GEORGE TOWN: Most property developers in Penang are expected to either hold back or launch fewer projects this year following soaring raw material prices and rising energy cost amid the acute labour shortage, say industry players.
The Real Estate and Housing Developers Association (Rehda Penang) expects the number of new property launches among developers to decline by 5% to 10% in 2022.
Meanwhile, major raw materials such as cement and steel bars are also on the rise.
When contacted by StarBiz, Penang Master Builders and Building Materials Dealers Association president Datuk Goh Teng Whoo said that compared to January 2021, concrete price has jumped 32% to RM258 per cubic metre while steel bar price soared by 46% to RM4,100 per tonne.
In addition, the prices of metal roofing and c-purlin have increased by 60% and 95%, respectively, he noted.
“For these reasons, we can see why most developers will likely be holding back on their new launches. There are also fewer jobs from the housing developers now.
“Another important reason for the fewer launches this year is the shortage of foreign workers,” explained Goh.
However, he expects there will be more jobs from the industrial sector as “the multinational corporations that have invested here are currently constructing their plants in the Batu Kawan area.”
Meanwhile, Aspen (Group) Holdings Ltd president and CEO Datuk M. Murly concurred that the company will be holding back its new property launches in Penang.
“We are reviewing our new projects’ construction cost and selling price because of the labour shortage as well as the significant increase in raw materials and energy cost.”
Murly projected property prices will be significantly higher compared with five years ago due to inflation.
“In fact, based on our initial assessment, there will be at least 25% to 30% increase in our construction and operation costs,” he added.
Penang-based Aspen Group, which is listed on the Singapore Exchange, is currently constructing Aspen Vision City in Batu Kawan.
Aspen (Group) Holdings Ltd president and CEO Datuk M. Murly concurred that the company will be holding back its new property launches in Penang.
It comprises the Viluxe premium terrace homes and Vivo executive apartments, and also planned to launch the Vogue lifestyle residence, Versa junior apartment and Viluxe supreme terrace homes soon.
“We have completed the development on 88 acres out of the 247-acre land bank in Batu Kawan.
“Now the group is undertaking construction work on 40-acres, leaving another 119 acres to be developed in the future,” said Murly.
Ideal United Bintang International Bhd will also hold back its new residential launches this year due to the scarcity of raw materials and labour.
Group executive chairman Tan Sri Ooi Kee Liang said: “We are focusing instead on our Penang Technology Park project in Bertam as the demand for industrial lots is expected to be strong and steady.
“Therefore, we believe this is a better business strategy to focus on the industrial park project for now,” explained Ooi.
IJM Land senior general manager Datuk Toh Chin Leong noted that the group has slowed down its Penang-based project launches in 2018 when the property market was not doing well.
“We are not planning to have fresh launches in 2022. The oversupply, high material cost and labour shortage have made the challenges more intense,” Toh said.
IJM Land senior general manager Datuk Toh Chin Leong noted that the group has slowed down its Penang-based project launches in 2018 when the property market was not doing well.
Eastern & Oriental Bhd director (projects and property investments) Emily Teh, meanwhile, said the recent raw material hike had affected the building industry.
“While we are not holding back, we are cautiously approaching new launches. Additionally, we are mindful of the need to manage our designs against the cost efficiencies to minimise the impact on consumers.
“Hence, we are continuously exploring new concepts and creative ways to offer efficient and sustainable homes in line with the current needs of today’s home buyers,” added Teh.
On the other hand, Mah Sing Group Bhd is scheduled to execute all its planned launches.
Its CEO Datuk Ho Hon Sang said this could be the best time for buyers to lock in their dream home.
He said a recent Rehda survey expects construction costs to surge in 2022 due to rising prices of building materials, wages and financing costs.
“It is a long-held belief by many Malaysians that properties are an effective hedge against inflation.
“The country’s young demography and the reopening of borders will continue to support home ownership,” he noted.
Mah Sing has also embarked on the E-model initiatives to optimise construction costs as a long-term solution to drive down cost structure.
“These initiatives include construction-friendly designs, bulk purchase of construction and architectural materials, time and cost savings from better work scheduling and optimisation of preliminaries,” added Ho.
Based on the National Property Information Centre (Napic), some 2,338 new residentials were launched in Penang in 2021.
“However, with the escalating raw material costs that seem to change every two weeks and the shortage of workers, we expect the new launches to contract by 5% to 10% this year,” said Rehda Penang chairman Tan Hun Beng.
Napic also highlighted that the current overhang in the residential segment for Penang-based units completed with Certificate of Completion and Compliance was 5,493, while the unsold houses units under construction were about 6,000.
“These figures are pretty high as they collectively formed more than 50% of the 13,648 residential property transactions recorded in 2021,” added Tan.