Sheda: Profit margin of housing developers low


BINTULU: Sarawak Housing and Real Estate Developers’ Association (Sheda) said it was erroneous to think that housing developers here were now laughing all the way to the bank just because the prices of houses has skyrocketed in recent years.

Its president Zaidi Ahmad said in reality the developers were only making a small percentage of the selling price because the lion’s share went to expensive construction materials and land cost.

For instance, he said housing developers typically make a net profit of only about five per cent for houses costing RM200,000.

This is because to build such houses, about 60 to 65 per cent of the selling price is construction cost, excluding compliance cost, while land ate up a further 20 to 25 per cent.

“At the end, our net profit is only about 5 per cent as we have to endure compliance cost as well – the cost we have to pay to meet government approval,” said Zaidi when met at Sheda Home and Property Roadshow in Bintulu on Saturday.

Zaidi said to ease the burden on housing developers, low cost houses should be built by the GLCs (government-linked companies) or the government.

To make houses affordable to those in the low income group, he said that the state government and the Bintulu Development Authority (BDA) should figure out ways to make use of the ample state land which were still available here for housing.

The property market in Bintulu has been experiencing double digit growth since 2011 following the influx of domestic and foreign employees and contractors to Samalaju Industrial Estate.

To meet increasing demands, Zaidi gave an assurance that Sheda was prepared to work closely with the government to ensure that the housing industry remain robust.






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Posted on July 30, 2012, in Business, Economy, Housing. Bookmark the permalink. Leave a comment.

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