By Sarban Singh
LISTED property developer Matrix Concepts Holdings Bhd thinks there are benefits to be found in the revised housing policy announced by the Negri Sembilan government earlier this month.
Among other things, the new policy increases the bumiputra ownership quota to 50%.
So far, the policy has been received with a degree of disapproval, with some parties going so far as to call it unjust.
Developers from outside the state, who are among the policy’s chief critics, claim it is regressive and a bane to the industry.
Without substantiating their claims, the naysayers surmise that the policy, which also no longer compels developers to set aside 30% of their projects for low-cost units, would actually force builders to exit Negri Sembilan.
But Matrix Concepts chief executive officer Datuk Lee Tian Hock begs to differ.
“When you dissect the revised policy, a pertinent point is that you must look at it from the Negri perspective,” he said.
Lee, whose company is developing the 1,320ha Bandar Sri Sendayan project, referred to by some as the “Damansara of Negri Sembilan”, said, on the contrary, the amended policy was a boon for developers.
“I am not plucking figures out of the sky when I say this. This is from someone who has been in the housing industry for the past 30 years and with an excellent track record,” said Lee, whose company was among the top performers in the state last year with an after-tax profit of RM182mil.
Lee had previously worked for Menang Holdings which developed Taman Rasah Jaya, the largest housing scheme in the state with a gross development value (GDV) of RM400mil, in the late 1980s.
In the early 1990s, he moved to NS Township Development Sdn Bhd, which developed the Bandar Baru Nilai township with a GDV of RM5.5bil covering 2,400ha.
Matrix Concepts, the developer that Lee now helms, has built and delivered 5,800 houses of various types in Bandar Sri Sendayan.
Lee said developers here held a series of meetings with the state government over a period of time and only then concurred that the new policy would work better than the previous one.
“It is certainly a win-win situation if you look at it from our point,” said Lee, a USM graduate in Housing, Building and Planning.
The revised policy dictates that 15% of houses to be built in any new scheme larger than 4ha should cost less than RM80,000.
These units should be landed properties with three rooms and two bathrooms and at least 112sq m (1,200sq ft) in size. And there will be no discounts given to bumiputra who buy these units.
Another 15% of the units to be built should cost less than RM250,000 and 20% should cost less than RM400,000.
For complying, developers will be allowed to fix the unit prices for the remaining 50% of houses to be built in the project.
Lee is befuddled with claims that there will be adverse effects on the industry with the bumiputra quota being upped to 50% from the previous 30%.
“They make up about 65% of Negri’s population. Any astute businessman would tell you that with such a huge market, you should have no problems selling the houses,” he said, adding that developers also had a responsibility to assist state authorities help the people, particularly those from the lower and middle-income groups, to own homes.
He doesn’t understand what the fuss is about, especially when developers are allowed to dispose of their unsold bumiputra lots after a certain period of time.
“Yes, a developer may face a cash flow problem, but this is only temporary,” he said.
Touching on the Bandar Sri Sendayan project, Lee said 1,123 of the 1,150 single-storey units built in phase one some four years ago were bought by bumiputra buyers.
“And the area is not even a predominantly Malay locality,” he said, adding that the 20ft by 70ft units were sold at around RM90,000. Today they cost RM250,000.
“One property was auctioned off last week for RM245,000,” he said, adding that the houses were still affordable despite being located less than 30km from the KL International Airport.
He said, when phase two of the Bandar Sri Sendayan project was launched, bumiputra and Chinese buyers bought 40% each of the units while the Indian community snapped up the remaining 20%.
“The units were of the higher-end types and sold at RM268,000. Today, these cost double the price,” he said.
Lee said, to allow the faster disposal of unsold bumiputra lots under the revised policy, the state Real Estate and Housing Developers Association has appealed to the state authorities for a more workable “release mechanism”.
“We have asked the state government to allow us to sell the unsold bumiputra units to others if we are unable to do so after six months.
“Apart from being more aggressive in marketing these units, we have also agreed to advertise at least thrice in the newspapers during the period,” he said.
Asked about the popular belief that properties in bumiputra majority schemes could not fetch high resale values, Lee dismissed this as a fallacy.
“The fact that single-storey and double-storey units in phase one and two of Bandar Sri Sendayan now cost more than double the original price is testament to how wrong that belief is,” he said.
Lee said Matrix Concepts was more than convinced that the revised policy would work. To walk its talk, the company will soon launch another project in Bandar Sri Sendayan to construct 3,200 affordable homes costing between RM80,000 and RM400,000.
Lee also admonished those who say the revised policy means lower profits for developers.
“Whether one likes it or not, profit is always a priority for any businessman. Why wouldn’t this policy work when our calculations show that it will make us more money?” he asked.
Citing an example, he said based on the previous policy, a developer planning to build 10 houses was required to build three low-cost units priced at RM40,000 each.
And with the seven other units priced at RM550,000 each, the total gross development value for the 10-unit project would be RM3.8mil.
This is after deducting the 10% discount for bumiputra buyers taking up the higher-end properties.
Under the new policy, the same developer who is now no longer required to build low-cost units will be able to achieve a GDV of RM3.9mil.
“The difference in GDV is about RM50,000 or 1.2% in the developer’s advantage,” he said, adding that the GDV under the revised policy might even be a lot higher as developers, under the old policy, would have to start selling their units a lot lower that RM550,000.
He said under the revised policy, the GDV for a project could even go up by up to 15%, depending on the size of a project.
“The difference is huge, but this is if you are building houses in Negri Sembilan,” he said.
Lee said the fact that the developers, in collaboration with the state authorities would come up with a website to advertise houses available for bumiputra in all projects in the state, is another plus point of the revised policy.
“The potential buyer could be working in Johor Baru but he would be able to know if there are bumiputra properties available for sale anywhere in Negri Sembilan,” he said.
Lee said the revised policy was also better as developers would now build landed properties and not the unpopular low-cost walk up flats.