Malaysia’s developers said a government move to remove a cap on cement prices will boost construction costs and compel them to increase property prices by about 10 per cent.
‘The price increase is an additional burden on the property industry at a time when the building and property industry is challenged by softening market demand,’ the Real Estate and Housing Developers Association said in a memorandum to the trade ministry.
Shares of cement suppliers, including Lafarge Malayan Cement Bhd, surged after Malaysia decided last month to lift the price cap on cement, a governmentcontrolled item.
The selling price of cement will be fixed every four months under an automatic pricing mechanism from Jan 1 instead of being set by the government, Deputy Prime Minister Najib Razak said then.
The price mechanism would affect ongoing projects, including 597,242 houses being built nationwide, the association said. ‘In extreme cases, contractors’ inability to absorb such financial burden may lead to project abandonment,’ it said.
The association represents more than 800 developers responsible for about 80per cent of the total real estate built in Malaysia. They include SP Setia Bhd, Malaysia’s biggest developer, Sunrise Bhd and Mah Sing Group Bhd.
Source: The Business Times, 12 July 2007
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