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Friday, November 29, 2013

Perak property developers stay calm over RPGT hike

Published: Friday November 29, 2013 MYT 12:00:00 AM 
Updated: Friday November 29, 2013 MYT 8:28:19 AM
Likely not to be affected: The showhouse of the Tasek Nova in Tasek.
THE increased real property gains tax (RPGT) announced in Budget 2014 might have drawn flak from developers based in many major cities, but their counterparts in Perak are unfazed by the move.

The Star spoke to several developers in the state for their opinion on the matter and the general consensus seems to be that the RPGT hike would barely affect the property market here.

From Pyhomes Realty managing director Chan Hoong Mun’s experience, the Ipoh property market had barely any speculators, which were the main target of the RPGT hike.

“As far as residential properties in Ipoh are concerned, most buyers are those who plan to stay in the houses.

“There might be some speculation for non-residential properties such as shops and factories, but I believe that by large, the Perak market will not be affected much by the RPGT hike,” he said.

Chan said that the RPGT hike would have a greater impact on the more developed areas such as the Klang Valley, Penang and Johor Baru, where property prices were skyrocketing due to speculation, and investors would snap up properties during the launch to sell them for high profits later on.
Pyhomes project: The Casa Lapangan houses under construction in Pengkalan in Ipoh.
“While property prices in Perak are rising, the trend is not due to speculation and prices remain very low when compared to the northern states.

“Instead, the increasing prices are due to rising costs of development and the staggering amount of bureaucracy developers have to go through to proceed with their projects,” he said.

Pyhomes, which has been a player in Perak’s property market since 1981, currently has a few active projects in and around Ipoh, namely its Kinara Parkview and Casa Lapangan double-storey terrace houses off Japan Pasir Puteh and projects in Sungai Siput and Batu Gajah.

Over in Kampar, Huges Corp executive director Hew Fen Yee said he did not foresee the RPGT hike affecting residential property sales in the former tin mining town in the near future.

“The current property market in Kampar is more geared towards long-term investors who buy for their own use or rent out as student accommodation.

“Those who rent out to students earn an income through the rental instead of selling off the property, while the rest are workers or businessmen who buy houses for their own accommodation and are not likely to sell them off in the short-term,” he said.

Active project: The Kinara Parkview housing project in Pengkalan in Ipoh.
Hew said property price would not deter people from buying houses in Kampar, as prices here were still reasonable and very affordable when compared to big cities.

“For example, we are currently developing Phase 7 of our Westlake Homes project that consists of double-storey terrace houses priced under RM300,000, which is a price that is almost impossible to find in the more developed towns and cities.

“Instead, the problems faced by property buyers in Kampar are mostly about acquiring bank loans, as new regulations have tightened loan requirements, making it quite difficult for loan applications with insufficient paperwork.

“The amount and duration for housing loans have also been reduced, thus affecting the buying power of homebuyers,” he said.

Despite the property market becoming more challenging for buyers, Hew believes it is not an impossible feat for genuine buyers looking to acquire property for their own.

“In Kampar, buyers are spoilt for choice as there are various players in the property market offering cheaper and smaller houses.

“Thus, owning a house is not a problem but they may have to make do with smaller properties in less central locations,” he said.

In KPM Corporation project manager Stuart Chin’s opinion, although the RPGT hike was implemented to curb speculation and thus slow down the escalating price of property, other measures introduced in Budget 2014 will still lead to higher property prices.

“The implementation of the Goods and Services Tax (GST) on April 1, 2015 will result in higher costs for building materials, which will eventually be passed down to property buyers.

“Besides that, the reduction or removal of subsidies for necessities such as sugar lowers the spending power of many families and they will find it harder to save money for buying a house or shop,” he said.

Chin said the Government had to look at improving the purchasing power of its citizens if it wanted to help them buy their first property.

“While property prices escalate, the salaries of private sector workers have barely budged in recent years.

“Even civil servants are affected, as we’ve noticed lower property sales in Gerik where most buyers are civil servants.

“They were most likely hoping for some government perks in Budget 2014 before making a property purchase decision and decided to hold but when none were announced,” he said.

Despite the difficulties, Chin said property developers should not merely throw the blame around and should come up with ways to attract more buyers.

“Developers need to be attuned to the changing needs of buyers and devise projects accordingly.

“Over in KPM Corporation’s current project, we came up with the single-storey semi-detached phase of Tasek Nova partly because we envisioned that it would appeal to middle-class families and those working outside Ipoh who are looking to buy houses for their aging parents to stay in.

“By adding features and facilities such as gated and guarded security, a swimming pool, gym and community hall, we are able to attract the interests of buyers and maintain sales during such uncertain times.

“The economy and government policies might not be very favourable towards property developers, but it is not impossible to conduct business in this environment.

“We need to think out of the box,” he said.

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