‘TIMELY MOVE TO TRIM OVERHANG’
Plan can help tackle glut value worth RM20b, says industry expert
ANEW form of crowfunding to provide a means for those who cannot afford a home and tackle property overhang that has hit RM20 billion in value may work, said industry specialists.
Asianland Realty Sdn Bhd director and licensed auctioneer Warrick Singh said with the recent experiment that had shown progress in some areas in Klang Valley, the time was ripe for an alternative solution, especially as property overhang value had been creeping up.
Last week, the Securities Commission unveiled a property crowdfunding (PCF) framework, thereby taking property investment
to a new level.
The government, through the PCF, is turning to the masses’ wealth, instead of banks, to help solve the matter.
Malaysia reportedly has more than 30,000 units of unsold residential units partly because banks have put in place stringent lending guidelines.
Finance Minister Lim Guan Eng said at the unveiling of PCF framework on Friday that property crowdfunding offered an alternative for home buyers.
He said actions may b e taken against banks for rejecting housing loan applications without a valid reason.
Warrick said the time was ripe for alternative private sector real estate financing strategies to move away from the straight jacket textbook guidelines of conventional bank financing.
He said the interest rates may not be based on the industry norm of base rate and base lending rate (interest rates), but adjusted appropriately to accomodate returns for “investor financing”.
“An experiment with the new norm was initiated in Semenyih with a rent-to-buy platform that has user-friendly features,” said Warrick.
“Agreed interest rates could be a notch or two higher, but it has at least got housing off the ground for the B40 segment and a roof over their heads plus their young families,” he added.
“Fundamentally, the recent 2018 Napic (National Property Information) Report seems to indicate a mismatch of properties (leading to an overhang) due to locations, connectivity and closeness to the centre of economic gravity in context of individual locations,” said Warrick.
“It is heartening to note (that) there appears a political will to evaluate alternative real estate financing strategies related to the recent crowdfunding mechanism floated by the Securities Commission,” Warrick added.
SuperiorWealth Resources founder and chief executive officer Alan Poon said the initiative announced in the 2019 Budget can be seen as an alternative financing model for house buyers as claimed by the government, but its effectiveness takes time to be seen.
He said industry stakeholders were taking a cautious role as to whether the overhang of units can be curtailed by offering another financing option.
Poon said much had been commented on the risk of providing such P2P platform in the real estate scene as hungry investors who bridged the seller and buyer without the need of traditional financing will be driven by profits, hence making property investment even more speculative than before.
He said a much proper success recipe by the government would be to set up a taskforce with stakeholders representing both supply and demand side to be on few roundtable sessions.