No shortage of affordable homes, says Glomac

KUALA LUMPUR: There is no shortage of affordable homes in the country, only the issue of end-financing, according to Glomac Bhd.
Its group managing director and CEO Datuk Seri Fateh Iskandar Mohamed Mansor said obtaining a loan is still the main concern as house buyers are faced with end-financing rejection and lower margin of financing offered by financial institutions.
His comments directly contradict Bank Negara Malaysia’s (BNM) statement on Tuesday which rubbished claims that access to financing was the main woe for affordable housing buyers and instead called for resolution of fundamental issues such as affordability and the shortage of supply of reasonably priced houses.
“In certain locations, there is a mismatch of supply and demand for affordable homes but there is no shortage of the supply of affordable homes anywhere,” Fateh told a press conference after Glomac’s AGM here yesterday.
Fateh is also the Real Estate and Housing Developers’ Association Malaysia (Rehda) president.
But Fateh agreed with the central bank that the maximum housing loan tenure of 35 years is reasonable and if the tenure is to be stretched, it may strain the borrower.
He cited models of other countries where two guarantors are allowed to back a loan for five to 10 years. “These mechanisms and what not ... we’ve to look into. It’s been done in Australia. These are steps that we have to study.”
On the recent proposal by the Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar to allow housing developers to lend to house buyers to make up for a “gap” in end-financing offered by banks, Fateh said Glomac will study the mechanism once the Cabinet has made a decision.
“We don’t have capacity to finance 100%. If you say bridging 10%, it’s something that we will consider. We want to help the purchasers and at the same time we have to be fair to them and cannot be charging (high) interest.
“No property developer has got the balance sheet to give 100% loan. We’re not financial institutions. There will be risks and challenges involved,” said Fateh.
Moving forward, he said, the property market will continue to be challenging. “A lot depends on next month’s Budget. We would like to see how the Budget could assist, especially first time house buyers. When there’s better and palatable financing given to purchasers, it would definitely help.”
Fateh called for better end-financing and better financing margins to be given to house purchasers, especially for first-time purchasers and purchasers of affordable homes; as well as for lower costs of doing business, which consists of compliance and contribution costs.
Glomac has planned launches worth RM1.05 billion for the financial year ending April 30, 2017 (FY17). Its FY17 profit performance is expected to be underpinned by the completion of the land sale in Cheras, as well as unbilled sales of RM512 million at the end-July.
The group is well placed to capitalise on the sustainable demand for landed properties with its RM7 billion pipeline of potential projects.
For the first quarter ended July 31, 2016, Glomac’s net profit jumped fourfold to RM85.54 million from RM21.07 million a year ago, surpassing its FY16 net profit of RM80.9 million, attributed to contribution from the disposal of land for RM145.6 million, as well as progress in its key ongoing projects. Revenue leaped to RM251.42 million from RM123 million in the corresponding quarter of FY16.