Malaysia has rather a lot of developers, which is great – after all, we need people to build our shiny new properties to keep up with the demand. But the innumerable property developers can create quite the challenge, especially when it comes to identifying the bad eggs in what is (generally) a well-respected industry.
Buying property is one of the most significant financial investment in an individual's life. That’s true whether you’re an excited homeowner purchasing your first home, or a keen property investor expanding their extensive portfolio.
Whichever side of the industry fence you sit on, you want to know that the money you shell out is going towards an asset that’s worth the value you’ve paid. So how do you find the right property developer in Malaysia?
In the interest of avoiding properties where the price (and maybe your furniture!) could quite literally fall through the floor, here are some essential steps and cautionary considerations when buying your property.
Caution And Consideration When Purchasing A Property
You wouldn’t rush into a swimming pool without knowing how deep it is, so why would you rush into a huge financial investment without testing the waters? If you want to avoid sinking into the murky waters of a bad property investment, it’s important to take time and consider the right steps.
- Do your research: This is the most important part of any property purchase, whether that’s a question of price comparisons or the quality of a developer. Always take time to research and consider the developer in question. Large developers with reputable track records will have a substantial online presence, clearly showing the work they have completed in previous developments. You can use this to measure how comfortable you will be using these developers.
- Check the blacklist: The Malaysian Ministry of Housing and Local Governmentcompiles a regular list of blacklisted developers (you can see more below). They call it a blacklist for a reason – which means you should avoid purchasing properties from anyone on this list. The chances are you’ll end up paying with more than just some lost Ringgit, but a whole lot of heartache on top!
- Don’t just internet: We get it, the internet is great! One minute you’re watching videos on YouTube and the next you’re reading an awesome article about the property market on PropertyGuru. But you can go beyond the internet! A true property development should have physical evidence, like, you know, the site of a building being constructed. Don’t be that mad internet investor who hands over your life savings to some unknown developer without having seen some evidence that a property will actually be built.
- Request company details: Dodgy developers will unfortunately be set up as private companies, meaning they’re not obliged to disclose company information to the public. But a clever buyer can discover a bit more by applying to the Companies Commission of Malaysia (SSM) for company details. That might help with your research by finding out just who is behind a development company. If it turns out the company director has a whole list of failed companies and bad investments behind him, it’s probably better to find out in advance.
- Ask if it’s too good to be true: One of the ways that bad developers lure in unsuspecting investors is with an offer that seems too good to be true. If you’re being offered a two-bedroom condo unit in Mont Kiara for RM300,000, someone either forgot about an extra '0', or isn’t telling you the truth. Always ask the question if it’s too good to be true, and take time to find out why if you’re worried.
- Trust a professional: If you’re in doubt about a property purchase, maybe it’s time to speak to the professionals? When it comes to real estate agents and negotiators, you can always check for a registered industry professional with a reputable industry body like the Malaysian Institute of Estate Agents (MIEA). They’re going to be in a better place to offer informed insight, rather than a quick search on the Lowyat forums.
What Bad Practices Should You Look Out For?
Just like you can tell a bad egg by that terrible smell, you can get a whiff of dodgy developers in the real estate industry with some clear signs of bad practice. There are a number of bad practices which are widely shared by poor developers, with four key areas identified on the Ministry of Housing and Local Government’s list.
1) Property Developers Without Licenses
Every property developer in Malaysia should operate with an Advertising Permit and Developer’s Licence (APDL). If they’re not, they aren’t legit!
An advertisement by a property developer should include the APDL. This APDL will reveal a validity date that should apply to the project, confirming it has been given permission by the Ministry. If you have any doubts at all about whether this is valid, take a note of the APDL number and contact the Ministry to confirm.
