LIST OF CONTENTS

1.0

INTRODUCTION
1.1 Definition of Abandoned Housing Project
1.2 Background of Housing Project
CAUSES OF ABANDONED HOUSING PROJECT
2.1 Financial Problem
2.2 Mismanagement
2.3 Economic Condition
PARTIES INVOLVED IN ABANDONED HOUSING

2
2
2-3
4
4
4
4
5

PROJECT
3.1 Developer
3.2 Consultants
3.3 Contractor
3.4 Financial Institutions
4.0 EFFECTS THAT CAUSED BY ABANDONED HOUSING

5
6
7
7
8

2.0

3.0

PROJECT
4.1 Personal and Company Effect
4.2 Social and Economic Effect
4.3 Environmental Effect
4.4 Country Effect
5.0 CONCLUSION
LIST OF REFERENCES
APPENDICES
MINUTES OF MEETING

8
9
10
10
10-12
12-13
14-16
17-20

1.0

INTRODUCTION

1.1

Definition of Abandoned Housing Project

Abandoned housing project are define as construction work in a project

site has been continuously stalled for 6 months or more, whether during the
project completion period or beyond the scheduled date of completion,
according to the Sales and Purchase agreement. Besides that, a developer is
1

not able to complete the project, or when the Housing Controller views that
the developer can no longer carry out their responsibilities as a developer
(Source: Monitoring and Enforcement Division).
Abandoned housing projects were first identified in 1983. For the purpose of
rehabilitation, an Abandoned Housing Project Revival Fund was established
by Bank Negara in 1990 whereby Abandoned Housing Project Revival Pvt.
Ltd. was given the responsibility to study and rehabilitate the projects.
In Longman Dictionary defines abandonment as the act of given up an action
on something completely, with no certain intention of when to resume. When
actions and activities on development projects are suspended without any
stated time of resumption the projects are said to be abandoned.
By referring to the Ministry of Housing and Local Government (MHLG),
anabandoned project is defined as an uncompleted project or a project that
underdelaying. Basically, it classified into three categories by the MHLG
where Delay Project, Ailing Project and Abandoned Project.

1.2

Background of Housing Project

Taman Mengkibol is a lower middle class residential area with some

commercial development. It is a project revived by KSL Holdings Berhad

Group after it was abandoned by Success Villa Sdn Bhd in 2003. It consists of
190 units Single Storey Terrace House, 80 units Double Storey Terrace House
and 22 units Double Storey Shoppe Office. The first phase of development
focused mainly on the construction of single storey terrace houses.
Taman Mengkibol is strategically located next to Kampung Mengkibol and
just 5m away from Kluang town. It is developed on the Kluang District, Johor.
A railway station is just a few steps away, and a few schools are located
nearby, namely Vocasional School, and SM Jalan Mengkibol. In addition, it is
near to Kluang Mall for shopping and leisure. Accessibility wise, Taman
Mengkibol is reachable via North- South Highway Malaysia.

Taman Mengkibol is a fully rehabilitated residential area by KSL Holdings

Berhad Group after 14 years abandoned. It was initially abandoned for about a
decade with 80% completion after construction started in 1998. Problems
arose as its Success Villa Sdn Bhd and together with the main contractor were
in liquidation. And the developer's holding Success Villa Sdn Bhd also folded.
Fortunately, an agreement was reached with KSL Holdings Berhad Group to
be the main contractor to support the rehabilitation of the project as well as
fund a substantial amount of its construction cost. Taman Mengkibol was fully
restored and completed in 2004.

Figure 1: Location of Taman Mengkibol Resident

2.0

CAUSES OF ABANDONED HOUSING PROJECT

2.1

Financial Problem
The major reason leading to the abandonment of the project was the

financial difficulties faced by Success Villa Sdn Bhd. These difficulties arose
due to the lack of skills, experience, and expertise of the defaulting housing
developer company and the inappropriate selling prices for the units compared

to the costs of construction and unforeseen costs faced by Success Villa Sdn
Bhd.
Increases in project costs due to mismanagement or unfavourable economic
conditions; and, the lack of proper feasibility study to determine the right type
of development and unattractive marketing strategy ultimately affect the sales
and hence lead to the financial problem.

