The Weight of an Empty Investment: What My Children May Inherit

New developments often dazzle potential buyers, promising a dream home just around the corner. However, lurking beneath this enticing surface lies an imperfect reality: the Sell-Then-Build (STB) model. Numerous reports have surfaced about the perils associated with this approach. Buyers may find themselves grappling with abandoned projects, delayed deliveries and subpar construction quality—circumstances that can wreak havoc on their financial stability and emotional well-being. It’s crucial to navigate with caution and awareness.

Grand vision went south

As a buyer who has been misled by unfulfilled promises, my experience with a development has been one that went from high hopes to disappointment. The vision for this project was grand—it was intended to rival the iconic Mid Valley, bustling with life and equipped with numerous entry and exit points catering to every direction. Initially, it was the talk of the town, a highly-rated gem that everyone wanted a piece of.

Unfortunately, since its completion, the project has been limping along. Limited accessibility has stunted its potential. What should have been a vibrant hub became a hollow, lifeless space filled with many unoccupied premises.

During the launch, the sales consultants informed potential buyers that there would be several additional entries and exits, which were crucial to the success of the commercial components. These, in turn, would affect the rest of the project. They even took us outside the sales gallery and showed us that earthworks for phase 2, which supposedly comprised a hotel and shopping centre, had begun. None of the additional benefits were stated in the Sale and Purchase Agreement. Despite this, many people lined up to book the units, much like they would buy groceries at a supermarket.

Until today, those promises have not come to fruition. Although additional roads were constructed, they fell short the promised quantity, and the second phase of the project has been put on hold indefinitely. Many years have passed since the project’s completion, yet numerous commercial premises remain unoccupied. Very few properties in the commercial components have been transacted. Several units were auctioned with reserve prices significantly lower than their initial purchase prices. Rental yields are only half of what sales consultants had projected, and most owners have struggled to find tenants since the project’s completion. After several years of vacancies and low rental rates, we decided to occupy our unit as our office. Like many other commercial property owners, we are unable to secure buyers as the development is not desirable.

I still remember the weekend we visited the sales gallery, and it haunts me. I certainly wasn’t in a professional mindset. We were swayed by the crowd, the stunning sales gallery and the impressive show units. Did the sales consultants mislead us? They were likely following scripts and didn’t truly understand the product. To make matters worse, once the development was completed, they left us to fend for ourselves, telling owners to find other agents to help secure tenants. This is the worst investment decision we have made, and we may have to pass this burden to our children if we cannot sell in the long term. I wish I could go back in time and walk away from this project.

When purchasing an off-plan property, whether for investment or personal use, it’s important to conduct thorough research and think objectively. Evaluate the marketability of the property and determine its potential resale value. Investigate similar properties in the area and the surrounding region. What are the current asking and transacted prices? Is the market flooded with similar properties?

Issues in mixed developments

If your property is part of a mixed development, there is a risk that dominant parties may control the management committee and make major decisions by using their larger share votes at the annual general meeting (AGM). Are you comfortable following their decisions even if you disagree with them? Additionally, will the commercial component thrive and is your property dependent on the success of the commercial sector? Is the visitor car park owned by a third party or managed by the management corporation? Ours is owned by a third party that has neglected its maintenance. This creates a poor impression for visitors before they even reach the common areas. First impressions matter.

Thoroughly review the Sale and Purchase Agreement. If you have any questions or concerns, consult with a legal professional. Please note that different rates for maintenance charges may apply, and residential properties could incur higher rates. These rates can be easily set at the Annual General Meeting (AGM).

Sale and Purchase Agreement

Ensure the agreement includes an attachment with a list of all common areas. You must verify whether the Sale and Purchase Agreement (SPA) adequately protects your interests, especially if it is not based on the statutory version (Schedules G, H, I, or J). Our agreement was not the statutory version as our property is not residential. We learned that one buyer chose to cancel and forfeit his booking fee after consulting with his lawyer about the SPA. We should have done the same.

If the developer offers additional items for your unit beyond those mentioned in the SPA, these should be documented in a separate letter. Don’t forget to read the fine print at the bottom of that letter.

New road to link development

If the development lacks current road access and depends on the developer to construct a new road to connect to the nearest route, it is essential to consult the relevant authorities and conduct thorough due diligence. Assessing the developer’s reputation and track record is essential. Be aware of the risks if you purchase before any official announcements or confirmations regarding the road plans are made.

Defects with vacant possession

If the Certificate of Completion and Compliance (CCC) has been issued and the developer has handed over the keys, but your unit is full of defects, you can refer to the court decision in the following cases.

1. Ho Yui Luen & Anor v. Agile PJD Development Sdn Bhd (WA-22C-10-01/2022, High Court of Malaya, March 5, 2025)
   The High Court reaffirmed that vacant possession is not just a procedural requirement; it must also reflect the substantive condition of the property, specifically its suitability for human habitation (Ref 1).
2. PJD Regency Sdn Bhd v. Tribunal Tuntutan Pembeli Rumah & Anor [2021] 2 CLJ 441
   The High Court emphasised that housing contracts must be interpreted in light of social legislation. Furthermore, a Certificate of Completion and Compliance (CCC) does not protect a developer from liability when the delivered unit is materially defective (Ref 1).
3. Dua Residency Management Corporation v. Edisi Utama Sdn Bhd & Anor [2021] MLJU 140 (Ref 1)

If your project has been delayed over several years, it’s crucial to seek advice from a legal professional and discuss the situation with your bank.

We have benefited from investing in successful projects due to the skilful developers behind them. It’s difficult not to sympathise with those who have been affected by projects that did not perform well. I genuinely empathise with their frustration and distress. I hope that authorities will implement strong measures to prevent subpar projects from damaging the market. After all, everyone deserves a quality property and peace of mind.

References

1.Vacant Possession and Habitability: Ho Yui Luen & Anor. explains Developers’ Continuing Duties | JUST Perspectives – JUSTLaw Lawyers Malaysia

Photo by Ali Sedigh Moghadam on Unsplash