Sure, you might have to wait on hold for some phone calls, but you could discover you’ve saved yourself a magically vanishing RM10,000 deposit to a questionable developer. There were 91 developers on the blacklist for failing to have a license, and here are just some of them:
- Aghniyak Builders Sdn Bhd
- Happy Home Development Sdn Bhd
- Intelligent Mission Sdn Bhd
- Juwasa Hikmat Sdn Bhd
- Kompobina Sdn Bhd
- Oridua Construction Sdn Bhd
- Paragon Nova Sdn Bhd
- Pembinaan Ls Sepakat Sdn Bhd
- Ummah Cemerlang Sdn Bhd
- Zest Properties Developer Sdn Bhd
Check out the full list here (updated as of 15 April 2019).
2) Property Developers With Abandoned Projects
The reason a project is abandoned can vary, from poor management to downright fraudulent activity. Some dodgy developers never really intend to finish a project at all, they just take big upfront payments from unsuspecting investors and run off with the money. Many abandoned projects are just down to inexperience and failure to hedge against changing market conditions.
Make sure you’ve got faith in a developer’s ability to truly deliver on a project. Big name developers often have the experience and financial capital to add that additional level of security to your property purchase, with far less chance of a project being abandoned due to the company going under.
That’s not to say you should ignore smaller developers, but it might raise the risk and inspire you to do even more in-depth due diligence. Remember to research! The blacklist included 169 property developers responsible for abandoned projects, and here are just some of them:
- Bahagia Indah Properties Sdn Bhd
- Conci One (M) Sdn Bhd
- Evergreen Acres Sdn Bhd
- Ganda Selat Sdn Bhd
- KA Resources Sdn Bhd
- Linear Legend Sdn Bhd
- Mekar Kota (M) Sdn Bhd
- Peter's Brickworks Sdn Bhd
- SL Work Force Development Sdn Bhd
- Tang & Lee Development Sdn Bhd
Check out the full list here (updated as of 14 June 2019).
3) Property Developers That Didn’t Honour Tribunal Claims
An important part of the grievance process to hold poor developers to account is the Tribunal of Homebuyer Claims. This body was introduced in 2002 to oversee legislation under the Housing Development (Control and Licensing) Act 1966.
This tribunal is a simplified dispute process to allow claims by homebuyers for developers failing to deliver on promised properties or breaches of the Housing Development Act. It costs just RM10 to lodge a claim, although claims must be for a value less than RM50,000, and the decision constitutes a legally binding court order.
Although it’s worth noting there is a 12-month period from receiving the CCC or expiry of the defect liability period to lodge a claim.
Unfortunately… this still doesn’t stop some developers from failing to abide by these judgements. If a property developer is blacklisted for failing to honour tribunal claims, you can get a good kind of indication what kind of developer might be. There were 312 developers on this part of the blacklist, and here are just some of them:
- Anglo Ventures Sdn Bhd
- Benih Murni Sdn Bhd
- Coral Lane Construction Sdn Bhd
- Ever Nobel Sdn Bhd
- GYC Development Sdn Bhd
- Indera Development & Construction Sdn Bhd
- Juwita Kasih Sdn Bhd
- Kansas Corporation Sdn Bhd
- Mujur Sepakat Sdn Bhd
- Oxbridge Heights Sdn Bhd
Check out the full list here (updated as of 14 June 2019).
4) Property Developers Who Failed To Settle Compound Payments
Compounds are an additional fee imposed on developers for breaking the law. That means a developer who failed to settle compound payments not only breached a legal duty, but then followed up by failing to pay the penalty for it.
That doesn’t sound like the kind of developer we'd feel happy with, building our dream home! There were 474 developers on the blacklist for failing to settle compound payments, and here are just some of them:
- Genting Global One Sdn Bhd
- Kupang Indah Development Sdn Bhd
- Morubina Sdn Bhd
- Peter's Brickworks Sdn Berhad
- QR Development Sdn Bhd
- Sweet Harvest Development Sdn Bhd
- Usbu Juwana Development Sdn Bhd
- Winfast Corporation Sdn Bhd
- Yontec (M) Sdn Bhd
- Zaza Property Sdn Bhd
Check out the full list here (updated as of 14 June 2019).
Dodgy developers are a scary prospect, but don’t stress out too much! Malaysia’s construction industry is blessed with a wide range of great developers offering fantastic properties for you to explore. Why not explore this great list of new developments and find the right property for you?