2.2

Mismanagement
Mismanagement happen due to the lack of experience of developers.

Mismanagement that lead to abandoned housing projects include lack of

proper feasibility studies particularly inaccurate market research, unattractive
marketing strategies, conflict among project participants and incompetent and
poor financial management by the developers.
The developer did not include the strengthening of the slope in their feasibility
studies therefore the houses sold did not include the extra cost. The viability of
the project was affected, the project had to be abandoned and the developer
had to refund the house buyers.

2.3

Economic Condition
Unexpected bad economic conditions affect a project in many ways

such as material prices, increase in the cost of financing due to higher interest
rate and lower returns of investment once the project is completed. Financial
problem faced by the developer of Success Villa Sdn Bhd got the problems to
bear the cost of development. However, in the course of the development of
the project, the project failed and was abandoned due their inability to meet
the development and construction costs.

3.0

PARTIES INVOLVED IN ABANDONED HOUSING PROJECT

From research, we found that the cause of the abandoned project are
merely because of the financial problem, mismanagement and economic
condition. But other than those factor, project participants somehow related.
The parties that involved are developer, consultants, contractors and financial
institutions.

3.1

Developer
Developers are often a major source contributor to abandoned housing

projects. The problem usually arises and result abandoned housing project.
(Dahlan, 2008) Developers forced to stop midway through the project when
facing financial problem as fails to secure the targeted demand to break even
due to high or unsuitable pricing of the product and the lack of feasibility
study in choosing the site for development, the type of development, and
precise in supply and demand. The culprit may come from poor planning and
researches as the developers that rush into a development without
comprehensive market study will most likely cause developers stuck in a
project due to poor cash flow. Besides that, developer's insufficient fund or
stops to operate and become bankrupt as the weakness of the company in
financial management.
The project may find failures cause to the developers as it appointed the
inexperience project management consultant PMCs or project managers PMs
to manage the project. The repercussion of the problems would be in
managing a good cash flow of the project and causing the project cost overrun,
insufficient quality control, poor planning causes the manpower, lack of
supervision and coordination, quality of the product is low as always delay.
The developers fail to constantly date the first estimated project cost by
incorrect fixation and causes insufficient fund to pay the contractors interim
certificate claim. Moreover, it will have a case of uncertainty prevails over
payment and timing with implications on the contractor's cash flow; design
changes that may adversely undermine timely delivery of the project; and
interpretations of the contract documents which may lead to disputes and
litigations.
5

For instance, weakness of the developers in the management of the project

organization normally will be the weakness in planning and control. It would
cause the project will fail to complete within the fixed period and project may
find too many people involve and lead to overstaffing slows communication
and decision and increase the changes of personnel thus disrupting smooth
progress. Conflict between landlord and housing developers would invite
dispute between family members for owning the land in selling to developers
and the developers may need to start advertising house put up for sale but the
land case is still unresolved.
It will possible with the case that, the developers used the progress payment
financial from purchaser to another unrelated matter (own investment) then the
money on following month is stuck and unable use of project construction
payment. But, when they try to get the loan from financial institutes as their
financial record of the developers is instability causes hardly to get approval in
application of bank loans. Site investigation and design stage both fall under
the standard that is crucial for the success of the project. For example, the
developers fail in studying the rule and regulation of the plot ration
requirement in that area for developing with not fulfilment design type of
housing will cause him unable to get the approval from authority. The
irresponsible attitude of the developers as give priority to the profit by
awarding tenders to incompetent contractors. (Hadi et al., 2014)
3.2

Consultants
Consultants in a construction project typically consist of architects,

civil engineers, and mechanical and electrical (M&E) engineers. (Hoe, 2013)
Involving the consultant at an early stage of the construction project is often
beneficial for the owner. In fact, a consultant may even be involved pre-design
in order to assist an owner with tasks such as project budgeting and
management,

site

selection,

space

relationships,

and

environmental

studies. (The & Documents, n.d.) However, choosing inexperience workers

can cause a problem in construction management as well as the financial
management.

