At some of these launches, sales and marketing personnel flutter about introducing the development and its high points. A wonderful picture of the developer is painted in order to convince potential buyers to fork out a deposit for a unit.
So, it is a terribly painful and crushing experience when months or years down the road, the buyer discovers that the project has been abandoned. Uncertainty looms ahead.
Last Sunday, LKH wrote to Letters to the Editor page his painful experience of having bought into a project that was subsequently abandoned.
In 1996, he and his wife bought a condominium unit in USJ1, Subang Jaya. They signed a sales and purchase agreement, paid the legal fees and the stamp duties and make progress payments.
They had paid RM40,000 for a RM180,000 unit. But the 1997 Asian financial crisis put paid to their planned investment.
He writes: “On and off, we would visit the site of the project hoping to encounter some good news. It therefore came as a shock when, last month, we were greeted not by the eerie black stumps of rotting structures but with a beautiful and colourful hoarding indicating the imminent launch of a new condominium project by a new developer.
“So, what happens to us poor purchasers for the condominium that has disappeared into thin air!”
A bit of investigation showed that the project is currently being marketed in USJ City Mall, Section 19 by a real estate agency hired by the new developer. The price tag has gone up to about RM500,000 or RM450 per sq ft.
Generally, when a project is revived, the new developer will advertise in the newspaper that a “white knight” has come in to revive the distressed project. If the majority of buyers vote in the new developer's favour, well and good. They may be able to buy the unit if they are able to top up the price. Alternatively, they may opt to get back their deposit, or as much of it as possible.
Abandoned projects are not new in Malaysia. But the hassle and uncertainty of having bought into such a project is crushing at worse, and a learning experience, at best.
So, when it was reported that the responsibility of reviving abandoned housing projects will fall under the purview of the Housing and Local Government Ministry, it is rather surprising that the news evaporated into thin air, like LKH's condominium, without anyone so much as bat an eyelid.
It may be too early to tell but since the ministry is responsible for issuing licences to developers, it seems logical they should clear up the mess, if there is one.
Secondly, this will hopefully pave the way for the ministry to be more vigilant as to which developer they grant licences to.
Third, because the revival of abandoned projects now falls under a government ministry and not a government agency they will have some clout to get projects moving again.
Some projects will not see life, however, because they may be located in the boondocks. Which begs the question, how is it the project got approved? Basis for another story.
In January, the ministry said that it will revive 35 abandoned projects, involving 12,000 housing units, throughout the country this year. The Government had revived 84 abandoned housing projects since 2009, about half of projects left derelict for some reason or other.
They were in distressed mode for between six to eight years before the government stepped in, at a cost of RM8mil. At that price, most of them would be low-cost housing.
At a time when property houses have moved up so much, RM8mil does not seem a lot.
Before the ministry came into the picture, government agency Syarikat Perumahan Negara Bhd (SPNB) had that responsibility. SPNB is a wholly-owned subsidiary of the Minister of Finance Inc (MoF) with a paid-up capital of RM10mil. In 2010, it was reported that it had borrowed RM1.3bil from the Employees Provident Fund to fund its projects.
Because it was part of MoF, the Government was also helping SPNB with land acquisition for its projects. In short, where funding and land acquisition was concerned, the Government was at its disposal.
The funny thing is, besides its role to revive abandoned projects, it is also a developer. Now which role would be more lucrative? The hassle of having to deal with angry and frustrated house buyers, or being a developer and market affordable housing and make loads of money, with the government coffers available to them?
Assistant news editor Thean Lee Cheng believes the Housing and Local Government seems to be in a better position to revive distressed projects and help distressed buyers. It cannot slip into the role of a developer.
By The Star
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