Our View on Abandoned Projects In Johor Bahru
- weetiam6
- Sep 11
- 3 min read
Article contributed to CNA
There are construction for some condominium projects which have stalled in Johor Bahru, such as The Peak by Malaysian developer Gabungan AQRS, Sovereign Bay by Chinese developer SanJia Group and Country Garden Danga Bay (one block in plot 4 remain unbuilt). In some instances, residents have paid deposit and downpayment but have not received updates on construction progress. Some have been forced to pay back their monthly loan despite no construction progress. Without commenting on any individual project, could you outline what legal recourse residents can take in these instances?
Below summarizes what a prospective buyer can do before signing on the dotted line :
Check your SPA (Sale & Purchase Agreement) which spells out the delivery timeline and compensation (LAD) for late completion.
File a claim with the Tribunal for Homebuyer Claims (TTPR) but one can only claim up to RM50,000 per buyer for delays or breach of SPA.
Report to KPKT (Housing Ministry) so that it can investigate and take action against licensed developers, or help revive abandoned projects.
Consider a group legal action for compensation exceeds RM50,000. Buyers can take collective civil action against the developer. This is time-consuming and not easy to mobilise sufficient buyers to align their interest.
Work with the bank to restructure the repayment or suspension of disbursements.
However, the buyers normally found out the developer is saddled with financial problems when the construction stalls. It is normally too late and there is limited effective legal recourse buyers can take at that time.
Policy wise, the authority can explore the viability of “build-then-sell” model combined with buyers’ payments held in an escrow account. This could strengthen safeguards for homebuyers. This ensures developers only access funds as construction progresses, reducing the risk of abandonment.
The “built-then-sell” model increases accountability, protects buyers and ultimately enhances confidence in Johor’s property market. The flip side of this model raises financing cost and other incidental expenses for developers. Such additional costs will be passed on to the purchasers. Property prices will be higher as a consequence.
In some of these cases, the developers have been hit with financial problems. Given the RTS and SEZ, there are more foreign buyers keen to investing in property in Johor. Could you outline some due diligence buyers should do when considering buying property in JB, and is ensuring that the developer is in good financial health one of them?
Check the developer’s track record – one should avoid developers whom have no or sound track record but appears more like an “one-time” speculative-developer popping up from no where
Verify the developer’s financial health - buyers should review public filings (for listed companies), news reports and industry reputation
Confirm licensing and approvals – ensure the project has a valid Housing Developer’s Licence (HDA), Advertising Permit and Developer’s Licence (APDL) and proper planning approvals
Review the Sale & Purchase Agreement (SPA) to understand delivery timelines, compensation terms for delays and your rights under the Housing Development Act
Check bank project financing - If major banks are financing the project, it usually indicates higher due diligence and credibility
The Johor state government has said that it will resolve issue of abandoned housing projects, there are plans to redevelop 9 projects and sell them to local buyers. How important is it for Johor to ensure that construction projects for residential housing are completed on time?
Such abandoned projects are eyesores to our cityscape. They also are the confident dampener for future buyers and investors. Ensuring housing projects are completed on time is extremely critical for Johor. It protects homebuyers who are paying loans, sustains confidence among local and foreign investors and reinforces Johor’s reputation as a reliable property market especially with the RTS and SEZ driving demand.
Sr Tan Wee Tiam
Executive Director
Olive Tree Property Consultants
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