3.3

Contractors
The contractor also contribute to result in stopping the project because

of the financial and management problems. This is due to an inability to meet

the needs of the construction costs of materials and payment of workers'
wages. Network connections progress payments from the developer is also the
main cause that caused the contractors to have a little flow of capital. If the
contractor has no credit facilities then it will be troublesome for the financial
practices of contractors from supplier and sub-contractor.
Some of these factors are identified as the main obstacle to increase the
efficiency and effectiveness of financial management of the contractor. This
problem requires a systematic approach, efficient and effective in order to
overcome the problems of financial management for contractor. (Ibrahim,
2006)
3.4

Financial Institutions
This is reasonable, as in the economic recession, banks would be

reluctant to grant housing loans to the developers and house buyer as they are
many bankruptcy in the country. This may cause the party difficulties in
getting bank loan as the bank may set the higher qualify and requirement for
grant housing loan to protect its interest as the show business couples with
high gearing ratio of borrowing and less generating profit by banks, traders
and business entitle. The small and medium size developers may face
difficulties to obtain the bridging funds from the bank and finally will cause
them weaker financial capability. Furthermore, this phenomena keeps on
recurring especially during the economic downturn and the inflation rate are
high where it may cause the financial institutions not to approve any loans or
even loans are approved. The charges of interest rate will certainly go up
drastically and high to the developers and when the interest rate increases, it
will cause the management of company operation cost to increase and this will
reduce the developer's profit. Meanwhile, the problem may rise up as the bank
simply approve the claims and without conduct further due diligence
investigations and verifications of the truth of the certificates issued by the
7

project architects and presented by the developers in the Sell-Off-The-Plan

system.(Hoe, 2013)

4.0

EFFECTS THAT CAUSED BY ABANDONED HOUSING

PROJECT
The impacts of the abandoned construction projects are referring to the

side effects or problems bring while a development project is said to be

abandoned. Those impacts are negative to the public mean that it will be
caused of loss for the entire impacts. The impacts here are varies in many
aspects where it could be personal of company impacts, social-economic
impacts, environment impacts and country impacts;
4.1

Personal and Company Effects

The very first impact; personal and company where the personal here

referred to the individual party that have influenced by the abandoned project.
When the project is abandoned, the victims that suffer would be fall on the
house buyers because they having monetary loss where there are a monthly
loan repayments and deal with financial institution for the entire abandoned
project. Followed by for those houses buyers who are not capable for
repayment loan they will have a big headache toward the personal financial
which might lead to the bankruptcy. Upon bankruptcy, the image of personal
was no longer good in applying loan from any financial institution or might be
blacklisted.
And for company aspect, same as with the personal impact where while there
is abandoned project mean that the company are not work diligent until failure
or delay in delivery their products hence their company image toward public is
affected because the people who wish to purchase a house will not be purchase
from them due the disappointing to the company. Besides that, when a project
is abandoned is causing a huge in monetary losses therefore the company
might be bankruptcy due to unable to pay the debt left behind by the
abandoned project. Additionally, the company will be blacklisted by the
8

government in applying of any other development and same as well

blacklisted from the financial institution in recruit funding of any new
development.
4.2

Social and Economic Effect

Rather than the personal and company effects, the social life of public

also being affected where the abandoned project become the abandoned place
for illegal gambling, drug addict, and homelessness campsite. With this
situation, it is seriously influence the neighbourhood security not matter is in
term of personal or family security because there will be an increasing of
chances in stealing cases by the drug addict and robbery problems by
gangsters.
In additionally, when a project works is abandoned many workers end up in
employment because construction company nowadays normally established in
macro-group and their employee required to run the company as same as in
the macro-group size as well. Therefore, the unemployment rate is increasing
and causes the economic quality of life decrease upon people loss their job.
Furthermore, while the project is being said abandoned there will be left
behind uncompleted or unfurnished building structure and cause negative
aesthetic values, pleasures and contribution toward the public become eyesore
to the vicinity.
At the end, all the social-economic impacts bring out by the abandoned project
has cause the value loss of the area at the same time the value of the property
related to the surrounding abandoned project will be decrease concurrently in
result the market values of the overall market collapse.
4.3

