Malaysia to limit new luxury property developments
The Malaysian government said it will allow luxury property developments, defined as such with a price tag of above one million ringgit ($241,000) per unit, only on a case-by-case basis for on undefined period on concerns that there are too many unsold residential properties on the market.
The decision was taken by the Cabinet following a recent report by Malaysia’s central bank that oversupply of high-end properties was on its highest level in a decade. Originally, it was believed the government’s directive was an outright ban to build any more luxury developments in the country, but Minister of Works Fadillah Yusof clarified it was not, rather a cooling measure.
“This is not a blanket stop order… The government is sending a message to developers to determine whether there will be sufficient demand for a project before they decide to start construction,” he said.
His comments come a day after his Cabinet colleague, Second Finance Minister Johari Abdul Ghani, said Putrajaya has temporarily frozen approvals for luxury property developments from November 1 due to the glut in the sector.
“There is a stark imbalance between supply and demand and we have to review the strategy in terms of real estate development as we do not want such situation to adversely affect the economy,” Ghani said.
The central bank report warned that Malaysia’s property market is facing an oversupply of non-affordable homes and idle commercial space, while demand for affordable housing is not being met.
There were 130,690 unsold residential units at the end of March this year, Condominiums and apartments costing over 500,000 ringgit ($120,500) dominate the unsold homes in Malaysia, and 61 per cent of the unsold properties comprise of high-rise apartments. Johor has the largest share of unsold residential units, followed by Selangor, Kuala Lumpur and Penang, the report found.
For non-residential space, the central bank said that one in three offices will be vacant by 2021 in the country, while 140 new malls entering the market by that year would exacerbate the oversupply of commercial space, making it more severe than during the 1997 Asian Financial Crisis.
The central bank concluded that said those imbalances in the property market posed significant risks to the country’s economy, especially in terms of the danger of a rise in non-performing loans and a house price crash.
The limitation of development approvals thus affects not only residential developments, but also shopping malls and commercial spaces.
The government said it will instead focus on said the government will continue to drive the development of affordable homes, specifically those with units priced below 300,000 ringgit ($72,300), which were in short supply.
The Malaysian government said it will allow luxury property developments, defined as such with a price tag of above one million ringgit ($241,000) per unit, only on a case-by-case basis for on undefined period on concerns that there are too many unsold residential properties on the market. The decision was taken by the Cabinet following a recent report by Malaysia’s central bank that oversupply of high-end properties was on its highest level in a decade. Originally, it was believed the government’s directive was an outright ban to build any more luxury developments in the country, but Minister of Works Fadillah...
The Malaysian government said it will allow luxury property developments, defined as such with a price tag of above one million ringgit ($241,000) per unit, only on a case-by-case basis for on undefined period on concerns that there are too many unsold residential properties on the market.
The decision was taken by the Cabinet following a recent report by Malaysia’s central bank that oversupply of high-end properties was on its highest level in a decade. Originally, it was believed the government’s directive was an outright ban to build any more luxury developments in the country, but Minister of Works Fadillah Yusof clarified it was not, rather a cooling measure.
“This is not a blanket stop order… The government is sending a message to developers to determine whether there will be sufficient demand for a project before they decide to start construction,” he said.
His comments come a day after his Cabinet colleague, Second Finance Minister Johari Abdul Ghani, said Putrajaya has temporarily frozen approvals for luxury property developments from November 1 due to the glut in the sector.
“There is a stark imbalance between supply and demand and we have to review the strategy in terms of real estate development as we do not want such situation to adversely affect the economy,” Ghani said.
The central bank report warned that Malaysia’s property market is facing an oversupply of non-affordable homes and idle commercial space, while demand for affordable housing is not being met.
There were 130,690 unsold residential units at the end of March this year, Condominiums and apartments costing over 500,000 ringgit ($120,500) dominate the unsold homes in Malaysia, and 61 per cent of the unsold properties comprise of high-rise apartments. Johor has the largest share of unsold residential units, followed by Selangor, Kuala Lumpur and Penang, the report found.
For non-residential space, the central bank said that one in three offices will be vacant by 2021 in the country, while 140 new malls entering the market by that year would exacerbate the oversupply of commercial space, making it more severe than during the 1997 Asian Financial Crisis.
The central bank concluded that said those imbalances in the property market posed significant risks to the country’s economy, especially in terms of the danger of a rise in non-performing loans and a house price crash.
The limitation of development approvals thus affects not only residential developments, but also shopping malls and commercial spaces.
The government said it will instead focus on said the government will continue to drive the development of affordable homes, specifically those with units priced below 300,000 ringgit ($72,300), which were in short supply.
