PETALING JAYA: Rising construction costs are squeezing margins as domestic property developers struggle to pass on higher costs to homebuyers without pricing them out of the market.
Glomac Bhd group managing director and CEO Datuk Seri Fateh Iskandar Mohamed Mansor said construction costs for landed properties had risen by 5% to 9%, while those for high-rise developments had climbed by about 15%, with higher diesel-related expenses driving up earthworks and infrastructure costs.
“We are already seeing a 30% surge in earthworks and infrastructure expenses, and most developers are still taking a hit on their margins because you can’t simply raise selling prices, especially for residential properties.
“Buyers’ affordability is limited by how much they can borrow,” he told reporters after the group’s 42nd annual general meeting (AGM) today.
Fateh Iskandar said developers could absorb some of the cost increases, but passing them on to buyers had its limits, as higher prices could make homes unaffordable for their target market.
“You need to absorb as much as you can, but if you can’t, you have to pass on some of the costs. However, once prices cross a certain threshold, buyers can no longer afford to buy, so you need to make a lot of adjustments.”
He added that demand for landed homes and commercial properties such as shophouses was showing signs of recovery, with buyers returning to the market after a subdued period, although high-rise developments remain more challenging amid rising construction costs.
Fateh Iskandar said Glomac had seen a strong response to its latest commercial property launch, with all non-Bumiputera units taken up, signalling renewed interest in shophouses after a prolonged period of weak demand.
“Three years ago, nobody wanted to buy shophouses. Now, everybody wants to buy. I think slowly people are coming back.”
However, higher construction costs have made it more difficult for developers to launch high-rise projects, as they need to secure sufficient demand and sales commitments to reach the threshold required to make a development viable.
Citing a recent industry survey, Fateh Iskandar said about 69% to 70% of developers were holding back launches as they assessed market conditions and the outlook for construction costs.
He said developers were also monitoring the impact of the recent minimum wage increase and other cost pressures before committing to new projects.
On labour costs, Fateh Iskandar said the industry recognised the importance of looking after Malaysian workers, but urged policymakers to consider the additional expenses borne by businesses in sectors that relied on foreign labour, including levies and the provision of centralised labour quarters.
He also noted signs of renewed interest from foreign buyers, saying they had largely stayed away from Malaysia’s property market over the past two to three years.
On the earnings front, Glomac recorded revenue of RM226.2 million for FY26, while profit before tax stood at RM32.7 million and profit after tax (PAT) of RM20.2 million.
Property development remained the group’s core earnings contributor, supported by continued progress across its established township developments, while lower finance costs and tax expenses contributed positively to overall profitability.
The group continued to make steady progress across its ongoing developments, while completed projects across its townships have largely achieved full take-up.
Glomac closed FY26 with RM546 million in unbilled sales, providing visibility for future revenue recognition as construction progresses.
On the balance sheet, Glomac has negligible net gearing and cash and bank balances of RM218.9 million as of April 30, 2026. This provides the group with healthy liquidity and financial flexibility to support its ongoing developments, planned launches and future growth initiatives.
The group’s RM3 billion Sukuk Wakalah Programme provides further funding flexibility, while about 600 acres of strategically located landbank, with potential gross development value exceeding RM6 billion, provides a substantial development runway for the years ahead.
As of April 30, 2026, Glomac’s net asset value per share stood at RM1.58.
Fateh Iskandar said Malaysia’s property market remained largely driven by domestic buyers, with foreign purchases accounting for just 1.7% of transactions last year.
“Only recently have we started seeing foreigners looking at Malaysia again. We are not sure whether they will buy, but at least they are back. Previously, they were not even looking,” he added.
On first-home buyers, Fateh Iskandar hoped the government would introduce broader incentives to help more Malaysians enter the property market, including extending stamp duty exemptions to existing homeowners looking to upgrade.
He said the current policy should also consider buyers who sell their first property to buy a larger home as their family grows, rather than focusing solely on those entering the market for the first time.