Government will not bail out developers in trouble

PETALING JAYA (Dec 15): The government will not bail out property developers, especially those who fail to sell their high-end projects and get into financial problems, said Finance Minister II Datuk Seri Johari Abdul Ghani.

This follows his reiteration that while the freeze on shopping malls, offices, and high-rise residential projects of RM1 million and above applied nationwide, developers can still submit their project proposals for consideration.

“This is a temporary freeze and not a blanket ban and when we see that things are better, we will review the situation. There is no particular timeline for the freeze.

“The concern is at the fringes of the Klang Valley, Johor and Penang. We want developers to look into the details and the right target market, because at the end of the day, if you (developers) have problems, and the bank have problems, we (the government) will have a problem,” he said in a Bernama report.

He added that if developers failed to sell high-end properties priced between RM2 million and RM3 million, this may cause problems.

“The banks would have a problem when this happens, and Bank Negara Malaysia has cautioned the banks. So, they need to look at this very seriously,” he said.

However, he said the authorities have no problems with luxury developments in the Kuala Lumpur City Centre and Bukit Bintang areas as there is strong demand from buyers and investors.

“Properties in these areas are very much in demand. If the high-end developers have the right location and are confident that the development would attract buyers, and the banks are confident in financing the projects, why worry?” he said.

The ban comes amid a report that there is a glut of properties worth an estimated RM35.5 billion, which include 130,690 units of residential properties worth RM20 billion.

Moreover, there is 20 million sq ft of vacant purpose-built office space in the Klang Valley, and seven million sq ft of empty retail space worth RM5.5 billion.

In addition, a further 13 million sq ft of purpose-built office space and 44 million sq ft of retail space is expected to enter the market over the next two years.