The Malaysian real estate market has shown signs of improvement since last year, but it has yet to fully recover to pre-pandemic levels, according to Datuk Seri FD Iskandar Mansor, the group managing director and CEO of Glomac Bhd.
FD Iskandar noted that there is a growing interest in property investment and real estate in Malaysia. However, several challenges continue to impact the industry’s growth.
“Sentiments are positive, and we’ve seen an improvement in take-up rates. Nevertheless, developers remain concerned about the rising construction and compliance costs. In the 1990s, these costs were around four to five percent, but today they stand at approximately 25 percent of total costs. Development expenses have increased, and material costs have surged,” explained FD Iskandar.
Before the pandemic, the steel prices, a crucial component in construction, ranged from RM2,200 to RM2,300 per tonne. During the pandemic, these prices skyrocketed to as high as RM3,800 per tonne. While they have since stabilized at around RM3,200 to RM3,300 per tonne, the overall increase has been substantial, reaching about 35 to 40 percent. Unfortunately, the purchasing power of potential buyers has not followed suit.
FD Iskandar highlighted the dilemma faced by developers: they cannot significantly raise house prices as most potential buyers have specific affordability ranges in mind, especially first-time homebuyers.
“We cannot increase the prices of houses because the majority of potential buyers want houses at a certain price. That is why, in the first phase of Loop City, the units are priced at RM230,000 to RM660,000. I think that is the price range that people want, especially first-time house buyers,” he emphasized during the unveiling of the Loop City project in Puchong.
Despite these challenges, FD Iskandar pointed out some positive developments in the market, including an increase in foreign direct investments (FDI) and domestic investment. He urged the government to not only attract more FDI but also expedite the implementation of investment plans.
Loop City, a RM1.6 billion integrated project, represents Glomac’s response to the evolving market conditions. The project, which follows the Lakeside Residences township development initiated in 2012, will be developed in four phases. It features three serviced residence plots offering lakeside terraced homes, semi-detached units, and apartments. Additionally, there is one commercial plot designated for a private school or hospital.
The first phase of Loop City boasts a GDV of approximately RM345 million, comprising 980 units of serviced apartments. These apartments are designed to cater to various demographics, including starter families, young working couples, empty nesters, and individuals seeking low-maintenance homes with potential for future capital appreciation. Prices for these units range from RM230,000 to RM660,000.
FD Iskandar Mansor emphasized the importance of providing housing options in Tier 3 areas like Puchong to reduce the financial burdens of individuals who currently live in Tier 2 locations such as Bangsar, Petaling Jaya, and Puchong.
“What we seek to establish, especially with young Puchong dwellers, is a choice to live and work in the area, to be closer to their family instead of living away from the Puchong city centre. We have 18 bankers with us here today who are very keen to give a good deal to prospective buyers and property agents,” he said.
As the Malaysian real estate market navigates its challenges, initiatives like Loop City demonstrate the industry’s resilience and commitment to providing affordable and accessible housing options for all.