Readiness of Private Housing Developers and Financial Institutions to the Build Then Sell Concept

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Readiness of Private Housing Developers and Financial Institutions to the Build Then Sell Concept

Associate Professor Dr Nor ‘Aini Yusof,
School of Housing, Building and Planning
Universiti Sains Malaysia,
11800 Penang.
MALAYSIA
Email: ynoraini@usm.my

Abstract
This research assesses the readiness of private developers and financial institutions in Malaysia to implement or support Build Then Sell (BTS). A generic model of BTS readiness and factors influencing it, was developed to analyze the BTS readiness of developers and financial institutions in Malaysia. A questionnaire survey was carried out to assess developers’ readiness to implement BTS. Elite interviews were conducted to assess the readiness of financial institutions. Statistical analysis consisting of descriptive analysis, Pearson correlation analysis and multiple regression analysis was used to analyze the survey data. The interview data were analyzed using a content analysis technique. The results revealed that developers are partially ready towards BTS and not all financial institutions seem eager to support BTS in Malaysia. Only the Islamic financial institutions were truly optimistic about BTS. External support and organizational factor are the two determinants for Malaysian developers’ readiness to implement BTS. On the ther hand, the financial institutions asssert the importance of market demand to ensure BTS can be succesfully implemented. Keywords: organizational readiness, housing developers, financial institutions, build-then-sell

INTRODUCTION
The government has proposed that a Build Then Sell (BTS) concept be implemented in Malaysia, seeing BTS as the best way to solve housing woes such as late delivery of houses, poor housing quality and abandoned projects. The government has offered some incentives to encourage developers to use BTS, and some developers have already implemented BTS in Malaysia. Yet many developers are reluctant to implement BTS. This hesitant from developers is not surprising given that the conventional Sell Then Build (STB) concept has proven profitable for developers for more than 4 decades. Not many developers would want to implement a new concept when given the option of continuing to work with a profitable existing one (Yusof, Mohd Shafiei, & Said, 2010). Previous studies reveal that in other countries too, the housing industry is not receptive towards new concept or products. One of the reasons is what Barlow (1999) termed as ‘organisational pathologies’ within the housing industry, which includes a perception that change will bring negative effect to the organization or work process. In addition, the temporary nature of housing projects and the involvement of many stakeholders ((Asibong & Barlow, 1997) make change effort challenging in the industry. At the same time financial institutions too have given no concrete feedback regarding their support of BTS. It is therefore understandable why many developers prefer to maintain the current STB concept. This research project was designed to assess the readiness of private developers and financial institutions in Malaysia to implement or support BTS. The project was funded by the National Real Estate Research Coordinator (NAPREC) under the Ministry of Finance Malaysia, and was carried out by a group of researchers headed by Universiti Sains Malaysia. The project commenced in October 2006 and took 30 months to complete. The research objectives are : 1. To explore BTS models implemented by other countries as well as those proposed by the Malaysian government and the National House Buyers Association (HBA). 2. To assess the readiness of private housing developers and financial institutions in Malaysia to implement BTS. The paper starts by conceptualizing the key terms in the paper; readiness towards change followed by the discussion on the factors which influence organization readiness to change. From this discussion, a working framework for the present...
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