Property cooling measures a temporary setback to industry, says Paramount CEO

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Cyberjaya: The cooling measures imposed by the government and central bank since Budget 2014 on the property development industry “is good in the long run” for the industry despite the “temporary setback” in booking-to-sales conversion rates, said Paramount Corp Bhd’s (Paramount) new CEO, Jeffrey Chew.

Already, the increase in property prices, new launches and land costs have come under control as a result of the cooling measures, said Chew.

“Today, there are slower sales but developers are a bit more careful in terms of the number of properties they launch. Also, in terms of land prices, which have been going up so much in the last five years, people who are holding their land will be more reserved about the land that they want to sell,” said Chew in a media briefing on Paramount’s first high-end residential development, Sejati Residences, today.

To recap, some of the measures imposed by the government under Budget 2014 are: increase in real property gains tax (RPGT) to 30% for properties disposed within three years of purchase, imposition of a minimum purchase price of RM500,000 for properties bought by foreigners, and the abolition of the developer interest bearing scheme (DIBS).

None of these measures were eased by the federal government under Budget 2015.

Besides the cooling measures, Chew said that the industry and consumers alike will continue to be hit by rising costs from the implementation of the goods and services tax (GST) come April 1, 2015, making affordability of homes a “real issue”.

“Malaysia has always been a low cost country because of how much things have been subsidised. But, in the last three years, a lot of government subsidies have been removed. In 2015, when GST comes in, costs will keep going up and property prices will go up,” Chew explained.

Chew, who holds a "neutral" outlook on the industry for 2015, added that the demand for affordable housing is still strong and not fully met by developers.

Tomorrow, Paramount will launch Sejati Residences,a 40-acre project in Cyberjaya, that will house 249 units of three-storey bungalows, semi-detached houses and super-linked houses.  

As a sequel, Paramount will launch two blocks of condominium on a 10-acre land just next to Sejati Residences in the last quarter of 2015. The total estimated gross development value (GDV) for Sejati Residences Cyberjaya and the condominiums is RM1.06 billion.