assignment perumahan zulkis sx130070beps04

SBEP 2413: Perancangan Komuniti dan Perumahan

Housing Problems in Majlis Perbandaran Nilai (MPN) Locality Area

Case Study: Bandar Enstek, Negeri Sembilan

By:

Zulkipli bin Ismail (SX130070BEPS04)

Lecturer:

Associates Professor Dr Nooraini Bte Yusoff

Semester 1, 2013/2014

Bachelor in Urban and Regional Planning Programme (SBEP)

Fakulti Alam Bina

Universiti Teknologi Malaysia

Mass Housing in Ixtapaluca, Mexico (Source: www.oobject.com)

Table of Contents

1.0 Introduction .................................................................................................................................................. 1

2.0 Background of Housing Sector Generally .................................................................................................. 2

2.1 Housing Supply .............................................................................................................................................. 3

2.2 Housing Supply in Negeri Sembilan .............................................................................................................. 5

2.3 Nilai and Surrounding Area .......................................................................................................................... 5

2.4 Background of Case Study: Bandar Enstek ................................................................................................. 7

3.0 Issues and Problems in Housing for Bandar Enstek ................................................................................ 8

3.1 Recent Issue ................................................................................................................................................... 8

3.2 Lack of Affordable Housing Supply .............................................................................................................. 9

3.3 Increasing of Construction Cost Materials ................................................................................................... 11

4.0 Conclusion .................................................................................................................................................. 13

References ................................................................................................................................................................ 14

List of Figure

Figure 1.1: Role of Housing in Society ..................................................................................................................... 2

Figure 2.1: State Urbanization Rate ........................................................................................................................... 4

Figure 2.2: Pie Chart on the breakdown of Population in the District of Sepang, 2010 ............................................. 6

Figure 2.3: Pie Chart on the breakdown of Population in the District of Seremban, 2010 .......................................... 6

Figure 3.1: The graph shows the increment the cost of steel supply for the year of 2010. ....................................... 11

List of Table

Table 1.1: A Perfect Housing Setting Element ........................................................................................................... 1

Table 3.1: Surrounding Price Analysis of Double Storey Terrace (similar product) ................................................ 10

Table 3.2: Construction Materials Involved in Increment of Cost. ............................................................................ 11

List of Plan

Plan 2.1: The location of Bandar Enstek which shows the circle area of case study. ................................................ 7

List of Photo

Photo 3.1: Newspaper cutting from Sinar Harian showed that the increment of the price of residential. ................ 8

Housing Problems in Majlis Perbandaran Nilai (MPN) Locality Area. Case Study: Bandar Enstek, Negeri Sembilan

SBEP2413: Perancangan Komuniti dan Perumahan

Zulkipli Ismail (SX130070BEPS04)

1

1.0 Introduction

Based on Oxford Dictionary1, housing means; Houses and flats considered collectively

which is the approach that has been used in a housing development and it also can be

explained as The provision of accommodation as a modifier in a housing association.

In urban planning, a home is a basic need that must be owned by each human. It is a

second level of basic need requirements that must be accomplished as it is for human

shelter before the other needs of to be fulfilled. Home is a personal and family physical

boundaries separating one family with another family. Such separation is distinctive

because of its rationale in this life have determined the limits of interaction between an

individual and another individual.

Housing is also defined as a series of homes inside a scheme of settlement. In a housing

scheme in urban areas, there are some houses which has been accommodate with all

physical facilities such as shops, facilities, infrastructure and other supporting elements.

In well-planned residential areas, people live in clusters and socialize with each other

with a different of design of houses in each community. The six elements of good

housing neighbourhood (see Table 1.1 below) as suggested by the JPBDs Doctrines

(1997) 2would be a basic for aligning focus on the housing.

Table 1.1: A Perfect Housing Setting Element

Elements Characteristics

Comfort Housing interior design and surroundings should foster family

systems

Friendliness Basic facilities should encourage a friendly neighbourhood

Beauty, quality and identity Designs should reflects beauty and quality and allow room for

growth

Affordability Housing development should meet demand and should be

affordable by people from walks of life

Cleanliness and harmony Housing areas needs to be clean, healthy and in harmony with

the surroundings

Adequacy Residential areas should have adequate public facilities and

utilities (self-contained)

1 AS Hornby & Asmah Hj Omar Oxford Dictionary (2007) 2 JPBD Doctrine refer to Table 1.1 (1997)




2

Figure 1.1: Role of Housing in Society (Source: Dr Amita Bhide 1988)

Dr Amita Bhide (1988) 3 stated that House is a place where do we live in, but housing

policies should provide opportunities to public and their families. Recently, the

population of the world is growing rapidly. Increase in population leads to creates

many problems like slums, poverty, unemployment, unhygienic conditions and others.

