KUALA LUMPUR: Property developer LBS Bina Group Bhd intends to intensify its focus on the affordable housing segment as it expects more of such sales in 2015, following the various forms of assistance for home ownership outlined by the government in the recent Budget 2015 announcement.
The segment is set to account for about 70% of the group’s total launches in 2015 — up from about 60% this year — which will carry about RM1.55 billion in terms of gross development value, said its managing director Datuk Seri Lim Hock San.
“Malaysia has a population of 30 million and we see a steady growth among the young demographics, hence the steady demand of purchasing their first home. This strategy fits in nicely with the government’s initiatives to support the development of affordable housing,” he said in an email interview.
LBS plans to launch eight projects next year, namely D’Island Residence, Bandar Saujana Putra and Desiran Bayu in the Klang Valley, Cameron Centrum (Cameron Highlands), Sinaran Mahkota (Kuantan) and Midhills (Genting Highlands) in Pahang, and Bandar Putera Indah and Tampoi in Johor. The eight are a mix of affordable and high-end projects.
With the upcoming launches, the group expects 20% on-year growth in terms of sales and net profit. The group also expects a short-term boost in demand for housing in the period leading up to the implementation of the goods and services tax (GST) next April, with a continued sustainable demand for residential projects after the introduction of the consumption tax.
Residential properties are not expected to be directly affected by the GST as they are “tax-exempt” items, but Lim said the implementation of the tax may adversely affect developers. “There is a high possibility that developers may have to absorb the increase in costs of developing and renting residential properties due to the inability to claim input tax,” he said.
As for the sale of non-residential properties, which are taxable under the GST, he said developers may lose out on such contracts going forward as they may not collect the input tax charged on the billings after March 31 next year.
Meanwhile, for ongoing projects not completed by March 31, Lim is concerned that there may be complications in completing valuations, “with multiple projects running at the same time and the availability of valuers”.
“We believe a smooth implementation of the GST depends on its clarity and effectiveness in addressing the different aspects of the property sector,” Lim said.
This article first appeared in The Edge Financial Daily, on November 17, 2014.