Environmental Effect
Upon left behind uncompleted building structure from the abandoned

project, it promote the habitat for the dangerous animals such as reptiles like
snake and rat, mammals like lion and insect like flies and mosquito. Those
dangerous animals are threaten to the public where snake poison might lead to
people dead and the rat, flies and mosquito may create new diseases which
9

lead the public healthy in a poor situation. And yet due to the place it occupied
by those rat, flies and mosquito, it created the air pollution toward public at the
same time where bad smell spread out from the abandoned project due to lack
on maintenance or care of the entire project.

4.4

Country Effect
By gather all the impacts that mentioned of above, it may destroy the

image of our country toward other country where the poor management skill
of our country lead to a lot of abandoned project occurs and follow by those
social-economic impacts and the environment impact which may cause loss in
the tourism sector in Malaysia. In addition, due to the abandoned project that
cause the overall market value collapse will lead to the country economic
collapse as well because too much of unemployment cases in our country.
(Hadi et al., 2014)

5.0

CONCLUSION
In conclusion, it can be said here that the problem of

abandoned housing can give the impression of the economic

and social aspects. It is evident that the problem of
abandoned housing can give a negative impact on the
national economy as the housing sector is a key sector in the
economic production. If a malfunction occurs in this sector as
a result of the problem of abandoned housing, then it will have
an impact on the national economy as a whole
However, the problem of abandoned housing also cause social
problems, and affect the image of Malaysia as a country that
is heading development. In connection with this problem it
should be contained and eradicated that the phenomenon
does not continue to spread. So with that recovery measures
should be implemented should be effective and sustainable so

10

that it can prevent and suppress abandoned with more

productive and effective. (Hilal, 2008)
There are some steps to overcome or reduce the
problems of abandoned projects:
1

Tightening procedure production license for

projects

where

the

financial

capacity

of

developers preferred.
Enforce the Housing Development (Control and
Licensing) Act 1966 and Regulations relating to
the licensed developers found to have violated
the Act and Regulation decisive action taken by
the prosecution, the compound and blacklisted
housing

developers

and

directors

of

the

company holding the permit in addition to

advertising and sales and production freeze the
3

Housing Development account (HDA).

Supervision of the project more closely on an
ongoing basis. Each developer is required to
submit a report physical progress every six (6)
months. However, more frequent reporting can
be requested by the ministry for the purpose of
effective monitoring. Site visits are held from

time to time.
Control of the Housing Development Account
(HDA) and the audited financial statements is
enhanced.

Developers

who

fail

to

submit

audited financial statements report will be

prosecuted to the Court. If the developer does
not find strong financial position to continue the
project, the developer will be called to discuss
5

the need to take appropriate steps.

Enforcement
Act
/
Housing

Developers

tightened. Developers who found irresponsible

11

and a violation of the Act / Rules will be

prosecuted by the courts.

Overall, basically the causes of abandoned housing project

can be classified into five aspect where are mismanagement,
unfavourable government policies, inefficient public delivery
system,

unfavourable

economic

condition

and

financial

problems. And the key personnel involved in driven the

problems are developers, government bodies, contractors and
financial institutions. Continuously, the impact which bring up
by the abandoned housing project were categories into four
part

where

are

personal

or

company,

social-economy,

environmental and country preciously. And the challenges in

resolving the abandoned housing project issue have to be
considering from few aspects where policy and role of
government,

rehabilitation,

alternative

housing

delivery,

finance restructure and law enforcements. At last concluded,

abandoned housing project was created a lot of issues where
those issues is not only effect on the overall housing market
and is also effect of the benefit of country such economic of
country. Therefore, necessary implementation should be take
action right now to prevent it becoming worst and hard to be
resolve.

