‘Cooling measures a temporary setback’

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CYBERJAYA: The cooling measures imposed by the government and central bank since Budget 2014 “are good in the long run” for the property development industry despite the “temporary setback” in booking-to-sales conversion rates, said Paramount Corp Bhd’s new chief executive officer 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 [and] 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, yesterday.

To recap, some of the measures imposed by the government under Budget 2014 are: increase in real property gains tax to 30% for properties disposed of within three years of its purchase, imposition of a minimum purchase price of RM500,000 for properties bought by foreigners, and the abolishment of the developer interest bearing scheme. None of these were eased in Budget 2015.

Additionally, Chew said the industry and consumers alike will continue to be hit by rising costs from the implementation of the goods and services tax next April 1, making affordability of homes a “real issue”.

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

Consequently, Paramount, whose property development projects are mainly located in the Klang Valley and Penang, has been focusing on smaller units in mixed development projects in these places, while leaving landed developments to suburban areas such as Sungai Petani, Bukit Mertajam and Batu Kawan, which enjoy a “spillover” effect from urban areas.

Chew, who wants to double Paramount’s existing market capitalisation to RM1 billion in three years, said property development is “more than just location” and that Paramount has started emphasising the importance of connectivity, customer-centric products and innovative branding.

“We want to be regarded a top10 [property] player in the market. We hope to climb up in the next five years,” Chew said.

Today, Paramount will be launching Sejati Residences. The 40-acre (16.2ha) project in Cyberjaya will house 249 units of 3-storey bungalows, semi-detached houses and super-linked houses.  

It will launch two blocks of condominiums on a 10-acre land next to Sejati Residences in the last quarter of 2015. The estimated gross development value of the entire project — both Sejati Residences and the two condominium blocks — is RM1.06 billion.

This article first appeared in The Edge Financial Daily, on October 21, 2014.