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Abandoned projects: No easy fix

Buying a home is a major financial commitment that many Malaysians save for for years. Between massive down payments and strict loan approvals, getting a mortgage can feel like an uphill battle.

The Star MalaysiaSAMANTHA WONG查看原文 ↗
废弃项目：难以修复

Buying a home is a major financial commitment that many Malaysians save for for years. Between massive down payments and strict loan approvals, getting a mortgage can feel like an uphill battle.

After signing the sale and purchase agreement (SPA), the next step is to get the keys and move in. But when that anticipation gets cut short and the promised completion date suddenly goes missing, the limbo strikes hard.

That is the case of buyers who see their investment sitting in deteriorating, half-built structures. Left in a pickle, some buyers end up trapped in a long-term financial commitment.

And then there is the feeling of constant uncertainty about when the unfinished structure will become the functional residence it was promised to be.

Abandoned properties have been a thorn in the Malaysian property market for decades.

The government has not been resting on its laurels, it aims to eliminate sick and abandoned housing projects by 2030, only four years away.

Attention is being placed on rehabilitating these troubled properties, together with bettering safeguards for homebuyers.

Housing and Local Government Minister Nga Kor Ming recently said the ministry remains committed to its goal.

Speaking in the Dewan Rakyat and also at the StarProperty Malaysia Developer Awards 2026 gala night, he announced that 1,726 private housing projects had been successfully revived as of August this year. This involved a total of 199,643 residential units with a whopping combined gross development value (GDV) of RM158.16bil.

According to his announcement, from the total number, Certificates of Completion and Compliance (CCCs) had been issued to 1,542 sick projects comprising 163,621 units overall.

Additionally, another 147 projects involving 29,900 units had been restored to normal construction progress.

A total of 37 abandoned projects consisting of 6,122 units had been revived or resolved using arrangements that benefit the homebuyers themselves.

So, what do these figures really tell us?

For one, the efforts of the Special Task Force on Sick and Abandoned Private Housing Projects that was set up in 2023 have received praise from industry players. Its work has helped bring many troubled developments back on track, although there is still some way to go.

Not every troubled housing project has found its way out of the woods. Based on figures released by the Housing and Local Government Ministry (KPKT), there were still 303 sick private housing projects in Peninsular Malaysia as of June 30 this year.

Together, they accounted for 43,288 residential units with a GDV of RM40.25bil.

Then there are the abandoned projects. Another 100 developments, comprising 27,998 units, were on the ministry’s list, with 14,961 homebuyers affected.

Selangor had the largest share with 41 projects, while Kelantan and Terengganu recorded 13 and 11, respectively.

Under KPKT’s own definition, a housing project is considered sick when construction progress falls more than 30% behind schedule or when the completion period stipulated in the SPA has expired.

An abandoned project, meanwhile, involves more serious circumstances such as prolonged inactivity at the construction site or financial and legal difficulties affecting the developer, though that is subject to the ministry’s confirmation.

For a sick project that has yet to be abandoned, timely intervention could be all it needs before the situation deteriorates.

But as always, it is not easy to spot a shaky development because delays come in many forms. The developer may have insufficient financing due to rising construction costs.

Other hurdles include contractor disputes and complicated land-ownership issues can spring up out of nowhere. Developers had also reported that regulatory approvals had slowed their project’s progress.

The price of waiting

For homebuyers, an unfinished property represents more than an investment that has yet to deliver its expected returns.

It may have been intended as a first family home, a place to settle down after marriage or a property purchased to provide greater financial security in later life.But these plans are put on hold when construction stalls.

Some buyers, even though their homes remain incomplete, may have to continue paying interest on amounts already disbursed by their banks.

Those currently renting may also have to continue coughing up for temporary accommodation, leaving them with financial commitments that were never supposed to overlap for such a prolonged period.

Unlike buyers of completed properties, buyers who purchase under-construction homes do not really have control over the development process once their financing arrangements and contractual commitments are set.

So this makes early intervention particularly important.

Bringing developments back to life

However, reviving an abandoned housing project depends on just how long construction has been suspended because it may require structural assessments, revised construction estimates and negotiations among several parties.

The financial viability of rehabilitation is another consideration. A developer taking over an unfinished project must assess whether the remaining construction work can be completed within a reasonable budget, particularly when the original selling prices do not accurately reflect the current material and labour costs.

The government, under Budget 2027, has focused on rehabilitating abandoned housing developments via incentives like the 100% stamp duty exemption on eligible loan agreements and instruments of transfer involving rescue contractors or developers and original homebuyers.

The exemption is scheduled to take effect from Jan 1, 2027, to Dec 31, 2030, subject to KPKT’s certification. The incentive aims to reduce transaction costs associated with rehabilitation.

Legal disputes can also make it harder to revive an unfinished development.

For example, take the 1,120-unit Residensi Wilayah Pangsapuri Salak Selatan project which Nga highlighted in his parliamentary response.

Classified as sick in August 2021, the development faced complications arising from legal proceedings between the developer and landowner that caused expensive delays.

Prevention better than cure

While rehabilitation provides a way forward for affected purchasers, preventing projects from becoming sick or abandoned in the first place would reduce the need for costly recoveries.

The government has introduced several measures to strengthen oversight of residential developments, including the Housing Integrated Management System, the Transforming and Empowering Data Usage in Housing platform and regular audits of housing development accounts.

These are meant to improve monitoring of construction progress and developers’ financial commitments, while providing greater visibility into potential problems before they become more serious.

Nga indicated that additional reforms, including an option to purchase mechanism and an order to build initiative, are being studied and tested to strengthen the housing delivery system.

With 2030 drawing closer, the government’s ambition to eliminate sick and abandoned housing projects will depend on more than resolving the existing backlog.

It will also require consistent monitoring, timely intervention and an industry capable of responding to emerging financial difficulties.

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