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GIB1002

DECEMBER 2016

TITLE: CONCEPT AND PROCESS OF REAL ESTATE


DEVELOPMENT IN MALAYSIA
GIB1002: INTRODUCTORY REAL ESTATE DEVELOPMENT
AND MANAGEMENT

Nur Ina Binti Ujang

AEC150006

Syafiqah Aqilah Binti Mohd Isa

AEC150013

NurAwatif binti Ishak

MEB150027

Chieng Siew Hee

CEA130011

Nur Aishah binti Jaafar

SEW150047

Table of Contents
Cover Page 1
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Table of Content.2
1.0 Concept of Real Estate Development

1.1 Meaning or the Real Estate Development

1.2 Purpose of Real Estate Development and Initiator of Real Estate Development .......3
1.3 Initiator of Real Estate Development.4
2.0 Introduction To Process of Real Estate Development..
4
2.1 Pre Development Stage
..7
2.2 Development stage..8
2.3 Post-development stage..9
3.0 Example: A Case Study In Pulau Duyong, Kuala Terengganu
........9
References........12

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1.0 CONCEPT OF REAL ESTATE DEVELOPMENT


1.1 Meaning or the Real Estate Development
Real estate is property consist of land and physical properties such as buildings, housing and
structures on it together with the natural resources of the land.
The real estate development is making new built environment which is beneficial to the
surrounding or society from a raw material. Linchfield (1996), claimed that the land
development happens when a land initially for the purpose of agriculture turn to urban areas.
It is for the purpose of satisfying people need, maintaining the environment and laid out good
social accessibility and heritage values.
1.2 Purpose of Real Estate Development and Initiator of Real Estate Development
The purpose of real estate of development consists of four.
First, provide the facilities to the society. In order to fulfill basic necessity such as
shelter and provision, real estate takes place to set up buildings or property. Having a social
life also needs and wants that play a big role in societys life. Furthermore, providing space
for activities such as agriculture, business, leisure, and worship are crucial are a must.
Second, it is the symbol of wealth of a country. It attracts foreigner to do so when
visiting a country. The more property has been selling, the more benefits are gaining through
it. Moreover, it automatically will increase the value of a property along with the standard
value of property globally. Besides that, it will help in developing countries to a better
prospect economically.
Third, sustainability and environmental issue.

Real estate also contributes to

environmental impacts which are the green house that affects societys life. In order to sustain
and create a better environment, real estate must develop buildings or infrastructures that
focus on improving land use policies and regulations.
Fourth, it will create more business. As investment generates money, it brings
opportunity for those who passionate in investing in real estate. Real estate creates more
business as people can start their own real estate company after experiencing in buying and
selling property.

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In conclusion, the purpose of real estate development brings benefits to human and
ecology needs. The basic forms or purpose of real estate must take into consideration in order
to have a better settlement.
1.3 Initiator of Real Estate Development
First and foremost, government. The government has established policies that need to
be fulfilled by a person before government takes account on his proposal or in another way,
to approve before proceed to the next step. Other than that, rules and regulations must be
followed to prevent any misuse in real estate and also to standardize the usage of concepts of
real estate.
Next, finding the developers or initiators in helping to complete the investment is
needed. Initially, they corporates with the bank or financial institution to complete the basic
process of buying and selling in real estate.
Moreover, local communities also play a role as the initiator. Two things that need to
be considered which no private profit is and meet the needs of society. Find out whether there
is private profit is going on within the community and consider the needs that develop by the
real estate authority. For example, sustainability of environment and the harmony within local
communities.
Lastly, land or property owner. It includes land that belongs to land or the land
owners, such as the buildings, or structures that permanently affiliates to the land and it also
consists the certain rights that associate with the land or the land owner which are interests,
benefits and rights in order to have rights to live on the property in specific time or in the
future.
.
2.0 INTRODUCTION TO PROCESS OF REAL ESTATE DEVELOPMENT
Developmental process can be divided into 3 major stages:
i)

Pre-development stage, which comprised of idea initiation, investigation of site,

ii)

acquisition and financing.


Development stage, which comprised of tendering, construction, project managers,

iii)

leasing, financing and sale.


Post-development stage, includes transfer of the property to the owner.

