We are not too concerned about construction cost, says Soam

PETALING JAYA (Oct 21): Although construction material costs continue to rise, 25% of  respondents in the “REHDA Property Industry Survey 1H2021 and Market Outlook 2H2021” survey released today said their cost of doing business have gone down by 26% in 1H2021. This was mainly due to the postponement of new launches and right-sizing activities.

But 72% of the respondents saw their business cost increase by 17% in 1H2021.

The surge of material and labour cost is among the top reasons that impacted developers’ cash flow in 1H2021. The second was compliance cost, which used to be the top reason, followed by financing cost.

“The world commodity prices have fluctuated in the last 12 months, especially aluminium, copper and steel prices. Steel prices have gone up to RM3,400 yesterday (Oct 20) from RM2,100 in August. However, this is something that is beyond our control as it is the global commodity price phenomenon,” said Real Estate and Housing Developers’ Association Malaysia (REHDA) president Datuk Soam Heng Choon.

For locally produced building materials, such as bricks, their pricing was mainly affected by the low supply as manufacturers were not allowed to operate during lockdown period. The market also faced short supply hiccups when large infrastructure projects such as railway transportation development used up all their earlier stockpile, he added.

“We need to give them some time to build up the stock and balance the demand and supply to see the price normalised. We are not too concerned about this,” Soam shared.

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