THE MALAYSIAN RESERVE. 19TH APRIL: Unijaya works alongside KPKT where it takes over abandoned projects, completing and handing them over to the owners
The abandonment of housing projects continues to be a prevailing issue in the country.
Despite being a basic necessity and everyone’s life goal, the process of owning a home is problematic and some might end up getting a half-completed house due to irresponsible developers abandoning their projects.
According to the Ministry of Local Government Development (KPKT), a “sick” housing project has been delayed by more than 30% of its scheduled process or where the sale and purchase agreement (SPA) has lapsed.
Despite the government’s numerous attempts to mitigate the issue, the number is still prevalent because of multiple factors such as the lack of reinforcement and the developer’s credibility.
Unijaya Holdings Sdn Bhd, a company that revives abandoned housing projects — mainly low-cost units — said it alleviates purchasers’ struggle with half-completed homes.
Project director Raventharan PS said the company started reviving abandoned housing projects in 2007, with its first project in Batu Gajah, Perak, reviving 50 low-cost houses that were abandoned by the previous developer.
Unijaya Holdings works alongside KPKT where it takes over the abandoned projects, completing and handing them over to the owners according to the layout plan and the SPA.
He noted, however, that not every project is worth the revival and various factors must be taken into consideration such as the number of sold and existing purchases in the project, and whether the houses will have a buyer take-up upon completion.
Reviving such houses is challenging because project developers, according to government policy, are prohibited to impose extra charges or additional costs to buyers, despite the developer having to deal with the increase in material prices and labour costs.
Raventharan added that the project also cannot be converted into other facilities unless the purchasers no longer want their houses and surrender them in full, after which the property will be owned by the current developer.
“A common problem we face is that some buyers tend to demand more, such as better design and bigger space, which we cannot fulfil since the house must be in accordance with the SPA signed including the unit and room size and housing phase. We also need to adhere to the ethical standard,” Raventharan told The Malaysian Reserve (TMR).
Failure to adhere or arising conflict in that regard will cause rescue developers difficulties when receiving the remaining amount from the involved projects from banks.
Fluctuation of material price is also a big issue in project revivals and sometimes the company has to cover the cost whereby the unsold units are being sold at the then current market rate.
“Let’s say earlier the price was RM100,000 but now the market price is RM180,000. So, we have to bear the additional RM80,000 because we cannot ask for extra payment from the existing buyers,” he added. Raventharan said the sick project, although yet to be fully addressed, is often led by a lack of experience, weak financial background among the developers and vague market research that prevent some units from being sold.
To avoid this, the developer must have a good financial background, support and proper market research. Only then can they complete the project on time.
“When the sales are slow, you are unable to break the cost of the development hence abandonment takes place,” TMR was told.
There are also circumstances where the market is sluggish in a particular location or there is another development going on there at the same time.
Victims of abandoned housing projects are the purchasers, who suffer emotional stress and financial loss as they must pay loan interests despite their houses having not been built.
To date, Unijaya has completed eight abandoned projects across Malaysia, including Bandar Baru Kulim, Taman Naga Lily, Lukut Port Dickson, Negri Sembilan, and Tanah Merah in Kelantan, among others.
Among the significant projects it completed was in Kampung Gajah, Perak, worth RM19,335,000, consisting of 81-unit terrace houses and 39 medium-high-cost houses that took approximately 15 months to complete.
However, currently, due to the high material prices, Unijaya has no new or ongoing project.
“Material price is going up daily and we cannot control it, so it is a very high risk to commit to any project,” Raventharan said, adding that if industry players and the government can control construction material prices, it will reduce the number of abandoned projects.
Despite not working on new projects, Unijaya is focusing on the construction of private bungalows for individuals, from concept design to completion, which is a new market the company is exploring.
“However, we are still involved in abandoned housing if a viable project comes along because it is not just business, but also to help suffering victims,” he said.
Usually, rescue developers are given 10 to 12 months to complete construction, which can be extended depending on their contracts.
“Once we complete within 10 months and hand the keys to the original purchasers, we will then start selling to the public,” he added.
According to KPKT, 437 sick projects and 115 abandoned projects had been identified as of Jan 31, 2023.
Deputy Minister Akmal Nasrullah Mohd Nasir, in Parliament, said the ministry projected that there would be 354 late projects and 538 sick projects if there is no government intervention.
At press time, there is no breakdown by KPKT on which state has the highest number of abandoned housing projects.
Raventharan said abandoned projects can be found all over, from the city centres to smaller towns and even the outskirts which comprise 30 to 40 houses that are usually developed by unlicensed developers.
Highlighting the situation is worsening and the number increasing monthly, he emphasised that government control and stricter regulation are needed.
Among others, he suggested that the government can identify the number of sold and unsold units in some areas to limit new developments as well as be stricter with developers, including those that met construction requirements.
“Without control, if developments continue but there are no buyers, the project is more likely to be abandoned,” he added.
Another problem that leads to project abandonment is joint ventures between the land owner and the developer, usually involving small-scale unlicensed developers.
“Not only that, but the penalisation is also ineffective and developers that are supposed to be blacklisted are freely taking up projects,” he said.
He also highlighted that developers’ current setbacks are labour issues as construction workers are demanding higher pay.
“They are asking for a starting salary of between RM80 and RM100 per day. Sometimes, we have no choice but to pay that kind of money to complete our project,” he added.
Raventharan concluded that if the problem persists, it will refrain the public, especially the low-income group and younger generation, from owning their first homes.