Ipoh landed properties to cost 10%-15% more in second half

IPOH: The selling price of landed properties targeted for launch here in the second half of this year will be priced between 10% and 15% higher than last year due to better demand, rising raw material and land cost.

Real Estate Housing Developers’ Association (Perak) chairman Datuk Francis Lee said that since the Asian Financial Crisis in 1997, property prices had been stagnant.

“Presently profits reached sub-normal levels in Ipoh, with margins of about 10%.

”For example, the cost to construct which include the land and raw materials, and to market a landed property with a built-up of 1,800 sq ft, is around RM200,000.

“When sold in the market, such a property is priced between RM210,000 and RM225,000, depending on its location.

“The profit should be at least 20% as there are risks that the developer have to encounter, such as late delivery due to unforeseen circumstances and the liability period for claims on defects,” he said.

Lee said that for the past six months, the property development market in Ipoh had picked up.

“The demand is rising gradually,” he added.

“The growing demand in the property market, rising raw material prices, and land cost are likely to push property prices up in the second half by 10% to 15%.

“However, if the demand drops, there will be no new projects launched because of the abnormal returns.

“This will eventually force prices to move up to a more equitable level,” he said.

Lee said the present home ownership in Ipoh is about 60%, while the remaining 40% comprised those who stay as extended families or in rented premises.

“The potential for home ownership to grow in Ipoh is there, as it has a population of about 710,000,” he said.

Lee added that the purchase of primary and secondary residential properties in Ipoh was largely driven by effective home ownership demand. And only a fraction of which is in the form of property asset investment.

“As property prices in Ipoh are largely determined by economic fundamentals devoid of speculative investment, prices of properties are relatively stable even through the recent recession,” he said.

By The Star