Many of the countries even in Malaysia are experiencing shortfall in housing on the one

hand. In other hand, it is people who are having surplus income and savings; they are

investing in housing industry. But unfortunately the source is limited but the demand is

high. (Refer to Figure 1.1)

2.0 Background of Housing Sector Generally

Housing industry is now emerging as one of the rapid growing industry in Malaysia.

Malaysia had been in a series of declining and upward trend throughout the years in

terms of its property price. To illustrate the situation, the Asian financial crisis during the

period of late year 1997 to early 1999 had crippled our property market. The chronic

economic recession drove plenty of potential buyers away and as a result, many new

residential units remained unsold 4(Zainal Abidin Hashim, 2010). The supply which was

3 Dr Amita Bhide (1988) 4 Zainal Abidin Hashim (2010)




3

mainly middle and high cost residential far exceeded the demand causing housing prices

throughout the country to depreciate up to 30%5 (Zainal Abidin Hashim, 2010).

After another series of downward trend in housing price due to slowdown in the US

economy back in 2001, housing markets in Malaysia began to recover and demonstrated

incremental changes in house prices. Selangor in particular had a tremendous boost up to

53% in housing demands 6(Zainal Abidin Hashim, 2010). However, there was an upward

slope of property overhang spotted on national level. In the short span of two years,

unsold units increase from 15,558 units in 2004 to 25, 645 units by the end of 2006

7(Zainal Abidin Hashim, 2010). It is worth nothing that a large percentage (61.5%) of

these unsold properties were priced beyond RM150,000 8(Zainal Abidin Hashim, 2010)

On the other hand, the 2011 property market report made by the Valuation and Property

Services Department in the Finance Ministry showed a nationwide increase in demands

for residences that cost above RM500,0009 (Valuation and Property Services

Department, 2012) . Moreover, the Real Estate and Housing Developers' Association

(REHDA) of Malacca reported that the demand for landed property in the state remain

high despite the trend in rising property prices that most residential property in Malacca

are now priced at RM180,000 and above.10

Overall this upward trend observed in the

housing market is predicted to continue for the foreseeable future.

2.1 Housing Supply11

Malaysia has experienced rapid development reflected by the increased in urban

population from 62% in 2000 to 71% in 2010 (2020 will be at 85%). Apart from

Wilayah Persekutuan Kuala Lumpur and Putrajaya with 100% level in

urbanisation, the other states with high level of urbanisation were Selangor and

Pulau Pinang with 91.4% and 90.8% respectively. Whilst, in Negeri Sembilan the

urbanisation rate is at 66.5%. (Refer Figure 2.1)

5 Zainal Abidin Hashim (2010) 6 Ibid 7 Ibid 8 Ibid 9 Valuation and Property Services Department; Laporan Pasaran Harta (2012) 10 Real Estate and Housing Developers Association (Rehda) Malacca (2012) 11 DTZ Nawawi Tie Leung (2013)




4

Figure 2.1: State Urbanization Rate (Source: DTZ Nawawi Tie Leung 2013)

Year 2011 and 2012 would be a house buyers year, as more projects are

expected to be launched thus giving the former a variety of choices to select.

Terrace houses and apartments or condominiums will continue to dominate

supply in the pipeline. Nevertheless, developers are encouraged to conduct proper

feasibility and market studies before embarking on new development projects to

avoid adding to property oversupply.

In general, house prices increasing every year (except for projects in much sought

after location) but there is a continuous incoming supply of houses especially in

sub-urban or greater Klang Valley area such as Nilai and KLIA.

There is an evidence of a significant price increase over the last few years as the

price of houses are too expensive to be owned by because of high prices

especially on landed housing. However, increased cost of doing business in terms

of capital contribution for various utilities and infrastructure services, compliance

costs, construction costs and so on might trigger a push effect on house prices.




5

2.2 Housing Supply in Negeri Sembilan12

According to DTZ Nawawi Tie Leung (2013) in Negeri Sembilan, pentup

demand is concentrated in Daerah Seremban Zone (Nilai, Mantin, sub-Seremban

area and Pajam). Nonetheless, some spill over demand might help some projects

to be viable in Negeri Sembilan.

Similarly, major towns in Nilai and near KLIA are likely to sustain pockets of

viable residential properties development. Residential properties priced below

RM280,000 are likely to enjoy good demand at least until end of January 2013.

Ultimately, projects that enjoy the advantages of good location and branding will

command a premium from discerning house buyers.

