80% of developers for Greater KL, Water Shortage, Project Approvals

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80% of developers for Greater KL are not able to get approvals for their projects. Main reason? Water. According to REHDA president, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) is not approving projects because there is not enough water. Affected projects are up to 800 in total when both the projects in Kuala Lumpur and Selangor are added up together. According to a survey amongst Rehda members, 57% said they have approval issues of which 45% are related to water, 35% by TNB and sewerage at 27%. The developers also face higher cost of business due to scarcity of land, higher conversion premium, higher compliance cost and higher infrastructure contribution funds.

In many predictions, the population of Greater KL is expected to hit 10 million within 6 years. REHDA said 166,000 new homes are needed per annum to cater to this demand. Thus far, around 100,000 are built every year and as many developers started to pull back, the expectations are that it should be lesser than 100,000 units. Then, Fateh said something which is very important for any development to continue. The public transportation part. Even with MRT or LRT, a good public transportation system must include feeder services, buses and taxis. In other words, a holistic approach. MRT is proceeding fine, just that I have not yet see a plan for these feeder services.

Over 3 years ago, a few developers in Sungai Petani told me that their developments plans were not approved due to water shortage. At that time, I thought this must only happen in smaller or secondary towns. Today, it is happening in Selangor. Frankly, this has better be solved immediately because if these developments do not happen and everything is pushed back for one year, it also meant that the new supply into the market would be cut. I searched, so far there has been no response from Syabas even after the report appeared in mainstream media. Oh  yeah, in terms of scarcity of land, I think this reason is also because buyers simply would not consider unpopular areas. There’s no need to believe me, just go online, search for prices in popular areas and then compare the price per sf versus the not popular ones. There should be a premium which I agree but areas which are less than 15 minutes away are priced 3 times higher? Properties cannot run away from demand and supply. Supply is by developers and secondary ones. Demand is just YOU.

written on 14 Sept 2014

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