An Assessment of Malaysian Property Development: The Cost Components and The Economics Activities
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Abstract
Housing is crucial for fulfilling basic human needs because it has a significant impact on the growth of a country and is essential for creating inclusive and sustainable cities. Despite its importance for human well-being, Malaysia’s housing median multiple affordability score is classified as seriously unaffordable, leading to a lower rate of homeownership compared to other emerging nations. This study seeks to refute the housing development cost components and their associated economic activities, which are classified based on land costs, hard costs and soft costs. By analysing the cost components separately, it is possible to identify the main factors that contribute the most to the overall cost breakdown. This allows for a clear understanding of the economic activities associated with these significant cost components. By doing so, the hidden expenses and economic activities associated with property development can be determined. This research was conducted using case studies, document surveys and interview methods, which were subsequently analysed using content analysis. A total of 57 case studies from 6 distinct regions were obtained. The data confirmed that hard costs accounted for most of the gross development expenses, with land costs and soft costs following in order of importance. The distribution of land costs and soft expenses, which can be significant, were influenced by project characteristics, location, ownership and compliance rules. These factors vary depending on the locale and the specific needs set by local authorities. The assessment included the economic activities that generate the cost components. This will help industry players conduct feasibility studies to achieve process coordination and cost transparency, reducing uncertainty.
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