Industry players hope to see more green building and sustainable construction incentives in Budget 2024
13 Oct 2023, 04:00 pm
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This article first appeared in City & Country, The Edge Malaysia Weekly on October 2, 2023 - October 8, 2023

With the tabling of Budget 2024 on Oct 13, City & Country asked Malaysian property developers and real estate consultants to voice what they hope will be included in the unity government’s second budget. On top of more incentives to assist first-time homebuyers, there were strong calls for the government to incentivise green buildings and sustainable construction as well as renewable energy investments.

(Photo by CBRE| WTW)

 

CBRE | WTW 

group managing director 

Tan Ka Leong

We recommend that incentives be intensified for developers investing in the Industrialised Building System (IBS). The implementation of this will cushion construction cost and the dependence on labour as well as ensure timeliness of project delivery, which translates into cost savings.

We encourage the extension of financial assistance to homebuyers to soften the number of unsold units, such as extending the stamp duty exemption to not only first home buyers but also second home buyers. In line with current home prices, consideration should be given to first home buyers of new launches to be fully exempted from stamp duty for homes priced up to RM750,000 from RM500,000 currently.

Taking cognisance of the government’s direction in reducing carbon emissions and encouraging a green economy, we recommend that more green building incentives be provided to developers and related parties in the supply chain. The increase in green feature adoption will translate into greater economies of scale, resulting in cost reduction.

We support the government’s electric vehicle (EV) initiative as it will boost the economy and create new jobs. To further enhance EV ownership and usage, we believe that investing in EV charging infrastructure supported by adequate charging capacity in private and government buildings will enhance the convenience of owning and using EVs.

(Photo by Mohd Shahrin Yahya/The Edge)

 

Gamuda Land 

CEO 

Chu Wai Lune

With mounting pressure on natural resources and the uncertainty of climate change, it is more pertinent than ever for homes to be built in ways that benefit both residents and the environment. As our country approaches an inflection point in renewable energy (RE) technologies and viability, we look forward to becoming close partners with the government in working towards the realisation of the recently announced National Energy Transition Roadmap.

Incentivising investments and initiatives in RE need to have a follow-through to move the needle in triggering shifts in consumer behaviour. Ultimately, our aspiration is to have collective action towards forging a more sustainable future.

To bolster economic growth, it is equally imperative for the government to maintain Malaysia’s stature as a premier investment gateway to Southeast Asia. A robust economy results in a higher employment rate, which means our people will have more stable incomes and this opens up more opportunities for long-term investments such as property ownership.

We urge the government to quickly implement initiatives that will drive digitalisation and innovation in the construction industry. Embracing digital IBS and Building Information Modeling (BIM) not only promotes sustainable construction methods but also nurtures a robust workforce ecosystem.

(Photo by IOI Properties Group)

 

IOI Properties Group Bhd

group chief operating officer (property development) 

Teh Chin Guan

We hope the budget will include the revival of a holistic home ownership campaign (HOC). Its replacement, the i-Miliki scheme with 100% stamp duty waiver, was limited to first-time house buyers and houses priced at RM500,000 and below. The new HOC should include a 100% waiver on stamp duty for the memorandum of transfer (MoT) and loan agreements for houses priced up to RM2.5 million. The proposed scheme should also be extended to commercial or office units.

There should be more incentives to develop green buildings. With the focus on ESG (environmental, social and governance) and the government aspiration to achieve carbon neutrality by 2050, a holistic approach to the provision of incentives, tax allowances and exemptions for green buildings, adoption of RE technology and use of IBS, with active participation from the authorities and government agencies, will encourage the adoption of and investment in green technology. Also, accelerating the transition from fossil fuel to RE will contribute to the nation’s carbon neutrality goal as well as reduce the Imbalance Cost Pass-Through (ICPT) rate.

As such, we wish for a review of the Green Electricity Tariff (GET) rate to encourage uptake, support RE schemes/initiatives towards an attractive return on investment (ROI) and continue to support and fund incentive and financing schemes that promote RE and energy efficiency.

(Photo by JLL)

 

JLL Property Services (M) Sdn Bhd 

executive officer 

Tony Lee

We wish for the government to take a more proactive role in controlling new supply to mitigate the negative effects of an oversupply of both commercial and residential properties. There should be measures to manage existing volumes of overhang by stimulating demand. Additionally, it should establish stricter policies for future supply, such as requiring a certain percentage of space in larger projects to be pre-committed prior to construction.

We hope that the government continues the implementation of national infrastructure projects, such as the East Coast Rail Link, RTS link, LTU Expressway and MRT lines. These projects will improve regional connectivity and have a long-term positive effect on economic growth and employment.

