Property
Moving into uncharted waters
Joseph Wong 
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Most people would frown upon the idea of integrating social (affordable) housing with high-end residential developments.

One of the main reasons many would oppose such integration projects is the impact on property valuation.

Integrated living structures would however see a narrowing of the social divide between the poor and the rich.

Integrated housing projects are more prevalent in developed nations like the United Kingdom (UK), but modified versions are starting to emerge within the Kuala Lumpur city centre.

An integrated living concept would mean that buyers in this market segment can afford a home and enjoy the facilities and close amenities that the project may offer, says a property observer.

“The lower income group in normal circumstances cannot afford homes closer to the city or in higher end developments,” he says.

Already, local property developers are starting to allocate parts of their development portfolio for social housing to cater to the lower income group, particularly the B40 segment, which is the bottom 40% of households with monthly income of RM3,900 and below.

What is normally undertaken by property developers that are developing huge parcels of land is to separate the social housing which are the low-cost component into an obscure location that has the lowest property value.

In some extreme cases, the low-cost housing components are built in an entirely different location.

This naturally defeats the purpose of social integration.

“When you look at social housing, you have to take into consideration three things - shelter, protection and a sense of belonging to the community,” says property online portal PropertyGuru Malaysia country manager Sheldon Fernandez.

“As Malaysians, we are taught from day one to buy houses by grandparents and parents. The moment you get your first pay cheque, they will tell you ‘buy a house,’” he says.

But the reality is that young prospective buyers will need time to build up their financial standing in order to qualify for housing loans.

The rich-poor divide in society cannot be bridged merely by building more social housing on prime land, says another property player.

There has to be a pragmatic approach with government intervention to help foster closer relations between those who live in public and social housing and those in private homes, he says.

He refers to a recently published paper by Singapore’s Lee Kuan Yew School of Public Policy which notes that over 70% of housing in the central area of Singapore are private compared with about 23% in other parts of the island.

The author of the paper states this “could exacerbate household income differentials as well as spatial segregation by income over time” as Singapore’s Housing Development Board residents may drift towards the lower-paying jobs found closer to their homes.

“Those in favour of blended communities cite social cohesion and mobility as key concerns,” he says.

In the worst case scenario, market-driven segregation would lead to the creation of exclusive enclaves, widening the rich-poor gap, says the property player.

In the UK, for example, social housing offers low rents to those who are most in need or struggling with their housing costs.

This role is normally undertaken by local councils and not-for-profit organisations such as housing associations.

However, social housing is not meant for simply everyone who meets the criteria.

The landlord of a private unit normally lets it out to tenants of his choice but social housing is distributed according to the local council’s allocation scheme.

Under UK’s Localism Act 2011, councils can decide who is or isn’t eligible to go on the waiting list for social housing.

Of those who meet the council’s criteria, legislation requires that certain groups be given ‘reasonable preference,’ according to Shelter, a registered charity that campaigns to end homelessness and bad housing in England and Scotland.

 

Social landlords

Social housing is owned and managed by registered providers, often known as social landlords, and are the bodies that own and manage social housing.

“They tend to be non-commercial organisations such as local authorities or housing associations.

“Housing associations are independent, not-for-profit organisations that can use the profit they make to maintain existing homes and help finance new ones.

“It is now possible for commercial organisations to build and manage social housing, although this is not yet common practice,” it says.

Social housing is regulated in the UK and registered providers are financially regulated and funded by the government through their Homes and Communities Agency, which is responsible for the construction of new social homes, and overseen by the Department for Communities and Local Government.

In Malaysia, the concept is different as the government focuses on ownership rather than the rental market, says the property observer.

“Even the rent-to-own has an end-period for the renter to buy the home they are renting over a prescribed time period,” he says.

That said, several developers are looking at integrated living.

 

Setting the standard

One development may set the standard for integrated living - UDA Holdings Bhd’s Legasi project, developed at a former hawker site in Kuala Lumpur.

It offers 636 units of apartments, 43 retail units and office space with a gross development value (GDV) of about RM435 mil.

Of the total units, Legasi Residensi, a Rumah Wilayah Persekutuan (Rumawip) project, will involve 206 apartments, measuring 807 sq ft with three bedrooms and two bathrooms and sold at RM300,000 each, according to former Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansur at Legasi Residensi’s launch.

The project is a part of the bigger transit-oriented development (TOD) located next to the Kampung Baru light rail transit station in Kuala Lumpur.

“As the units are located in the same building with those priced at market value, the owners will be able to enjoy the same facilities, which include playground, gym, swimming pool, library and BBQ area,” he says.

“Whether it succeeds or fails will depend on the owners’ interaction within the development. Certainly, there are many questions, especially with the Strata Management Act 2013 coming into force.

“Among them, how will the maintenance fee be apportioned given the sharing of facilities?

“Will the property see a slower appreciation value given the market perception of being tied to a Rumawip?

“Should more developers take a closer look at such integrated living project and improve on the concept?” asks the property observer.

As for Platinum Victory Holdings Sdn Bhd, it has a 33-storey block Vista Langkawi, which is a Rumawip project. This project is located next to Platinum Victory’s latest development, PV18 Residence in Setapak, Kuala Lumpur, which caters mainly to middle income buyers.

“We are obliged to build affordable homes as part of the project because the property exceeds five acres. This is a standard practice as required by the government and this is not the first time we have constructed such projects,” says executive director Gan Yee Hin.

PV18 Residence, which is on a 2.25ha leasehold land parcel along Jalan Langkawi, next to Danau Kota Lake, consists of two towers.

The RM590 mil development comprise a 40-storey Block A with 32 residential floors of 10 units per floor, totalling 318 units and a 42-storey block comprising 34 residential floors of 16 units per floor, totalling 534 units.

Offering 852 units with built-ups of 1,021sq ft and 1,219sq ft, prices start from RM473,000, which is lower than the average transacted price of RM519,166 for non-landed properties.

Vista Langkawi will have 25 residential floors of 16 units per floor, totalling 398 units, each with a built-up of 926 sq ft, he says. Like PV18 Residence, the first eight floors of Vista Langkawi are a car park podium.

“[But] there are no facilities at Vista Langkawi to keep maintenance low,” he says.

Pointing to the scale model, he says the three towers look connected but in reality, they are separated from PV18 Residence with separate entrances.

Essentially, the wider objective of integrated living should be to create shared amenities and spaces in central areas that can facilitate social interaction on a daily basis, says the property observer. Integrating social and private housing wherever possible creates the basis of a single spatial community that is not closed to the lower income group, who form the majority of the population, he says. FocusM



This article first appeared in Focus Malaysia Issue 297.