WITH house prices skyrocketing in the last few years, it has become harder for the low- and middle-income groups to buy houses that are safe, comfortable and secure.
Although developers are launching affordable houses with reduced sizes, the low- and middle-income groups are still unable to purchase them.
In Malaysia, Bumiputera developers are developing wakaf land (inalienable endowment land in Islamic jurisprudence) and offering properties at 20 per cent below the market value, specifically for Muslim buyers.
Wakaf housing development is typically cheaper than the conventional housing project of a similar type. Bumiputera developers price their properties below the market value to ensure that the target group can afford them.
Such development is expected to fulfil the demand for safe, comfortable and secure housing.
It was reported that there are more than 10,120ha of wakaf land in Malaysia that can be developed into commercial and residential projects. The projects are aimed at unlocking the value of wakaf land and improving the socio-economic status of Muslims.
In 2010 and 2011, there was a lot of buzz about wakaf land development. Companies such as UDA Holdings Bhd started identifying land parcels to develop in Selangor, Kedah, Perak, Kelantan, Johor and Sabah.
In January 2015, UDA Holdings formed UDA Waqf Sdn Bhd to develop wakaf land as part of its effort to ensure growth and diversification of wakaf assets.
UDA Waqf aims to develop up to 125ha of wakaf land with a gross development value (GDV) of more than RM1 billion over the next few years.
Bank Muamalat Malaysia Bhd allocated RM100 million in 2015 to develop 4.47ha of wakaf land via a collaboration with UDA Waqf.
UDA Waqf will develop wakaf land through joint ventures with the State Islamic Religious Council (SIRC) - the wakaf administrator and beneficiary institution for the enhancement and expansion of wakaf practice.
According to Nada Sepakat Group chief executive officer Kamsol Said, Selangor has about 400ha of wakaf land in nine districts.
He said about 170ha (some occupied by mosques and abandoned cemeteries) could be developed for commercial and residential projects.
The remaining 230ha was agricultural land and not suitable for redevelopment, he told NST Property.
Nada Sepakat, a niche property development company, is the first private company to commercially develop wakaf land in Malaysia.
It was established in 2005 and to date, its completed and ongoing projects in the Klang Valley, Pahang and Terengganu have a total value of RM1.1 billion.
The first wakaf land project for Nada Sepakat is the 1.2ha Taman Impian Kasih in Jalan Hj Taib in Section 30, Shah Alam, which is also the first wakaf development in Selangor.
The ground-breaking for Taman Impian Kasih was held in December 2015 and officiated at by SIRC chairman Datuk Setia Mohamad Adzib Mohd Isa.
The project follows a joint-venture (JV) agreement signed between Nada Sepakat and Selangor Wakaf Corp (SWC) on March 20 2014.
SWC was formed to coordinate property development of Selangor Islamic Religious Council (MAIS)-owned wakaf properties under the Establishment of Wakaf Selangor 2011 (Amendment 2012) order.
Nadi Sepakat also inked a JV agreement with SWC to develop another project on a 1.2ha plot in Section 30, Shah Alam called Taman Impian Kasturi.
The group will absorb the cost of development for both projects and is responsible for
marketing activities.
Taman Impian Kasih is being developed in two phases. Phase 1 comprises 12 units of 1½-storey terraced houses, with a built-up area of 1,400 sq ft priced at RM495,000 each.
Phase 2 has 16 units of double-storey semi-detached houses priced at RM731,000 each.
Kamsol said Nada Sepakat launched Taman Impian Kasih a year ago and had sold almost 70 per cent of Phase 1 and 2 collectively.
He added that a percentage of the proceeds would be returned to SIRC.
Nada Sepakat currently has 28 units of semi-detached houses in Taman Impian Kasturi for sale, each priced at RM772,000 with a built-up area of 2,032 sq ft.
Kamsol is confident there will be positive take-up for Taman Impian Kasturi, as it is located in a high-growth area near Kota Kemuning, Alam Impian and Berjaya Park, with easy access to highways.
He said Taman Impian Kasih and Taman Impian Kasturi had a combined GDV of RM40 million, which would be realised over three years.
Kamsol said there were a few challenges in developing wakaf land.
Firstly, projects have a restricted target market of Muslim buyers.
Kamsol said as long as there were interested Muslim buyers, the group would be able to sell the properties.
Secondly, he said wakaf land development was in its infancy, with only Bank Islam and Bank Muamalat supporting it financially.
“Other banks are not familiar with such developments, so they will take time to provide financing and this scares away potential buyers.
“Bank Islam and Bank Muamalat are supporting wakaf land development as they have been involved in wakaf assets for years. We hope more banks will come forward and assist developers to build and sell wakaf properties so that a large number of Muslims can benefit from them.”
The sale of wakaf properties is done according to the Al-Ijarah (Islamic leasing) concept where buyers get a 99-year lease on their house.
Financing facilities were currently available only from Bank Islam and Bank Mualamat, said Kamsol.
He added that despite the challenges, Nada Sepakat would continue to collaborate with various state Islamic councils to unlock the potential of wakaf lands.
This is in response to the call to commercially develop wakaf land for the property market.
“The good thing about wakaf land development is that the projects we undertake are located near established amenities and infrastructure, including shopping malls and commercial centres, as well as major roads and highways.
“It is not just about developing wakaf land and selling the properties, but also providing convenience to the buyers,” he said.
Kamsol said wakaf land development could spur economic activities and raise asset value.
He cited Menara Bank Islam as a success story of wakaf land development.
The 34-storey building, built at a cost of RM151 million, stands majestically on 0.48ha of wakaf land in Jalan Perak, Kuala Lumpur.
It was reported that when construction started in 2007, the site was valued at RM31.9 million. The value is anticipated to surpass RM300 million when the lease expires in 25 years.
As the sold trustee of the land, the Federal Territories Islamic Religious Council will receive RM56.6 million in cash and also the building when the lease expires.
Meanwhile, Bank Islam is enlarging its wakaf presence in the local market. It signed a RM15.5 million wakaf project development agreement with PWS subsidiary Urus Maju Ehsan (M) Sdn Bhd in 2015.
The agreement covers the development of two wakaf plots in Selangor.
Bank Islam will part-finance the projects, which have a GDV of RM50 million.
The first project is to develop 164 apartment units and 12 shoplots on 3ha in Jalan Kebun, Klang.