2.3 Nilai, Sepang and Surrounding Area

Nilai, Sepang and surrounding KLIA area are the secondary catchments that

command relatively bigger size of population and higher income profile. Most of

them from Secondary and Tertiary Sectors; such manufacturing and construction,

government services, business, real estates and others. Both are quite balance as

there are institutional centres and industrial areas with development area i.e.

Universiti Sains Islam Malaysia (USIM), Bandar Baru Bangi, industrial area in

Seremban and Nilai, and development area in Putrajaya, Cyberjaya and KLIA.

The Low Cost Carrier Terminal (LCCT), influx of new workforce from Low Cost

Carrier Terminal at KLIA which contributes on buying properties in Nilai and

KLIA surrounding area.

In year 2010, based on DTZ Nawawi Tie Leung study (2013), district of Sepang

had a total population of 207,354 which was made up mainly Malay (62%) with

15% Chinese and 13% Indians. The current demographic profile showed that

dominated by population within the age group of 15 to 64 years old.13

(Refer to

Figure 2.2: Population in District of Sepang 2010)

12 DTZ Nawawi Tie Leung (2013) 13 Ibid




6

Figure 2.2: Pie Chart on the breakdown of Population in the District of Sepang,

2010 (Source: DTZ Nawawi Tie Leung study 2013)

While the population in the district of Seremban is about 536,147, which half of it

is Malays (52%), whilst Chinese composes 24% and Indians 16%. Based on the

study, dominated by age working group 15 to 64 years old (69%) provide

potential demand for longer term.14

(see Figure 2.3 below)

Figure 2.3: Pie Chart on the breakdown of Population in the District of

Seremban, 2010 (Source: DTZ Nawawi Tie Leung study 2013)

14 DTZ Nawawi Tie Leung (2013)




7

2.4 Background of Case Study15

Bandar Enstek is a township that has been developed by TH Properties Sdn Bhd

(THP) since 2000. It is located in Mukim Labu, Daerah Seremban, Negeri

Sembilan Darul Khusus under the authority of Majlis Perbandaran Nilai (MPN).

It is 57 km south of KL city centre; about 1 hour drive from city centre and

sprawling on 5,116 acres of freehold land. It is will be fully developed in 25 years

(1999-2025). The township is surrounded by few township such as Kota Seriemas

(adjacent) and Kota Warisan (North); KLIA Quarters, Sepang F1 Circuit, KLIA

and KLIA2 (West); Felda LBJ (South) and Kg Jijan Hulu (East). (Refer to Plan

2.1: The location plan)

Generally, middle income group dominates mostly part of the neighbourhood in

Bandar Enstek whereas they work within KLIA mostly in Airasia or Malaysia

Airlines. The current population for Bandar Enstek is 8,800 and is projected to

increase to 50,000 by 2025 once the township is fully developed.

15 THP Operation Division Management Committee Meeting (MCM) Report No. 3/2013 (2013).

BANDAR ENSTEK

Plan 2.1 : The location of

Bandar Enstek which shows

the circle area of case study.

(Source: Operations

Division, THP)

Nilai Impian Kota Warisan

Kota Seriemas




8

3.0 Issues and Problems in Housing for Bandar Enstek

3.1 Recent Issue

Photo 3.1: Newspaper cutting from Sinar Harian dated 9 July 2013 showed that the

increment of the price of residential. (Source: Sinar Harian 9 July 2013)

Based on comments from the Managing Director of WTW CH Williams Talhar & Wong

(WTW), Sr. Foo Gee Jen said, the price of terraced houses in the suburbs to become

more competitive due to the rise in house prices in the city center of Kuala Lumpur. He

said to have a terraced house in 2020 at least a household must have an income of

RM12,000 per month.16

If this statement were true, state of Selangor which located within the Klang Valley was

naturally affected by the sharp rise in house prices. It seems that people are getting caught

and crushed is the middle income group earners. This is because, for low-income earners,

they have the advantages to purchase the the low cost housing which is provided by the

state authorities with the range of RM35,000 to RM42,000 per unit.

