News: Unfair For Private Developers if State-Owned Companies Are Exempted From Luxury Property Ban

Nov 30, 2017

Petaling Jaya Utara MP Tony Pua revealed that among those responsible for the oversupply of luxury projects in Malaysia are government-linked companies (GLCs) and government-linked investment companies (GLICs), reported Free Malaysia Today.

For instance, the Employees’ Provident Fund (EPF) is directly involved in the 2,300-acre Kwasa Damansara township, which has a gross development value (GDV) of RM50 billion.

“Permodalan Nasional Bhd (PNB) on the other hand, is developing the 118-storey Menara Warisan. It will offer 4.3 million square feet of residential, hotel and commercial space,” he said.

PNB is also the largest shareholder in property developer SP Setia. This means it has a say on some of the biggest high-end developments in Klang Valley like KL Eco-City and Setia Sky Seputeh.

“In addition, EPF and PNB jointly owns 63 percent of Sime Darby Bhd, which recently launched its RM8 billion AYLA Kuala Lumpur project spanning 360 acres.”

The lawmaker said this in response to the cabinet’s development ban on new shopping malls, offices, serviced apartments and luxury condos costing more than RM1 million in Kuala Lumpur that took effect on 1 November 2017.

In particular, he believes that the supply glut of office space in Klang Valley would worsen as around 38 million sq ft of premises are expected to be completed in the future. Earlier this month, Bank Negara Malaysia warned that office vacancy level in the area had risen to 23.6 percent in Q1 2017 compared to 20.9 percent in the same period two years ago.

Moreover, Pua pointed out that the Finance Ministry owns UDA, which is constructing the RM8.7 billion Bukit Bintang City Centre (BBCC) in the former site of Pudu Prison.

Khazanah-owned UEM Sunrise also builds upscale real estate in sought-after locations like Mont Kiara, while the Trade Ministry was involved in a land-for-building transaction with Naza TTDI for the RM20 billion KL Metropolis project.

“Then we have the two mega property developments linked to 1MDB, the 70-acre Tun Razak Exchange (TRX) and the 486-acre Bandar Malaysia,” he noted.

Hence, any prohibition on new luxury projects should involve GLCs and GLICs as well. Otherwise, the glut of unsold high-end units will continue to plague the property market.

Furthermore, Pua fears that Putrajaya could exempt these companies from its freeze order, especially for TRX and Bandar Malaysia, given their significance and large scale.

If this happens, it would be unfair to private companies that will be hit by the ban, and this could discourage them from investing in Malaysia.

Image sourced from Free Malaysia Today

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