Rehda Institute reiterates call to reduce compliance cost

• Compliance cost includes the time and expenses incurred by developers in order to conform with government policies, legislation and regulation which have increased the cost of doing business by between 15% and 25% for township developers and start-ups.
• Rehda Institute is hoping that this can be mitigated to make property development more “sustainable”.

KUALA LUMPUR (Jan 12): Rehda (Real Estate and Housing Developers' Association) Institute has reiterated its call for all stakeholders to further discuss the causes behind the surge in property prices over the years.

Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip said at a Rehda Institute-Rehda Malaysia joint press conference that one of reasons behind the price surge is the high compliance cost imposed by state local authorities.

Compliance cost includes the time and expenses incurred by developers in order to conform with government policies, legislation and regulation which have increased the cost of doing business by between 15% and 25% for township developers and start-ups.

Rehda Institute is hoping that this can be mitigated to make property development more “sustainable”.

He also said that asking developers to reduce pricing in today’s high inflation environment is “going against the tangent”.

On developers’ profit margins, Ng stressed that unlike a few decades ago when profit margins were great, developers today are bogged down with many “hidden” compliance costs and, in reality, are making only about 15% or thereabouts.

He also said that there would come to a time when developers could no longer bear those costs, and would eventually have to pass them on to consumers.

At the same event, Rehda Malaysia president Datuk NK Tong said about 100 stakeholders in the property development industry attended a discussion on Thursday (Jan 12) on the cost of doing business and its impact on the property sector.

Participants included developers, government agencies personnel and representatives of associations. The aim of the closed-door event was to promote a better understanding of how compliance cost impacts housing development and prices.

Tong said Rehda Malaysia looks forward to publishing the latest research report on the cost of doing business, and will also make recommendations to the authorities.

The first report “Housing Forward - Understanding Costs and Sustainable Prices” was published in March 2022. Tong said the latest report will supplement the first, which remains vital today.