16 Sinar Harian (9 July 2013)




9

3.1 Affordable Housing for Middle Income Group

This is one of the major issues in housing sector which reflected the development in

Bandar Enstek. It is the offering numbers for affordable home, where housing developer

as a housing provider sometimes forget that determination of price (is now high) for the

housing is not affordable by the people anymore. The problem is that the system used in

housing ownership which sometimes allows people who already owned a home where

affordable housing is used as an object of investment by those who have the capital,

hoping to double their profit. According to Brenan (1993), affordable housing should be

built and owned by the need, but the definition of "need" is currently not clear, then

required standards and indicators to determine community needs affordable housing.17

The pressure to the middle income group in having affordable housing usually influenced

by two factors, the first is the rise in house prices queries, while first-time buyer's do not

have enough proper financial with the increase in house prices, the second problem is

where the interest loans for home purchases to be much higher. In other words, future

homeowners are forced to pay higher house prices and also followed by high financial

interest. According to Williams P. (2004), a proven that the low interest rate set by the

bank will influence the purchasing power of society, the small bank interest for housing

loan then the greater the ability and interest of society to have their own home.18

It is also influenced by the financial institution that sometimes too rigid in lending a

housing loans, which sometimes loans granted must be resolved in a short period, but the

amount to be paid by the middle income group draws too high for them.

According to DTZs study 2013, over the past 5 years, residential properties in Bandar

Enstek and under the locality of Majlis Perbandaran Nilai (MPN) is in the price range of

RM150,000 to RM280,000 has constantly been the most actively transacted property in

district of Seremban and greater Sepang area. Property of this price range is seen to be of

increasingly expanding market, from 30.56% in 2010 to a high of 45.66% in both years

17 Jane Brenan (1993) 18 Williams P. (2004)




10

2011 and 2012. This suggests that these price range could be affordability for the middle

income group as the price range is the most saleable property in Seremban District.

According to THPs Marketing and Sales Department, since early year 2010 to end year

2012, sales for the high-end products in Bandar Enstek has been encouraging as all of the

terrace house with the range price of RM160,000 to RM330,000 has achieved 70% -

85% take-up rate within 10 months.19

Since then, THP has launched large numbers of high-priced housing due to higher

purchasing power especially from buyers who live in the Klang Valley. The latest

launching for double storey terrace house with the size of 24x75 was offered with the

minimum price of RM450,000 per unit. This is because the type of affordable housing

that is priced around RM160,000 to RM280,000 cannot be offered by the developer

because of the rising land prices (which is capped at RM6 psf) and the increasing of

building construction cost.20

Based on the current price of double storey terrace house in Nilai dan Sepang, the price

offered by other developers are also quite high, resulting in THP take steps to maintain a

minimum price of not less than RM400,000 (from 2,500 square feet built up). Table 3.1

shown the analysis of prices for double storey terrace houses in Nilai and Sepang;

Table 3.1: Surrounding Price Analysis of Double Storey Terrace (similar product)21

No Location , Developer & Product Land area (sf) Built up area

(sf)

Price per unit

(RM)

1 Kota Warisan Sepang Gemapadu Sdn

Bhd (Palatial Link) 2 storey terrace

30 x 75 3,259 380,000

2 Kota Seriemas Nilai (Terreza) Double

storey terrace

22 x 70 2,142 420,000

3 Kota Seriemas Nilai (Alamanda)

Double storey Terrace

24 x 75 2,356 447,800

4 Nilai Impian Sime Darby (Delfina)

Double storey terrace

22 x 70 From 1,900 to 2,200

450,888

Source: Marketing and Sales Department, THP (2013)

19 Marketing and Sales Department, THP (2013) 20 Ibid 21 Ibid Kota Warisan, Kota Seriemas and Nilai Impian are the nearest competitor as they are also offer the same product and within a township development.




11

3.2 The increasing of Cost on Construction materials

The increasing of cost on construction materials is the second major issue and problem in

Bandar Enstek once new project parcel is being launched. The government has imposed

price controls on the prices of building materials produced in Malaysia. Therefore, there

is still a shortage of raw materials due to the rise in the construction industry. In addition,

building materials, the policy to limit the influx of imported building materials essential

to keep the local industry has resulted in the price of raw materials rise to the higher.

Value of construction work completed by the year 2010 is estimated at

RM57.00 billion a year. Based on these projections by Construction Industrial

Development Board (CIDB) in year 2010, the use of building materials such as cement,

iron rods, aggregate and sand is estimated to be sufficient to accommodate demand

period.22

Overall, prices of construction materials increased due to higher production costs include

the cost of construction materials, electricity tariffs, fuel costs, transportation and

payment of wages. 23

(Refer Figure 3.1, one of the materials involved in the increment)

22 Construction Industry Development Board - CIDB (2010) 23 Ibid

Figure 3.1: The graph shows

the increment the cost of

steel supply for the year of

2010. (Source: CIDB 2010)




12

The increment of construction material price can be divided into three categories as

Table 3.2 below:-24

Table 3.2: Construction Materials Involved in Increment of Cost.