We also hope that our data centres can rival those in neighbouring countries through their use on a regional basis. Several large-scale data centre projects will be completed before 2025, but Malaysia still lags behind its neighbours in terms of provided megawatts. It is crucial to promote and expand data centres regionally in order to enhance national prosperity and maintain the country’s attractiveness to investors.

We urge the government to prioritise ESG initiatives in its policy decisions and introduce new incentives to encourage and hasten all stakeholders towards sustainable practices. To attract more foreign investments, national policies must establish incentives to facilitate local businesses in transforming their practices to meet the requirements of their international partners.

(Photo by Knight Frank Malaysia)

 

Knight Frank Malaysia 

group managing director 

Keith Ooi

First, affordable housing boost. We applaud the government’s support for affordable housing through subsidies and call for swift stimulus packages to boost supply. Developers championing affordability should receive tax incentives. A long-term affordable housing policy, akin to Singapore’s HDB concept, is needed for clarity. There also needs to be a greater push towards the “property management” agenda — all these affordable housing need to be maintained properly.

Second, infrastructure momentum. Infrastructure investments — exemplified by projects like the Kuala Lumpur-Singapore high-speed rail, Johor Bahru-Singapore Rapid Transit System and Penang light rail transit — stimulate the economy and create liveable communities. Prioritising connectivity and accessibility enhancements in key property zones, such as expanding public transport networks and upgrading road infrastructure, will not only attract investors but also fuel economic growth. A concrete policy should be implemented to ensure timely project completion.

Third, sustainable urban transformation. In our pursuit of net zero 2050, we advocate for sustainable urban planning with strict environmental regulations and incentives for green building practices. This strategy aligns with eco-conscious buyers, symbolising progress and responsible stewardship for Malaysia’s prosperous, green future. By embracing sustainability as a cornerstone, the country’s property sector can chart a prosperous and environmentally responsible future.

(Photo by Sam Fong/The Edge)

 

Mah Sing Group Bhd 

founder and managing director 

Tan Sri Leong Hoy Kum

We hope the government will implement further measures with the aim of helping first-time homebuyers, ease their home-buying process and accelerate the property industry’s recovery. We also hope to see a revival of HOC and an enhanced financing scheme to ease home ownership for first-time homebuyers. The HOC has proved to be vital in helping homebuyers secure their home, such as the 100% stamp duty exemption for properties priced from RM300,001 to RM1 million. 

Some other  impactful measures would include:

•     a one-off first-time homebuyers’ grant of RM30,000 for properties priced up to RM500,000 and/or to reactivate the MyHome Scheme programme for eligible purchasers;

•     lower fixed rate financing for first-time homebuyers, for properties priced up to RM500,000;

•     step-up financing that allows middle-income buyers more time to improve their income during the first few years of home ownership;

•     restoring the maximum loan tenure to 40 years; and

•     referring to gross income rather than net income when reviewing loan applications.

We also hope to see:

•     tax exemption for interest incurred during construction;

•     the minimum threshold for foreign property ownership reduced and standardised to RM600,000;

•     appealing policies incorporated into the Malaysia My Second Home (MM2H) programme and the promotion of the Malaysia Premium Visa Programme (PVIP);

•     waiver or reduction of duties on construction materials until prices normalise;

•     incentives for developments that incorporate green features; and

•     incentives for the adoption of IBS and BIM.

(Photo by Patrick Goh/The Edge)

 

Master Builders Association 

Malaysia (MBAM) 

President 

Oliver Wee

The construction industry is still suffering post-Covid-19 and is in need of a great number of projects that will assist the industry’s recovery and further stabilise our economy. The industry also needs to transform through digitalisation and automation efforts parallel to IR4.0 (Fourth Industrial Revolution). Financial assistance is essential for smaller construction companies to kick-start their transformation journey, which can be realised through grants provided by the government.

The government should provide sufficient funding to help smaller construction companies achieve successful digital transformation. The government should immediately roll out the remaining balanced works that have been allocated under the 12th Malaysia Plan. For instance, we foresee that the physical works for MRT3 will only start months after an initial decision has been made.

We also hope the government will encourage private and public contracts to adopt a more collaborative way of contracting between the contracting parties rather than the traditional adversarial methods. This will not only help reduce contractual disputes but also reduce abandoned projects, to name a few. By having these measures in place, contractors will be on a more level playing field when conducting business.

(Photo by Low Yen Yeing/The Edge)

 

Nawawi Tie Leung Real Estate 

Consultants Sdn Bhd 

Managing Director 

Eddy Wong

We hope the government will announce plans for the MRT3 project. Due to its circular alignment covering the perimeter of Kuala Lumpur, it will provide a public train system to areas that are not currently served by the train network. Dubbed the ‘final piece’ of connectivity in KL’s public transport system, it is a catalytic development that will have a huge multiplier effect on the construction industry and the economy.

