This article first appeared in City & Country, The Edge Malaysia Weekly on December 30, 2019 - January 5, 2020
Ra Adrina Muztaza (35)
Finance director of Fairview Group of Companies
Started in 2014; BA Economics (Hons) majoring in Accounting and Finance, The University of Manchester, UK, and chartered accountant under CIMA (Chartered Institute of Management Accountants).
Fairview Group of Companies was incorporated in 1985.
Projects in the Klang Valley, Putrajaya, Kelana Jaya, Shah Alam and Bangi
Current projects in Dengkil, Taman Seri Tanjong and JV project Inspirasi Mont’Kiara with an estimated total GDV of RM525 million.
What is your view of the current property market?
Malaysia’s population growth of 1.4% per annum creates demand for nearly 100,000 homes a year. This gives developers the opportunity to provide various commercial and residential designs, locations and prices to a spectrum of property buyers. However, financing remains a challenge. Buyers generally prefer to purchase property under construction or near completion but bridging loans to construct property are only available upon sales. Property developers incur high costs due to long project gestation periods and compliance payments, such as improvement service fund contributions, land conversion premiums and capital contributions to utility providers. Yet, cash flow is restricted by Housing Development Act (HDA) stipulations and there is a long cash retention period.
The affordability issue is not unique to Malaysia. Nevertheless, its definition fluctuates between different sources and buyers. Also, the affordability discussion should not only focus on current prices but also take into account the purchasers’ benefits, such as the appreciation of the asset in the future.
Moreover, the administrative approval processes of affordable housing schemes are unhurried and registrants’ loan eligibility is not comprehensively vetted on official databases. These hinder quicker delivery of affordable homes.
What are the issues in the property market that need addressing?
If providing affordable homes is key, then developers’ carrying costs should be alleviated across the development process chain. High upfront compliance and capital contributions should be reviewed, reduced and streamlined. It is also vital to hold dialogues to understand public housing versus private development roles in this market.
The progressive payment schedule under HDA needs to improve for developers to unlock cash funds. Developers need the help of financial institutions to finance the capital-intensive early stages of development rather than ineffective bridging loans based on sales percentage. Higher financing availability for SME property developers could also fuel a more competitive property market.
What new ideas will disrupt the Malaysian property market?
There will be greater need for comprehensive neighbourhoods with good infrastructure to reduce travel and cost of living demands. To prepare, the industry has to be supported by government spending in connectivity and public infrastructure.
The focus on access to opportunity, such as jobs, education and healthcare, also requires planning policies that encourage good mixed-use density. It is evident that developers are increasing efforts to provide quality and efficient living spaces in high-density developments as well as to create more flexible commercial spaces to cater for lifestyle changes in urban areas.
What do millennials want when it comes to property?
The digital economy is transforming property design and security features to adapt to usage for e-hailing, food delivery, remote working and short-term accommodation. This has to be combined with good community and collaborative opportunities that have become central to well-received properties. New generation buyers also care about design features and branding.
Fairview’s focus on boutique property developments in the Klang Valley allows an intimate neighbourhood atmosphere in urban environments. We recently completed Mutiara Keruing, which features 1-storey houses priced from RM300 psf (land area). It is located 8km from Alamanda Putrajaya.
Our high-rise JV project, Inspirasi Mont’Kiara, will be a green building and has been well received due to its established township location and property amenities offered.
What in your opinion is the outlook for the property market in 2020?
Property demand by our growing population is strong and it will continue into 2020. The property product mix may change due to macroeconomic challenges, technological transformation and lifestyle changes but a robust ecosystem of government investment, policies and financial institutions willing to give developers loans is needed to support market demand.
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