Type of Material

Percentage of increment

More than 30% 10% to 30% 5% to 10%

1. Circular Iron 35%

2. Ready Mixed Concrete 10%

3. Agrigate 15%

4. Bricks and Buffle Wall 15%

5. Roofing materials 15%

6. Pipeline 15%

7. Metal based material 15%

8. Sand 20%

9. Flooring materials and wall finishes 5%

10. Sanitary equipment 5%

11. Glazing materials 5%

Source: CIDB (2013).

Based on the above data by CIDB, it shows that the incremental rate for the construction

materials per year is in the range of 5% to 30%. Therefore, the cost of houses is expected

to be increased as the price rising up. Based on information by THPs Contracts

Department, the inflation rate being used for their annual companys budget is capped

and locked at 10% per annum for the building construction cost. So if this scenario

happens, THP as the developer has to increase the housing price for a better profit

margin.25

4.0 Conclusion

According to Zainal Abidin Hashim (2010), affordability housing issue in Malaysia has

never dealt with in detail and specific study on affordable housing has been done. The

connotation on Rumah Mampu-milik which has been widely used by housing

developers is mainly their selling point without referring to any established facts or index

24 CIDB (2010) 25 Contracts Department, THP (2012)




13

as base point.26

In the case of Bandar Enstek, the term of affordable is very subjective

based the popular price range which is in line with the income levels of surrounding

community.

Problems in the preparation of affordable housing are also affected by population growth,

so that if housing demand is higher, will eventually create an increment in housing

prices. It is also usually followed by the inability of the community to have their own

house (Henry, 1997).27

This relates the provision of housing which can be referred as

commodities, where its highly influenced by the demand and supply.

Without an increase in the supply of housing that affordable, there will be significant

increase in house prices, for the housing supply is an important factor in controlling the

rising prices house (Williams P, 2004).28

However, the housing developer sometimes

having a dilemma situation whether to provide affordable house in addition to get a better

return or to sacrifice on social responsibility to the communities and society.

Turner, John FC (1967), accused the developers are the cause of increase in housing

prices that has to be borned by society, he stated that the architects, engineers and many

other professional occupations is working under the "White Collar" cost burdened to the

community.29

The government and CIDB should also look into the increment of the

construction materials and have to study on how to control the cost increment by the

construction industry that will affect the price of housing.

26 Zainal Abidin Hashim (2010) 27 Henry W. McGee, Jr. (1997) 28 Williams P (2004); 29 Turner, John FC (1967)




14

Rujukan:-

1) Zainal Abidin Hashim (2010); Harga Rumah dan Tahap Mampu Milik Rumah di Malaysia

Akademika 78 (Jan April 2010) Universiti Kebangsaan Malaysia (UKM)

2) DTZ Nawawi Tie Leung (2013); Proposal to Conduct Retail Market Study on Commercial

Land in Bandar Enstek; Presentation Slide to THPs Management (Private and

Confidential)

3) Dr Amita Bhide (1998); Linking Housing form to Housing Policy School of Habitat

Studies, Tata Institution of Social Sceince.

4) Construction Industry Development Board (CIDB), 2010; Koleksi Pertanyaan Lazim

Ekonomi Binaan; CIDB

5) Brenan, Jane (1993), 'Planning for Social Housing in London and the South East',

Planning Practice and Research, 8 (4), December.

6) Henry W. McGee, Jr. (1997); Equity and Efficacy in Washington States GMA Affordable

Housing Goal; Washington States Growth Management Act (GMA).

7) Williams P. (2004); The Australian mortgage and housing markets: a parallel universe

with the UK; CML Housing Finance Spring 2004 (www.cml.org.uk)

8) Turner, John F.C., (1976); Housing by People: Towards Autonomy in Building

Environments; London Boyars.

9) Operation Division, TH Properties Sdn Bhd Management Committee Meeting (MCM)

Report No. 3/2013 (2013).

10) Real Estate and Housing Development Association (REHDA) Melaka (2012); Buletin

Rehda (www.rehda.com/bulletin/12/bulletin-1210.pdf ); REHDA Southern Chapter.

11) Jabatan Perancangan Bandar dan Desa Semenanjung Malaysia (1997); JPBDs Doctrin

Principles; Kementerian Perumahan dan Kerajaan Tempatan.

12) Valuation and Property Services Department (2012); Laporan Pasaran Harta 2012.

13) Newspaper cutting; Sinar Harian dated 9 July 2013.

14) Information from Contracts Department, TH Properties Sdn Bhd (2012)

15) Information from Marketing & Sales Department, TH Properties Sdn Bhd (2013)

16) A.S Hornby & Asmah Haji Omar; Oxford Dictionary Compact Advanced learners;

Oxford Fajar.

17) Website www.oobject.com

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