KUALA LUMPUR, Jan 12 — Rehda Institute has reiterated its call for all stakeholders to further discuss the causes behind the surge in property prices over the years.
Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip said at a Rehda Institute – Rehda Malaysia joint press conference that one of the reasons behind the price surge is the high compliance cost imposed by state and local authorities.
Compliance costs include the time and expenses incurred by developers in order to conform with government policies, legislation and regulation which has increased the cost of doing business by between 15 and 25 per cent for township developers and startups.
Rehda Institute is hoping that this can be mitigated to make property development more ‘sustainable’.
He also said that asking developers to reduce pricing in today’s high-inflation environment is ‘going against the tangent.’
On developers’ profit margin, Ng stressed that unlike a few decades ago when profit margins were great, developers today are bogged down with many “hidden” compliance costs and in reality, are making only about 15 per cent or thereabouts.
He added there would come a time when developers could no longer bear those costs and would eventually have to pass them on to consumers.
At the same event, Rehda president Datuk NK Tong said about 100 stakeholders in the property development industry attended a discussion today on the cost of doing business and its impact on the property sector.
Participants included developers, government agencies personnel and representatives from associations. The aim of the closed-door event was to promote a better understanding of how compliance costs impact housing development and prices.
Tong said Rehda Malaysia looks forward to publishing the latest research report on the cost of doing business and will also make recommendations to the authorities.
The first report ‘Housing Forward — Understanding Costs and Sustainable Prices’ was published in March 2022. Tong said the latest report will supplement the first, which remains vital today.