There is a stamp duty waiver for first-time homebuyers for properties priced at RM500,000 and below until December 2025 and a 75% exemption for properties priced from RM500,000 to RM1 million until December 2023. However, some homebuyers need additional assistance if they are currently renting, as they have to pay their existing rent in addition to their housing loan interest while waiting for their property to be constructed (if they purchase a property that is under construction). This is where the developer interest bearing scheme can help to relieve the financial burden of homebuyers and it would be good if the government can consider reallowing this scheme, if only for first-time homebuyers.

Lastly, we wish the government will review and streamline the guidelines and policies for the acquisition of properties by foreign buyers and investors. No doubt land matters fall under the purview of the state governments, but it is only through clear and consistent policies throughout the country that we are able to attract foreign investments that will help reduce the property overhang and stimulate the property market. We can still impose a minimum price threshold, and exclude certain categories or types of properties, to ensure local homebuyers are protected and not priced out of the market.

(Photo by OSK Property)

 

OSK Property 

CEO 

Ong Ghee Bin

Tax incentives should be extended to developers tasked with constructing essential infrastructure such as flyovers, community markets or pedestrian link bridges as part of their development projects. This approach aligns with the objective of fostering sustainable communities. Furthermore, developers that attain commendable 

QLASSIC scores while maintaining unwavering commitments to timely delivery, post-sales service, quality and safety standards should benefit from such incentives.

The standard delivery period for high-rise developments should be automatically extended up to 60 months instead of having developers apply for extension for every project, which is time consuming as the currently allowed time frame of 36 months is no longer relevant due to buildings today having more storeys to be built than before.

Additionally, the debt service ratio of financial institutions needs to take into account the income generated from the gig economy for those who do not have regular income to be eligible for property financing, as it would allow more people to have the opportunity to own a home.

(Photo by Savills Malaysia)

 

Savills Malaysia 

group managing director 

Datuk Paul Khong

We hope Budget 2024 can enable the property market to be a ‘major growth catalyst’ next year and bring in positive growth again, as well as create a paradigm shift in the property sector and deliver an upswing in capital values.

As for our budget wish list, we continue to ask for a blanket Real Property Gains Tax (RPGT) waiver in all property subsectors, like from 2007 to 2009, and a stamp duty waiver for property transfers in all categories for a time period to give the property market a much-needed boost and create synergy throughout the related markets. Exemptions should be targeted at all categories and not just the low-end segment.

We would also like incentives to attract foreigners to reinvest in properties and to attract foreign capital back to our shores. On the local level, we hope the upcoming budget will provide tax incentives for homeowners on home loans as well as renovation incentives for upgrading old residential properties of 20 years or more. This can be capped at a fixed amount per annum and be claimable over a five- or 10-year period.

(Photo by Kenny Yap/The Edge)

 

Sunway Property 

Senior Executive Director 

for central region 

Chong Sau Min

Developers face challenges such as a shortage of skilled construction labour, which could be mitigated through liberalised foreign worker permit applications and tax incentives for adopting IBS. The price escalation for building materials may be addressed by strengthening the local currency and reducing the ICPT rate for construction. We hope to see the following measures in the upcoming budget.

Financial incentives:

•     Extend the stamp duty waiver to all purchasers for properties priced up to RM1 million.

•     A reduction in compliance costs and charges for property development.

Green financing incentives:

•     Better incentives for green certified developments and better incentives for green loans.

Efficient regulatory processes:

•     Implement business-friendly policies to attract foreign investors and buyers.

•     Improve speed of property development approvals by authorities.

 

(Photo by UEM Sunrise)

UEM Sunrise Bhd 

CEO 

Sufian Abdullah

We hope to see the introduction of a new stimulus package that will spur the housing market, like HOC, to allow Malaysians to own their dream home while reducing their financial burden.

Additionally, we hope the government can work alongside industry players to provide affordable homes to the nation by containing the cost of delivering these homes. We also recommend introducing a price ceiling for raw materials such as cement, concrete and steel, and tax subsidies for imported construction materials.

We hope the government can relax the MM2H programme’s rules and regulations and collaborate with stakeholders to agree on requirements that are more realistic and attainable. This can help decrease the national property overhang and have other positive spillovers.

Zooming in to Johor, we would like to particularly request a budget allocation, special policies and fiscal incentives to spur the development of the Iskandar Malaysia region. There is vastly untapped potential to be unlocked in the region from the potential synergy with Singapore, specifically on the Second Link side, where there is still a lot of greenfield land available for strategic developments.

Additionally, we would like to see an allocation for the rehabilitation of brownfield sites such as mining ponds and landfills. We hope developers can be incentivised either with higher density or lower compliance costs for their ESG initiatives to rehabilitate brownfields, which will improve the environment for public use and regenerate the economic viability of the land or its surroundings, where land is already scarce, especially in the Klang Valley.

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