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(Figure obtained from http://www.slideshare.net/rehdamalaysia/malaysian-propertydevelopment)

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2.1 Pre Development Stage
There are 6 stages of pre-development in real estate which made up of the initiation
stage, evaluation, acquisition, design and costing, permissions and commitment.
For the initiation stage, an initiator who can be the landowners, public sector and
government agencies looking for the suitable land for more intensive use or demand for a
particular use.
Next, at the evaluation stage, developer need to conduct market research and follow
the guidance from financial appraisal throughout the process. At this stage, the developer is
supported by a professional or an economic consultant in the person of registered property
valuers or appraisers.
Following by the stage of acquisition whereby the legal investigation of the site on
issues such as land ownership and planning permission are done thorough assessment on the
physical attributes and capabilities of the site to accommodate the development. The
developer can either carry out the legal investigation of the site on its own or engage a
solicitor to conduct the task.
Next is the design and costing stage. This is the stage where the preparation of plans
and cost estimates for the proposed development is undertaken. At this stage, if the developer
is a large corporate entity already having the qualified professional staff in its stable.
Architects also play role in this stage by designing the appearance and construction of new
buildings and refurbishment of existing building whereas quantity surveyors advise the
developer at this stage on the likely costs of the total building contract and associated costs.
Permissions is the stage where statutory planning permission from the local planning
authority before commencing with the actual development is obtained. In some cases and
depending on the original status of the acquired land, the landowner or developer has to apply
from the state authority for conversion and sub-division of the land before the land can be
developed.
Planners in the form of politicians are responsible for approving the development
plans drawn up by professionals in accordance with policy which they have earlier set down,
and approving and refusing the applications for permissions for development proposals.
Planners in the form of professionals or Planning Consultants on the other hand come up with
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the development plans on behalf of the developer and the ones who will negotiate with the
local planning authority as to the permission that allow for the highest and best use
development particularly with large or sensitive schemes.
Commitment is the final stage of the pre-development in real estate. This is the stage
where the land development starts to materialize in the form of signed agreements on matters
such as inputs of land, finance, labour and materials and statutory permissions. Lawyers /
solicitors in overseeing the signed agreements, tenders and contracts between the developer
and building contractor and its professional team of consultants such as architects, quantity
surveyors and engineers.
2.2 Development stage
Construction is considered to be the most complex stages among the land
development process. Design skills, financial feasibility and legal considerations are required
in the most of the construction projects. They need to tolerate among themselves to make the
construction projects successful.
Before the commencing of construction, the real property developer should apply the
developer licenses. Developers need to ensure that their licenses are kept active until the
issuance of certificate of completion and compliance (CCC). Next, developers should be
more responsible by applying for the sales and advertising permit from the National Housing
Department (NHD). Developers will face legal action if they advertise their projects in
newspapers without getting the necessary permits from the National Housing Department
(NHD).
The construction projects may take time to be completed from the range of 24 to 36
months. During construction period, they can apply for the bumiputera quota release if they
found out that reserved slots for bumiputera still are not yet being sold out. After obtaining
the Certificate of Completion and Compliance (CCC), they can release the reserved lots for
bumiputras to non-bumiputera. Sale and Purchase Agreement (SPA) also have been imposed
for safeguarding the interest of the purchasers.
During the post-construction stage, there will be an issuance of the Certificate of
Completion and Compliance (CCC) by Professional Architects and Professional Engineers as
well as Building Draughtsman. It replaces the Certificate of Fitness for Occupation (CFO)
which are issued by the local authorities.
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Next, the developer must begin the process of applying for subdivision of the
building. Developer should apply and obtain a Certificate of Proposed Strata Plan (CPSP)
from the Director of Survey in JUPEM. Developer also must apply for Strata Titles within
one month after the issuance of CPSP. PTG (Land and Mines Office) will approve the
application by register the Strata Title and issuing to the developer. Developer will send the
Strata Title and vacant possession to the purchaser. Memorandum of Transfer will be
executed to transfer the property to the buyer. Lastly, there will be closing or withdrawal of
surplus of Housing Development Account under HDA Regulations 1991.
2.3 Post-development stage
The post-development stage is the period when the project is almost finish is available for
customers. The cost during this stage, such as salaries and wages, cleaning, security, utilities,
water, and real estate taxes, and expensed required.
This is the activities in this stage. There are ongoing marketing and leasing, finding a
buyer, if not done earlier, determining a hold strategy, if not selling, ramping up property
management and achieving stabilization.
All of those stages mention above are the stage which encompass the process of the real
estate.

