Reviewing 2018: 10 highlights

It would probably be an understatement to say the year 2018 has been an extraordinary year for Malaysia. It goes down in history as the year that saw the first change in government in 60 years following Pakatan Harapan’s victory in the 14th General Election on May 9.

Since then, it has been a roller coaster ride for all, as the new administration, the public, the private sector, and the people try to come to terms with the reality of how things have been working and how things are going to work from now on. There has been a slew of announcements and statements made regarding new policies and decisions, as many were eager to make their stamp in running the country for the first time.  

The news headlines since then have also been dominated by the charges made against the former government and former Prime Minister Datuk Seri Najib Razak.

Overall, the country’s economy is not expected to pick up anytime soon. The rakyat has been told that the country is deep in debt, so the days ahead will be challenging.    

Taking a cue from the overall economy, the real estate sector has remained subdued while the government and the people continue to focus on affordable housing and housing affordability. 

Let’s take a look back at some of the biggest property industry news that came out of the year 2018.

1. So sad, Ampang Park Shopping Mall is gone… 

Kuala Lumpur’s oldest mall, Ampang Park Shopping Mall, which would have turned 50 in 2023, shuttered its doors on Jan 1.

The mall held its own against the newer, glitzier malls nearby such as Suria KLCC, Pavilion Kuala Lumpur Shopping Mall, and those on the Bukit Bintang stretch as it served the middle-income group who had been taken with its potent mix of nostalgia and value-for-money offerings. Nearby office workers also frequented the place for lunch and for shopping that was easy on the pocket. 

The mall has made way for the construction of the Ampang MRT (mass rapid transit) station which is expected to be ready by 2022, and an underground walkway that will link it to the nearby Ampang LRT station.

2. Calling all property managers, let’s get registered  

With the amendment to the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 that was passed on Oct 17, 2017 and gazetted on Jan 2, 2018, property managers are required to register themselves with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP). 

Previously known as the Board of Valuers, Appraisers, Estate Agents Malaysia, BOVAEP will now regulate property managers in Malaysia. Prior to the amendment of Act 242, the act allowed only registered valuers to conduct property management.

BOVAEP will provide training courses to registered property managers to ensure that they have sufficient knowledge of related laws and regulations as well as standard practices.

3. Hip, hip hurray! Change in government and the first woman to be appointed housing minister

The May 9 elections marked a change in government, after which a new cabinet was formed. Ampang MP Zuraida Kamaruddin made history as the first woman to be appointed Malaysia’s Housing and Local Government Minister. She is also chief of Parti Keadilan Rakyat’s women’s wing. Zuraida has been an MP since the 2008 General Election, winning the seat of Ampang from Barisan Nasional, the ruling coalition then. She was re-elected in 2013 and in 2018. 

In an exclusive interview with Edge Prop.my after she was sworn in on May 21, she spoke of being committed to upholding the promises made in the Pakatan Harapan manifesto, including the formation of a National Affordable Housing Council.  

4. Stop! DBKL’s dubious land deals  

About a week after the General Election, on May 16, Kepong MP Lim Lip Eng lodged a report with the Malaysian Anti-Corruption Commission (MACC) to investigate 64 parcels of land totalling 424.29 acres that are worth RM4.28 billion. The land parcels had been sold by Kuala Lumpur City Hall (DBKL) under the purview of the former Federal Territories Minister, Datuk Seri Tengku Adnan Tengku Mansor from 2013 to 2018.

Almost half of the land parcels had allegedly been sold for the development of Federal Territories Affordable Housing (RUMAWIP) projects while the rest were for higher-end residential and commercial products priced at market value, claimed Lim. All of the parcels were sold without open tender and most of them transacted at below the market price at that time and without having gone through a valuation report, he alleged. 

On top of that, some of the developers who had bought the land parcels have allegedly failed to pay development charges and the premium on the conversion of land use, yet their projects were able to commence, Lim told reporters.

A month later, the MACC seized documents connected to the sale of the 64 plots from DBKL’s premises and 48 plots have been cleared by the MACC as at July. The remaining 16 plots have issues with either their land titles or payments.

5. No money-lah — MRT3 and HSR scrapped
Almost immediately after it came into power, the new Pakatan Harapan government announced that it was reviewing all the mega projects in the country. A decision was made, to defer two rail transport projects — the Kuala Lumpur-Singapore High-Speed Rail (HSR), as well as the third Klang Valley Mass Rapid Transit (MRT3) line. 

The reason for slamming the brakes on these two mega projects, the new government said, was that the costs involved were just too high. The HSR would have cost RM110 billion while the MRT3 would have cost between RM40 billion and RM45 billion.

