The weakening ringgit has resulted in an increase of 20-25% in the cost of some construction materials, said the Real Estate and Housing Developers’ Association Malaysia (REHDA) president Datuk Seri Fateh Iskandar Mohamed Mansor.
“The cost of certain construction materials has actually gone up. For residential units, if you talk about landed properties, it (the cost) shouldn’t be higher because the majority of the construction materials would be locally sourced.
“However, if you talk about high-rises, items like lifts, escalators, precisioning and air-conditioning are still imported,” he told reporters at a press conference last Friday at the presentation of REHDA’s Property Industry Survey for the first half of 2014.
Fateh Iskandar said the cost of these imported items has increased by 20-25% as suppliers are asking to review the rates due to the weakening ringgit, despite prices being locked in six months ago.
He said any increase in prices of landed residential properties would be minimal.
“For commercial and high-rises, there will be a little bit of increase. As you can see in the survey, 67% of developers said they try to absorb whatever increase they can. It’s only when we cannot withstand the cost that the price will eventually be passed on to consumers,” he said.
Fateh Iskandar said property developers should take the opportunity to promote Malaysia’s higher end properties to foreigners as they are good buys for them in view of the weakening ringgit.
“Definitely we should promote some of our properties to foreigners because it is a good buy for them, the properties have not actually gone down in value and usually when they buy in good areas, they will actually go up. Because of the strengthening of their currencies, definitely they’ve already made some gain in terms of currency exchange,” he said.
However, he stressed that these properties to be promoted to foreign buyers are only in certain areas and of certain types, and exclude affordable homes which are meant for locals.
“I’m talking about the higher end ones that Malaysians say are a bit expensive now due to the current situation. So allow the RM2 million to RM3 million condos (to be promoted to foreigners). We should promote this. We can also probably work with the respective agencies,” he said.
REHDA immediate past president Datuk Seri Michael Yam said the various conditions imposed by various state governments on foreign buyers do not encourage foreigners to buy in Malaysia.
“Yet Malaysians are buying in Melbourne and London. For every unit we buy there, 10 local units need to be sold. I think you have to make a fair statement in the sense that, since the foreigners are restricted from buying property of certain prices, this will not impact the affordable segment of the market.
“But when the government says foreigners are pushing prices up and comes up with these sort of regulations and changes the rules, it is flip-flop.
“Foreigners are discouraged. Our properties are cheap but people still don’t buy. They still prefer to go to Hong Kong, Singapore and Taiwan,” he said.