3.0 Example: A Case Study In Pulau Duyong, Kuala Terengganu


Pulau Duyong is located in Kuala Terengganu, Terengganu. It consists of villages that
showcase traditional Terengganu architecture, Duyung Old Fort (Traditional Malay palace),
traditional boat making workshops, resort, food outlets and others. In 2005, the state
government had spent a lot of expenditures for the very first Monsoon Cup an international
yacht racing that was being hosted here, and it has been an annual event till now. The land
of the island is about 82.315 hectare, including 30.8 hectare of the government land. Pulau
Duyong consists of 342 lands lots and about 3,700 residents are currently staying in this area.
The density of residents are the least crowded compared to all other districts in Terengganu.
The average density of residents in Pulau Duyong is about 72 residents per hectare. In 1996,
Pulau Duyong is managed by Kuala Terengganu City Council. Due to some political issues,
the development in this area has been affected. The houses and roads developed are not wellorganized and poorly managed by the council.
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Factors of redevelopment such as behavior of the landowner and residents of Pulau
Duyong may give a big impact and obstacle to the development. This case study conducted in
Pulau Duyong is due to its strategic location. Pulau Duyong has a lot of benefits to the boat
industry as it is surrounded by the sea. The location is very strategic to the Central
Administrative Centre of Terengganu.
The arrangement of the houses in this island are very poor. The houses are scattered
all over the lands. As the time pass by, the local authorities become more responsible, the
land property in Pulau Duyong are well-organized and well-developed. Each houses are
provided with electrical and water supply for 24 hours a day. Other facilities such as school,
mosque, community hall, government clinics and library are built as well.
Starting from 2004, there are a lot of redevelopment and newly development
proposals that has been planned by the local authorities. The fisherman villages are
redeveloped to occupy the land in a well-arranged manner. In 2002, Mara Shipyard and
Engineering (MSET) had opened their shipbuilding industry in Pulau Duyong. Around 2007,
the development of affordable houses had increased.

Figure 1 The new progress of Pulau Duyong


About 52.88 acres of land has been proposed for residential development not only for
the local residents, but they are offered to be owned by the public as well. Therefore, this will
improve the market property in Pulau Duyong. The development of chalet, resort and
homestay is a good way to increase the property value and promote this island as a tourist
destination in the future. Besides, other development such as commercial shop, food court,
wet market, recreational center also contribute to the success of this island.

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Figure 2 Duyong Marina & Resort, Kuala Terengganu

Based on the case study in Pulau Duyong, the concept and process of real estate development
will be further elaborated and explained.

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Reference
1. (Real Estate, 2016)
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the risks and milestones. Retrieved December 6, 2016, from
https://www.crowdstreet.com/education/article/real-estate-development-processunderstanding-risk/
3. CrowdStreet, I. (2016, May 5). The real estate development process: Understanding
the risks and milestones. Retrieved December 8, 2016, from
https://www.crowdstreet.com/education/article/real-estate-development-processunderstanding-risk/
4. Devine, A. (2014, March 27). The development process step by step: 20/10/2011.
Retrieved December 6, 2016, from
http://www.yourinvestmentpropertymag.com.au/property-development/thedevelopment-process--step-by-step-20102011-119088.aspx
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December 8, 2016, from http://www.nilaiharta.com.my/view/land-developmentprocess-and-property-development
6. Land Development Process in Malaysia. (2016). Nilaiharta.com.my. Retrieved from
http://www.nilaiharta.com.my/view/land-development-process-in-malaysia
7. Loh, D., & Debbie Loh. (2010, February 5). Alan Chu. Retrieved December 6, 2016,
from http://www.slideshare.net/rehdamalaysia/malaysian-property-development
8. Loh,. (2016). Malaysian Property Development. Slideshare.net. Retrieved from
http://www.slideshare.net/rehdamalaysia/malaysian-property-development
9. Mohd Zaid Abdullah., & Ismail Omar.,. (2012). Pembangunan tanah & halangannya
(1st ed.). Johor Bahru, Johor: UTM Press.
10. Pulau Duyung, Kuala Terengganu, Malaysia. (2016). Backpacking Malaysia.
Retrieved from http://www.backpackingmalaysia.com/things-to-do/pulauduyung/kuala-terengganu
11. Real Estate (2016). Retrieved from
http://www.investopedia.com/terms/r/realestate.asp
12. The basic real estate development process. (2014, March 4). Retrieved December 6,
2016, from Uncategorized, http://dev-tips.com/basic-real-estate-development-process/

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