GEORGE TOWN: Affordable housing, widely sought after by the growing middle-income group, has led local developer Aspen Group to launch the first affordable development project to cater to this community.
Its chief executive officer Datuk Murly Manokharan said unlike other developers that incorporate low or low-medium cost homes within their projects to fulfil the quota, Aspen was the first to focus on only affordable homes.
“As a business entity, we have been told that there was a variety of pricing for affordable homes. It was either RM500,000 or RM400,000.
“We see RM300,000 as affordable and have worked with the state to achieve this. We were not asked by the state to build these homes, but we see this as a necessity.
“It does not bring us huge returns but if planned well and with the right landbank, we can achieve returns according to the economies of scale,” he said.
He added that the company is also looking at making affordable homes its core business.
“There is a huge demand for this sector. Though we are new and small, we have no commitments to shareholders. We are happy with smaller profit margins.
“This is a deliberate business model. We are looking at a gross development profit of RM400 million,” he said, adding that the company would utilise Singapore’s Housing and Developmet Board (HDB) model with further fine-tuning.
He said a 0.6km road from the present Mount Erskine market would be built as an alternative access road connecting its development.
The project called Tri-Pinnacle on Lebuhraya Halia, Tanjung Tokong will feature 390 low medium cost units of 650 sq feet priced at RM72,500 each and 859 units of affordable units of 800 sq feet costing RM299,000 each.
The property to be sited on a 4ha piece of land behind The Peak development by Ivory Property would begin in the third quarter of the year with a RM95.5 million Islamic financial facility from the Malaysian Building Society Berhad (MBSB).
Established in 2013, Aspen has projects with a gross development value of RM8 billion that would be developed over 10 years including its Vision City in Batu Kawan that is anchored by Swedish chainstore, Ikea.
Murly said Aspen aims to change the perception that low medium cost units are plagued with problems.
“A lot of effort has been put into the design to ensure internal and external qualities are met, including facilities, making it similar to the condominiums one would find in town.
“We are also looking into upgrading the low medium cost in terms of design and outlook, and there is the cross subsidy element between this and affordable units,” he said.
Speaking at a press conference after the signing ceremony between Aspen and MBSB, Murly said in order to reduce the building cost, there would only be one category for low medium cost and affordable units, respectively.
Asked if there were any incentives by the state for carrying out a purely affordable housing development, Murly said speedy approvals were the only incentive.
The units are available to those registered with the state’s affordable housing eligibility board, he said, adding that there were 30,000 people on the state’s list.
“There is only so much the state can do on its own and that is why they asked private developers to help,” he said.
Meanwhile, MBSB president and chief executive officer Datuk Ahmad Zaini Othman said loan packages would be made attractive for buyers but they are free to seek their own financial arrangements.
“We are mindful that these are affordable houses so the package ought to be competitive and not be too pricey and we will put in more protection such as insurance schemes,” he said.
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This article first appeared in The Edge Financial Daily, on May 29, 2014.
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