Hunza: Cut low-cost housing quota to 15pc

A review by the government of the 30 per cent low-cost housing quota imposed on private property developers under Budget 2009 will spur property players to bring down prices of other units being developed.

Hunza Properties Bhd chairman Datuk Khor Teng Tong proposed that the quota be reduced to 15 per cent as this will help the property industry cushion the impact of the current softening of the sector, which is expected to continue into 2009.

"The 30 per cent quota imposed currently is not helping consumers since developers are merely transferring the cost in building other properties to them.

"But by being made to subsidise less, we can then transfer the cost-savings to our buyers," he told a media briefing in Penang yesterday after announcing Hunza's financial results for the year ended June 30 2008.

Khor, who is also the International Real Estate Federation (FIABCI) Penang branch president, said the property cycle is on a downward trend.

"Factors such as price increase of building materials and the current local political environment are impacting negatively on the industry," he added, saying that the downward trend in the property industry is expected to continue into next year.

Reviewing the stamp duty to lower costs of home ownership is also on Khor's wish list for Budget 2009.

"This move will encourage house purchase and property investment among the general public," he added.

Other measures which can assist property players would be to control the prices of steel and cement, Khor said.

Meanwhile, construction of the RM700 million 'Gurney Paragon' project in Pulau Tikus is progressing according to schedule although the company has taken cost-cutting measures to face uncertain times.

"By taking on the role of main contractor for future phases of the project, we are looking at savings of between six per cent and 10 per cent in margins," Khor said.

He said Gurney Paragon and the 'Infinity' project in Tanjung Bungah are targeted at foreign purchasers.

"Prices of Malaysian properties in the global market are still competitive and the government can help Malaysian property players who market their projects overseas by giving tax incentives for overseas property promotion efforts," Khor said.

"Hunza has not experienced any significant margin compression as our products remain in demand and we have adjusted prices to cover the increase in cost," he added.

By New Straits Times (by Marina Emmanuel)