The Causes of Abandoned Housing Projects

There are many causes leading to this problem. Most sources are clearly coming
from certain quarters. While there are sources that do not get attention or study.
These include bureaucracy, transparency, professional negligence and legal
problems will be discussed in the next topic.

In summary the general causes that lead to normal or abandoned projects are:

i. The Developer

ii. the Contractor

iii. Financial Institutions

iv. Environmental factors

v. Government Bodies

i.The Developer

The developer is often the main cause contributing to the abandoned housing
projects. The problem that arises often is:

Lack of feasibility studies in respect of the suitability of the project location.

Developers are often influenced and too dependent on rumors the government
to provide infrastructure such as roads connecting to the highway, the
government projects or private development the future in the vicinity of housing
projects and many more. Developers are also less sensitive that the
government's policy change from time to time and so did the real estate market
is greatly influenced by political factors, economic and social development. If
the facility is not guaranteed to be done or changed to another it will lead to a
housing project abandoned due to lack of buying interest.

Application developers to get the loan (bridging loan) by the bank without
approval. Technical and financial proposals submitted to the bank did not
convince the banks to lend. This includes the project due to non-competitive
and high risk. Irresponsibility and only concerned with bottom-line profitability.
There are some developers who just want to make money in the short term.
Construction site conditions at a high cost because of certain barriers during
construction. This is due to the initial feasibility study as a review of the project
site is not made to take the possibility that restriction.
 Personal disputes between landlords and developers. Some land was very
difficult problem be solved, especially when it involves inheritance. Disputes
among family members during the process of selling land complicates the
developer because the developer has started to advertise homes for sale,
although the case are pending land. Weakness and negligence in the
management organization of the developer. Weaknesses when planning and
control is closely related to the failure to complete the project within the
deadline. Not all late projects will be abandoned, but some can lead to a
problem.

Home that cannot be sold by the developer is largely due to the absence of
Certificate of Fitness (CFO). This Certificate is issued by the Ministry of
Housing and Local Government as a sign of approval or notification that a
home safe from harm and can be occupied by residents. Among the matters to
be considered in the award of this CFO is the quality of materials used and the
durability of the building to accommodate residents. Sometimes, the CFO is
slow or fail, because the irregularity or fraud work in approving the housing
project. This will cause the user does not want to buy a house because they
fear their safety and lives are threatened.
ii. The Contractor

The contractor is also a reason to stop the project resulting in management

problems and financial sectors. This is due to inability to meet the needs of a
construction material costs and also payment of wages. Progress payment
network from the developer is also the main cause of the contractors have little
capital flow cycle. If the contractor has no credit facility, it will inconvenience the
financial practices of contractors and sub-contractors suppliers.

Several factors are identified as the main obstacle to increasing efficiency

and effectiveness of financial management on behalf of the contractor. This
problem requires a systematic approach, efficient and effective in addressing
the problems of financial management of the contractors.

iii. Financial Institutions

Financial institutions, especially the banking sector is the most important

institutions in the construction industry in Malaysia. Banks need capital injection
system, and the merger to strengthen its operations in the country. High interest
rates charged by financial institutions to reduce interest on loans to home
buyers. The rate of interest charged on loans changing from time to time.
Sometimes high and sometimes low.

Usually when the economy into recession, the inflation rate is high, interest
rates on loans are high. High rate of interest makes it difficult for buyers and
developers because of the strict criteria of loans by banks. If the buyer and the
developer to borrow at high interest rates, payment of interest on loans is also
high. Upon payment of the interest rate increase, cost management and
operations of the company will increase and this reduces the profits of
developers.

In addition, the costs involved, such as price of homes that are placed by the
developer of the houses were built high and probably too expensive for
individuals with low and middle income. This happens so because the raw
materials used, such as cement, steel framework, and sand purchased
wholesale price for the current market price. Therefore, to get a capital return,
the developer had to put prices in line with the construction costs. These high
prices make it difficult or moderate-income residents of low to have a home for
them, for fear that their spending would exceed budget. Therefore, the
developer has put a fair price for Malaysian society low and middle income can
afford to own their own home.

iv. Environmental factors

 Non-strategic housing also affect the sale of a house. Typically, the
developer will make the land or the new site, located on the outskirts of town or
away from the city as a new housing area. This happens so because, in the
area is open land, vast and there are no more people who occupied it.

However, new residential areas often do not have the infrastructure or the
physical infrastructure such as roads, public transport, schools, shops and
clinics. In addition, the distance from the city or place of work improving the
refusal of society to buy the house. Finally, the new residential areas continue
to be a white elephant project is abandoned without a buyer, thus to the
detriment of the developer.

v. Government Bodies

Government tax revenue is also affected trace when the houses do not sell
well in the market because the developer did not return as a result of targeted
houses cannot be sold at full price. So, the developer cant pay profits tax that
will be used to develop the country and can be used by the people. In addition
to government revenue will decline, there are some workers who had to stop
the housing company employees and this is certainly cause problems for the
retrenched workers. Therefore, the standard of living should be increased in
line with the times of the decrease and its impact will be felt by the people of
Malaysia.