Brunei's Housing Industry Faces Near Collapse
By Rosli Abidin Yahya

Bandar Seri Begawan - The continued economic downturn which has knocked the bottom off the local property market has caused a number prominent developers to abandon their housing projects.

Some developers gave up their projects halfway or even near completion while others did not bother to start development even though contracts were signed.

At least one landowner is expected to take a developer to court for breach of contract.

One housing project had been about 90 per cent complete some time ago but abandoned presumably because the developer could not find buyers at post-1997 prices since the prices had gone down considerably.

If the developer completes the project and sells the houses at prevailing prices then he would make a loss. It had cost him more to construct the houses than the price it could fetch now..

On average, a 2-storey terraced house now costs between B$120,000 and B$180,000. A 2-storey semi-detached can be purchased at B$200,000 to B$250,000 and a 2-storey detached house is advertised at B$260,000 - B$320,000.

These figures constitute a 25 to 30 per cent reduction from the post 1997 property prices.

In one case, prospective buyers had put up deposits for such houses, which commenced construction in 1997, just before the downturn, only to find sadly that the project would not be completed.

Even the landowner was said to be in a quandary because he was supposed to get his entitlement years ago but now he was said to be undecided as what to do.

In general, property markets here are currently experiencing an oversupply against declining demand.

House rentals dropped as much as 20 to 30 per cent for those located within a 10 kilometre radius from the town centre, while houses located further off the town centre have suffered up to a 50 per cent drop in rent.

In isolated cases, some property owners offer furnished double-storey houses at around $800 per month compared to $2,000 to $3,000 during boom time, several years before 1997.

A developer said "If buying a house is as easy as buying a branded vehicle through bank loans, then this could lead to a surge in demand. The multiplier effect will be great as it would lead to a booming property industry which would in turn lead to an aggressive construction and development industry as well as an increase in the demand for building materials".

Some members of public however welcome the fall in property prices since it increases their chances of owning properties.

"There are developers who construct low-cost housing which they would sell at less than $100,000 each," said one member of the public.

"Properties at these prices are within the reach of many people especially the government employees who are entitled to personal banking loans up to such amounts." (Courtesy of Borneo Bulletin)

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