Perak developers unhappy with new premium rate system

RECENT media reports suggest that Ipoh is experiencing an upswing in property developments but developers are unhappy with the new premium rate system imposed.

According to San Chak Chun, honorary secretary of the Perak chapter of the Real Estate and Housing Developers' Association Malaysia (Rehda), there are some significant property projects in Perak, particularly Ipoh, but recent developments in the state administration have been of great concern to developers.

“The Perak government should be more sympathetic to the property development sector as it is the locomotive' for economic growth in the state,” pointed out San, 65, a lawyer by training. He is concurrently a committee member of the Perak Chinese Chamber of Commerce and Industry as well as the Associated Chinese Chambers of Commerce and Industry, Malaysia, involved in monitoring issues related to property and housing development and legal affairs.

“The property sector plays a vital role in more than 140 industries and trades in the economy,” explained San. “It is, in fact, the lifeline for people from all walks of life. Property development creates many job opportunities for locals as well as foreigners.

“But the cost of doing business for property developers has been on the rise since the state government changed its method of calculating the conversion premium from nett saleable area to gross area of a housing scheme which saw a 100% increase in the premium rate payable by the developer even for his own land. The capital contributions charged by the National Water Services Commission or SPAN (Suruhanjaya Perkhidmatan Air Negara) is another burden.”

Rate of premium payable by the developer is 10% of value of land per square meter for commercial property, and 1% of value of land for residential development. The capital contribution to SPAN has different charges. If the service reservoir is built by the developer, then the top bracket charge is RM1500 per unit for houses costing above RM500,000.

He also cited that the Department of Civil Aviation's imposition of a height limitation on the construction of high-rise buildings within a 5km radius of the Ipoh airport was another problem. Such buildings were restricted to a height that should not exceed 130m above sea level.

“This had practically stunted the Ipoh city centre and rendered the development potential of land within that radius comparatively restricted.”

On bureaucratic red tape, San stressed that the local authorities should reduce the approval time for all stages of development application.

“That means, from planning to implementation. Although, the one-stop centre concept has been implemented but the resultant effect still needs much improvement.”

Assessing the property industry in Perak, particularly the commercial segment, San revealed that there were several new budget hotels currently being constructed. But there was a lack of four-star and five-star establishments.

“There could be an oversupply of budget hotels as many entrepreneurs are turning their shophouse premises into such ventures.

“But Perak has no proper convention centre nor big enough exhibition venues to hold conferences or expos of international standards,” he highlighted.

“There is already an oversupply of shops and such commercial properties in various parts of Ipoh and towns in outlying areas.

Many such properties have also been converted to swiftlet farms,” said San, referring to the backyard industry of breeding swiftlets for their edible nest.

Residential property

For residential property developments, San said projects within Ipoh city and nearby towns were still selling well, with prices going up 20% to 40% for double-storey terraced houses.

“A standard two-storey linked house in Ipoh city is selling about RM390,000, whereas in other areas and in suburban localities, such a property can now fetch RM240,000 and upwards.

“For semi-detached houses, the current price is about RM800,000 for a unit with a built-up space of 3,500sq ft and a lot size of 45ft by 80ft.”

In the ranking order of “saleability,” the demand for residential property is for single-storey terraced and double-storey linked-houses followed by single-storey and double-storey, semi-detached houses plus medium-sized bungalows.

For reasons of accessibility and convenience, such properties should be within a radius of 10km from the city centre where most business activities are located.

However, San lamented that wasn't much interest in industrial property.

Many units of such developments were still vacant or turned into swiftlet farms. Comparatively, property prices in Ipoh were still quite affordable for working couples with two incomes. There was still a market for such developments.

By The Star