission criterion for the loan applied, ABM said the report will still be subjected to the bank’s own assessment and risk appetite.

Moreover, the association noted that banks do not rely solely on feasibility/valuation reports as other factors and criteria, such as the developer’s financial standing, track record and multiple sources of funds for repayment, would also be considered in the assessment of loan applications.

For purposes of evaluating applications for the financing of shopping malls, ABM said that banks would additionally consider the population size and growth, purchasing power and potential growth in retail spending within the surrounding areas, as well as the outlook of the tourism industry.

“For some of our member banks, the financing of commercial properties and shopping malls requires an elevated degree of risk assessment and higher approving level.

“ABM would like to reiterate that banks are only one part of the ecosystem that is responsible for the creation of these properties and are not the only party that provides financing for the same,” it said.


Disclaimer: The information is provided for general information only. Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

More Articles