Explore the strategy of building 1 million affordable homes using IBS. Learn about property overhang solutions.
KUALA LUMPUR, 14 Aug 2023 – The Malaysian government has outlined its intention to construct a maximum of one million affordable homes through the application of the Industrialized Building System (IBS) for public projects spanning from 2018 to 2028. Works Minister Datuk Seri Alexander Nanta Linggi disclosed this plan.
Meanwhile, the Khazanah Research Institute’s (KRI) suggestion to impose a vacancy tax on unoccupied homes has faced opposition from the National House Buyers Association (HBA). The HBA contends that such a tax would yield adverse consequences for both homeowners and property developers, without offering a viable solution to the prevalent residential property overhang issue in the country.
1. Government Aims for 1 Million Affordable Homes via IBS
The Works Minister, Datuk Seri Alexander Nanta Linggi, revealed plans to construct up to one million affordable homes using the Industrialized Building System (IBS) for public projects within the span of 2018 to 2028. Notably, as of 2022, 1,913 affordable housing projects incorporating IBS were completed by government-appointed developers, constituting 91.5% of these projects. The utilization of IBS in government initiatives surged to 84% in 2021 from 79.5% in 2020. For private projects, it increased from 41% to 60% over the same period. Private project implementation of IBS is on the rise, while the government aims for 70% adoption in private projects by 2030, highlighting IBS’s potential for enhancing construction efficiency, cost-effectiveness, and reducing reliance on foreign labor.
2. Vacancy Tax Opposed as Solution to Property Overhang Issue
The National House Buyers Association (HBA) has taken a stand against the proposed vacancy tax by Khazanah Research Institute (KRI), asserting that such a tax would adversely affect homeowners and property developers, rather than addressing the issue of residential property overhang in the country. Datuk Chang Kim Loong, the Secretary General of HBA, emphasized that Malaysia’s property overhang is a result of diverse factors such as market sentiment, economic fluctuations, housing affordability, and preferences, among others. A more collaborative approach involving all stakeholders is suggested by HBA to address the overhang problem. The imposition of a vacancy tax on unoccupied and unsold units would likely raise new home prices, impacting both developers and homeowners.
3. Challenges of Sick Housing Projects Impact Various Parties
Real estate analyst Professor Dr. Noor Rosly Hanif highlights that “sick” housing projects negatively affect multiple parties, including buyers, local authorities, and developers. Homebuyers who purchase for occupancy often face financial challenges due to rental payments and loan commitments. Local councils overseeing such projects must manage issues such as disease-carrying mosquitoes, homelessness, and drug use at these sites. Revenue loss occurs for local councils as uncompleted projects hinder the collection of quit rent and assessment fees. Developers also face obstacles when operational and building costs increase. Hence, the impact of sick projects on the 3Ps underscores the need for sustainable development practices and comprehensive industry collaboration.
4. Centralized Labour Quarters to Improve Migrant Worker Living Conditions
The Selangor State Development Corporation (PKNS) has initiated the RM120 million Laman Lestari project in Klang, introducing a Centralised Labour Quarters (CLQ) to enhance the living conditions of migrant workers in Selangor. Spanning 1.7 hectares, the development encompasses 336 fully furnished units, each comprising three rooms, a dining area, and a bathroom. The CLQ, set to be completed within three years, offers housing for up to 5,712 individuals. The development is equipped with various amenities, including light fixtures, electric stoves, beds, and communal spaces for activities. The CLQ units will be available for rent at an estimated inclusive fee of RM350 per person per month.
5. Long Wait for Promised Land Affects Dengkil Voters
About 250 voters in Dengkil, Selangor, are still waiting for the land promised to them by the state government 35 years ago. These voters, comprising former Kampung Sri Tanjung estate workers and their families, have expressed their commitment to vote for a candidate who pledges to fulfill this promise. The voters were initially involved in a cash crop project recruited by the Malaysian Association of Youth Clubs (MAYC). Despite overcoming challenges such as floods and inadequate access roads, their lands were later seized for an unrelated project. Pursuing their land claims through various channels, these settlers highlight the importance of honoring commitments made by the state.
