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| Chang's Revelation |
I took this article from the online Sundaily dated 21 January 2014 which exposed another side of the construction industry and how it impact negatively on new pre-launch residential properties .
Here is it.
"Investor clubs are buying new houses en bloc from developers, leading to the sky-rocketting of house prices. Comprising groups of individuals, they are usually led by self-proclaimed property gurus who use their numbers to secure huge discounts from developers.
National House Buyers Association (HBA) secretary-general Chang Kim Loong (pix) claims some even get discounts as high as 25% on purchase prices.
This has resulted in developers passing on the "losses" sustained in those purchases to the average buyer in subsequent phases of the project to compensate for the reduced profits in the first phase.
Chang said that to his knowledge, there are at least seven such clubs in the Klang Valley. The HBA wants the authorities to investigate the growing number of such clubs in the Klang Valley area.
As at press time, REHDA had not responded to SunBiz's queries while the Minister of Housing and Local Government did not respond to calls for comment.
Bank Negara also declined to comment on the issue.
Chang said property gurus openly advertised, even showing off who "their" developers are.
"They say they 'front for them (developers)' which means the clubs already have deals with the developers," he told SunBiz.
"Such clubs have been mushrooming in the housing industry, manipulating prices by representing an average of 100 to 200 purchasers, even up to 500 buyers.
"Some even dominate 50% of housing units and commercial development."
"The modus operandi of the operators of these clubs is to negotiate as a block purchaser with cash-strapped developers and bargain for pre-launch discounts of up to 25%," he said.
Developers, for example, fall in with the plan in order to draw-down on bridging loans from banks, where, in most cases, they will only be allowed once 50% of the project is taken up.
"So here, they've got these purchasers who say they will buy en bloc, up to 50% or 60% of the units with a certain discount.
"They may ask for a 25% discount, which is a lot, and the developer may agree, but the property 'gurus' may not tell their members they have got a 25% discount. They tell their members that they got a 15% discount, even better than the bumiputra discounts of 7% for housing and 10% for commercial (units)."
Chang said buyers get excited when they see the discount but they do not realise that the other 10% has been pocketed by the property gurus."
