PETALING JAYA: The introduction of the 6% Goods and Services Tax (GST) in April will be the biggest agenda for the property market this year and will pose a challenge for property developers. "The implementation of GST come April 1 will present a challenge in terms of inflation, but it's just a matter of adjusting and doing right by the market. For example, while residential properties will be exempted from GST, it does not mean that the cost of supplying these properties, namely constructing, developing and selling, will be free from GST as developers will still have to pay this tax on nearly all areas involved, especially materials, to construct a home," said Trinity Group Sdn Bhd managing director Datuk Neoh Soo Keat. Property prices are expected to rise due to cost-push inflation factors such as shortage of workers following more construction projects and infrastructure works that are currently ongoing, while cost of construction materials may rise after the implementation of GST. "Once GST has been implemented, cost of doing business will increase for property developers. Property players will have to brace themselves for greater competition in terms of product offerings and pricing, targeting buyers and financing facilities. This will lead to property developers putting in more investments into product development and marketing innovation to stay ahead of the competition. "Developers should not raise their property prices arbitrarily for fear of pricing themselves out of the competition," he told SunBiz. LBS Bina Group Bhd managing director Datuk Seri Lim Hock San concurs, adding that the implementation of GST has created an uncertain sentiment in the property market. "There are bound to be some buyers who will wait on the sidelines pending the implementation of GST. However, we remain optimistic about the Malaysian property sector this year, with more transactions expected in the affordable housing segment following the incentives announced in Budget 2015," he told SunBiz. "We foresee overall steady demand for mass market properties in 2015, mainly for mid-range properties ranging below RM500,000, driven by increased demand from first-time home buyers, upgraders, new household formation and various government incentives to spur home ownership," he said. On the buyer's side, Neoh foresees home buyers and investors trying to complete transactions before April 1, with most property buyers opting for second-hand properties until the full impact of the GST is known. However, commercial properties may experience a slow down as incomplete properties will also be taxed. "We envisage that the third quarter of the year will pick up due to price adjustment and public acceptance of GST. Projects with strategic location and easy access to public transport and major highways coupled with good facilities and amenities will still be the preferred choice. "We anticipate that the delivery system and pending approvals from authorities will improve in various areas in order to cut down on holding cost of developers," he said. Despite the anticipated challenges, Trinity Group still foresees a positive year for the group with the various launches in its pipeline. "We just celebrated our 10th anniversary and we will be launching two new properties this year, in Sg. Besi (March) and Mont Kiara (July)," said Neoh, adding that the group aims to expand its presence further both in the domestic and international markets. "We are partnering with Sunway Group, Oxley Holdings and Macau Glory for a big scale project in Xuan Cheng, China; we will develop a few parcels of residential projects under the big umbrella project. "We've also purchased parcels of land on Bukit Antarabangsa and near Matrade area where we will be developing residential and integrated developments. Similar to all our award winning projects in the past, these two projects will also host a range of innovative designs that will set it apart from other projects in the area," he said. Neoh said the group's key goal this year is to expand its business presence by moving closer to the city centre and forming joint ventures on big projects with reputable companies, similar to what it is doing in China. "We already have our eyes set on a few things, which will be announced once everything is confirmed. We will continue to expand our landbank by leveraging on the current market situation whereby land would be available at a relatively cheaper price," he added. Meanwhile, it is business as usual for LBS Bina whose pipeline of launches this year comprise mostly of properties below the RM500,000 mark. "In view of the market sentiment, about 60% to 70% of our planned launches for this year are priced below RM500,000. Homebuyers can also expect more diverse offerings from us in key areas such as the Klang Valley, Cameron Highlands, Johor and Pahang," said Lim. He said some of the projects it will be busy with this year include Bandar Saujana Putra, Cameron Centrum, Bandar Putera Indah and Sinaran Mahkota.