Property developers said that the first half of 2022 (1H2022) had an average 17 per cent increase in business costs, which had an impact on their cash flow.

According to Datuk NK Tong, president of the Real Estate and Housing Developers' Association Malaysia (Rehda), 82 per cent of the 150 respondents to the Property Industry Survey 1H2022 issued today, said that their cost of doing business has gone up.

Building materials, labour, compliance, and land costs, according to Tong, are the main cost factors affecting cash flow in 1H2022.

Most of the respondents have implemented several operational and production-related cost-cutting measures, such as freezing hiring, lowering salaries, delaying the start of planned projects, and scaling back launch frequency.

"Building supplies and labour costs have been a major issue for manufacturing, plantations, and the construction industry. The sector continues to be plagued by rising compliance expenses. Even the cost of financing and land is rising. Despite their efforts, developers are having difficulty solving these problems," he said.

Tong said that some developers have begun to construct smaller units, make use of more cost-effective materials, create unique designs for all homeowners, and adopt the industrial building system (IBS).

"IBS is very low on the priority list because, if you want it done well, it is expensive. For IBS, you need size and large volume. Large-scale projects won't be started in the current economic climate, thus there is no economy of scale.

"Due to increased costs and low sentiment, developers may think about cutting their profit margin. Some developers have raised the prices at which their properties are sold. Some of these steps must be implemented," he said.

Tong said if compliance expenses are decreased and approvals are processed more quickly, the overall cost of doing business for developers can be lowered.

Cost increases when approvals take longer, he explained.

The survey found that the average percentage increase in the cost of building materials, such as metal products, was 32 per cent, aluminium was 24 per cent, glass was 23 per cent, steel was 20 per cent, timber was 19 per cent, concrete was 17 per cent, sand was 15 per cent, and cement was 13 per cent.

In the second half of 2022 and beyond, respondents predict an average 18 per cent increase in construction expenses, which is expected to affect home prices.