New development freeze applies nationwide, says Finance Minister II

KUALA LUMPUR (Nov 23): Putrajaya’s order to freeze approvals for shopping complexes, offices, serviced apartments and luxury condominiums priced above RM1 million applies to the entire nation, clarified Minister of Finance II Datuk Seri Johari Abdul Ghani.

"We have not decided, but as far as the cabinet's decision is, [it is] throughout the country. But if [there are] any [disputes], if they were to come back and put up an appeal or justification, then the cabinet may look at it [based on the] area," he told EdgeProp.com at the sidelines of the launch of Maybank Islamic Bhd's rent-to-own scheme, HouzKEY today.

Johari said the freeze aims to address the oversupply in the commercial property segment and the concerns of the banking sector.

According to him, there are about 30 million sq ft of vacant spaces in the shopping mall and office sector.

Meanwhile, there were 130,690 unsold residential properties in the first quarter of this year, the highest over the past decade.

Moreover, 83% of the unsold units are priced above RM250,000, and 61% of them are high-rise properties.

"Basically, if you look at the shopping malls and offices, I think [the situation] is oversupply. And at the same time, some of these projects come with high-end condominiums that are actually part and parcel of the developments. So that is the reason why the high-end [condominium segment] is included [in the freeze]," he told reporters after the launch.

He added that the move is also aimed at addressing the lack of supply of affordable houses in the country.

Johari reiterated that the demand for affordable housing is almost 48%, but the supply is only about 24% or 25%.

"I think we very much need the affordable houses to reach the people. [Hence], I think this is where we need to do some balancing and I'm sure it is also good for the developers.

"In fact, without even freezing [the development], the feedback that I got from the financial institutions, they are also reluctant to finance all these high-end and commercial properties at this moment because they also know about the oversupply [situation]. So basically this [freeze] comes just to [address] the concerns of our banking sector," he explained.

The minister reiterated that the freeze will be temporary.

"At the end of the day, this is not the first time that we have seen this, we just need to put some check on this. And once everything is back to normal and the level of unsold [units] come back to within reasonable levels, I'm sure we are able to unfreeze all this.

"All countries have their unique economic policies and you cannot stop any country from doing that. But in our case, because the figure is getting too big, so we just come in and intervene a bit.

"You cannot compare us with any other markets in the world because everyone has their own uniqueness of looking at their own economy, so it is not fair to compare us with the others. Anyway, this is just temporary, it is not forever," he stressed.