Bumiputera vs Non-Bumi Property

[silentnight1]

Hi All,

Regarding our property market, we have 2 different prices for bumi and non-bumi property, in which non-bumi is priced at 5%-15% higher.

Would like to know if the 5%-15% paid less by bumi is it actually a. covered by the government or b. is it the actual selling price of property?

c. Or is it covered by other buyer? e.g

Bumi price = 650k

Non-bumi price = 750k

Actual selling price(non-disclosed by developer) = 700k

For each bumi unit, the discount is paid by other non-bumi/discount is counted in the overall sales.

 

[taylorjr94]

@silentnight1 None of the above. (sort of C)

Developers already calculated the profits when they do the project budget. (This is when they do a feasibility study, and computed the GDV and GDC of the project).

The allocation for bumi lots are usually about 5-20% (usually 10-20%). For these properties, they will get 5-10% discount on the average, but ultimately, it's just a cost of business to the developers. It's the same as those low cost PPR as required by various state governments

The developers would of a study that looks like this :

In theory (base case A)

Example, a 300 unit DST project (numbers simplified)

270 unit x Rm100k = RM27m revenue

30 units on bumit discount at 10% - Rm90k = RM2.7m

Total revenue RM29.7m

Total project cost might be like something about RM20m (this is land cost + construction cost + infra works + Common allocated costs etc)

Profit : RM9,7m

In practice, companies often give marketing, booking rebates and all sorts of funny discount discounts,, so the same project is actually :

Example, a 300 unit DST project (numbers simplified)

270 unit x Rm100k = RM27m revenue (SPA amount)

Less : Marketing discounts and early payment rebates of 5-10% - negative Rm2.7m (actual add on rebates)

30 units on bumit discount at 10% - Rm90k = RM2.7m

Total revenue RM27m

Total project cost might be like something about RM20m (this is land cost + construction cost + infra works + Common allocated costs etc)

Profit : RM7m

***

Personal observation : The bumi rebate is a red herring. You focused on the wrong thing

In practice, the margins for property developers are so fat, that developers can afford to pay 3-6% marketing FEES to marketing agents (thats why so many agents sell new launch properties)

If anything, property developers are all profiteering with their ridiculous 30-40% Gross Profit margins. (don't believe me, go download property developer's annual reports and look at their gross profit margins)

 

[dwjoyner]

@taylorjr94 Hello, it looks like you've made a mistake.

It's supposed to be could've, should've, would've (short for could have, would have, should have), never could of, would of, should of.

Or you misspelled something, I ain't checking everything.

Beep boop - yes, I am a bot, don't botcriminate me.

 

[agadfly]

@taylorjr94 From what I know on new projects that is non affordable, non government the rate alloted for bumi is 30%. And yeah... Developer will have accounted for all those reduced price and leveraged out the discount portion to every units so they don't absorb the discounted price themselves. So in a way, the price is always bloated.

 

[taylorjr94]

@agadfly different state different rules. even bumi discounts vary by state.

but yeah, the prices are bloated. i've wroked with developers that essentially use the bumi lot price as the actual price, and give buyers 10% discount if they are buying non-bumi lots, but u don't get the same discount if your buying bumi lot.

 

[agadfly]

@taylorjr94 Now that's probably true on each state having different bumi quota alloted.

Though I've not heard of such bs that developers put bumi price as actual price and non bumi get 10% discount while bumi don't get that particular discount, only bumi discount %. Pretty sure if such were to happen and people know of it, it'd be reported and the developer can say goodbye to their current and future projects.

 

[taylorjr94]

@agadfly i'm not gonna say more other than, iykyk

 

[agadfly]

@silentnight1 A. It's not covered by government or any entity. It's just a flat discount like a membership thing.

B. It is the selling price for bumi lot.

C. If current owner selling to buyer and both are bumi, then no issue but the selling price is definitely much lower than non bumi lots even in the open market.

You need to understand that original bumi lot owner selling his unit will have reduced potential viewers/buyers due to the unit being bumi lot. Mostly and commonly only transacted between bumi.

I have a malay friend who bought 3 units and he opted to buy non bumi lot as those were purely for investment purposes and he didn't want too much hassle. If selling to non bumi, he'd have to apply and pay a fee to convert his 3 units into non bumi lot so anyone can buy his units at a good price and not reduced price(bumi lot)

 

[carla]

@agadfly Interesting to note that even Bumi Lot is discounted, the resale value also discounted.

 

[kimberlys]

@agadfly So bumi lot can be converted to non bumi?

 

[slpontes]

@silentnight1 racist policy, should let the whole world know.

 

[georgeluthfi]

@slpontes Bumi privilege hurts, poor non-bumi could also benefit from housing support and wealth support eg ASB

 

[idrys]

@slpontes The world should know by now, boo hoo crybaby

 

[bigcat1967]

@slpontes Don’t worry, the whole world works around like this too.

 

[slpontes]

@bigcat1967 Oh pro racist here lol

 

[bigcat1967]

@slpontes Whatever you say but that’s how the world works. I don’t call Native Americans racist with all benefits they get after all what happened to them.

 

[slpontes]

@bigcat1967 America don’t have racist govt policies and constitution, if you have show me one