However, Prime Minister Tun Dr Mahathir said the government may reconsider the projects in future, when the country’s financial situation improves. 

Another mega project, the East Coast Rail Line (ECRL), is still being studied. The RM81 billion project spanning 688 km linking Port Klang and Kota Bharu was launched last year and was slated for completion in 2024. 

The project has been put on hold by the present administration since July 3 to negotiate better terms with the China project contractor — China Communications Construction Co Ltd (CCCC). 
 

6. Just one will do — National Affordable Housing Council

The wheels began turning as soon as the new minister clocked in, as she was determined to fulfil the promises made during the General Election. By June, the ministry was preparing to submit a Cabinet paper on the proposal to place all affordable housing agencies under a single entity known as the National Affordable Housing Council, for more efficient and effective management and execution. 

A few months later in October, the ministry revealed the names of the agencies that will be consolidated under the council: 1Malaysia People’s Housing Scheme (PR1MA), UDA Holdings Bhd, Syarikat Perumahan Negara Sdn Bhd (SPNB), Housing Programme for the Hardcore Poor (PPRT) and Malaysia Civil Servants Housing Programme (PPAM).

7. Lower house prices? SST in, GST out     

The new government abolished the Goods and Services Tax (GST) on June 1 as promised in its election manifesto and then declared a tax holiday until the introduction of the Sales and Service Tax (SST) on Sept 1.

Under the GST regime, there was a fixed tax rate of 6% across every stage of the supply chain. With the SST, the Service Tax was 6% while the Sales Tax was 5% and 10% depending on the type of goods. The single-stage tax is imposed only at production level. 

It seems to have been implemented hastily without a complete list of chargeable items which took many business operators and consumers by surprise. But what was clear was that property (including land) is not chargeable under SST. Also exempted from tax are certain building materials such as cement, sand and iron and construction services. 

In light of this, Finance Minister Lim Guan Eng has urged developers to lower the prices of the homes they build going forward. In tabling Budget 2019 in Parliament on Nov 2,  Lim revealed that the Real Estate and Housing Developers’ Association has agreed to cut house prices by up to 10% on new projects. 

8. Better late than never — KL City Plan 2020 gazetted

On Oct 30, the Kuala Lumpur City Plan (KLCP) 2020 was gazetted with little fanfare and caught many by surprise. The public can view the plan displayed at the Kuala Lumpur City Hall (DBKL) headquarters on Jalan Raja. Attached to the gazetted plan is an addendum on the developments that were contrary to the plan. 

Federal Territories Minister Khalid Abdul Samad said infringements in the current plan and new additions would be taken into consideration in the future draft KLCP 2040 which would kick off next year and is targeted to be gazetted by 2020.

To recap, the drafting of KLCP 2020 began in 1998 and was finalised in 2012. However, it was not gazetted despite frequent calls to do so. Many KL folks believe that the failure to gazette the KLCP has resulted in haphazard developments in KL. In a news report last year, DBKL said it was pointless to gazette it as it was due to expire by 2020. It said it would instead focus on the Kuala Lumpur Structure Plan 2050, but that was under the previous administration.

9. No comment — Tax revisions 

The government made a few property-related announcements during the tabling of Budget 2019 on Nov 2. These include raising stamp duties for property transfers worth more than RM1 million from 3% to 4%, and revisions to the Real Property Gains Tax (RPGT).  

From January 2019, there will be an RPGT of 10% (increased from 5% currently) for companies and foreigners; and 5% (0% currently) on locals, on property sales conducted from the sixth year onwards. 

However, RPGT is exempted for low cost, middle cost and affordable housing scheme units priced RM200,000 and below.

10. Believe it or not? Own a home by paying only 20% of the price 

On Nov 2, Prime Minister Tun Dr Mahathir Mohamad launched FundMyHome.com, an innovative home-buying platform developed by EdgeProp Sdn Bhd. Currently limited to first-time homebuyers only, FundMyHome provides an alternative towards home-ownership. 

This is how it works – homebuyers will need to pay 20% of the property price to own the home, choosing from a wide array of high-rise and landed homes of different prices (capped at RM500,000) and locations showcased on FundMyHome.com. 

The balance 80% of the property price is contributed by participating institutions. After five years, homeowners can choose to sell, buy or refinance the home, sharing the returns from any changes in the value of the home with the institutions.

In the initial stage of the scheme, nine participating developers are offering about 1,000 homes priced below RM500,000. Following the launch, criticism and concerns were raised regarding the scheme, but only time will tell.

This story first appeared in the EdgeProp.my pullout on Dec 28, 2018. You can access back issues here.