REFERENCES
Dahlan, N. H. M. (2008). The Need To Define Abandoned Housing Project
In Peninsular Malaysia: An Analysis. IIUM Law Journal, 16(1), 85107.
Hadi, A. N. binti A., Salleh, N. H. B. M., & Tan, G. M. (2014). Abandoned
Housing Project:Issues and Challenge. Abandoned Housing
Project:Issues and Challenge, 122.
12

Hoe, Y. E. (2013). No Title. Causes of Abandoned Construction Projects in

Malaysia, (May).
Ibrahim, F. B. (2006). Faktor-Faktor Kritikal Bagi Pemulihan Projek
Perumahan Terbengkalai. Faktor-Faktor Kritikal Bagi Pemulihan Projek
Perumahan Terbengkalai. Retrieved from
http://eprints.utm.my/142/1/FadzilahMA041148d06TTT.pdf
The, I., & Documents, C. (n.d.). The Role Of The Consultant In Construction
1 1., 114.
Hilal, N. (2008). Abandoned-housing-projects-the-problem.
Retrived from
https://nuarrualhilal.wordpress.com/2008/09/09/abandoned-housingprojects-the-problem/
Yusoff, M. (2016). Proceeding of the international Civil and Infrastructure
Engineering Conference.
Source: Utusan Malaysia News
Retrieved from http://ww1.utusan.com.my/utusan/info.asp?
y=2012&dt=0222&pub=Utusan_Malaysia&sec=Johor&pg=wj_06
.htm

Source: Perak Today News

Retrieved from http://peraktoday.com.my/2014/10/reviving-abandonedprojects/
Source: The Star Online
Retrieved from
http://www.thestar.com.my/news/community/2014/09/29/protectingbuyers-rights-stern-action-to-be-taken-on-developers-of-abandonedhousing-projects/

13

APPENDICES

14

P
ictures of abandoned house in Taman Mengkibol, Kluang

15

16

MINUTE OF MEETING 1/2016

ENGINEER AND SOCIETY PROJECT
FACULTY OF CIVIL & ENVIRONMENTAL ENGINEERING

17

DATE
TIME
PLACE

: 17 SEPTEMBER 2016
: 2:00 P.M. 4:00 P.M.
: Library UTHM

Members Present: (5/5)

1

Mr. Andik Mohd Azril Bin Mohd Nasir (Chairperson)

Miss Nur Izzaty Binti Azni (Secretary)

Mr. Muhammad Haziq Bin Saipolbahri

Mr. Mohamad Ikhwan Bin Missnon

Miss Syazwani Binti Zamzam

Members Apologies:
None
NO

1.0

SUBJECT

Everyone take
part and give a
suggestion

Every member agree

on one suggestion
which is Taman
Mengkibol in
Kluang,Johor

PAPER PRESENTATION BY MR. ANDIK MOHD AZRIL

3.0

FEEDBACK

CHAIRPERSON ADDRESS
Chairperson starts the meeting by asking if the members have any
ideas on where to do this project

2.0

ACTION BY

Chairperson suggest to do the site visit and do the

interview on the person involved in Taman Mengkibol
preject.

All the members

aggreed

CLOSING
Chairperson reminds everyone to collect information about the
place and ask secretary to make the letter of site visit

Secretary make the

letter of site visit

Prepared by:

Approved by:

______________________

____________________

Nur Izzaty Binti Azni

Andik Mohd Azril Bin Mohd Nasir

(Secretary)

(Chairperson)
MINUTE OF MEETING 2/2016
ENGINEER AND SOCIETY PROJECT
FACULTY OF CIVIL & ENVIRONMENTAL ENGINEERING

18

DATE
TIME
PLACE

: 15 NOVEMBER 2016
: 8.00 P.M. 10.00 P.M.
: Library UTHM

Members Present: (5/5)

1

Mr. Andik Mohd Azril Bin Mohd Nasir (Chairperson)

Miss Nur Izzaty Binti Azni (Secretary)

Mr. Muhammad Haziq Bin Saipolbahri

Mr. Mohamad Ikhwan Bin Missnon

Miss Syazwani Binti Zamzam

Members Apologies:
None

NO

1.0

SUBJECT

Everyone

Based on the
information, the work
were assign.

PAPER PRESENTATION BY MR. ANDIK MOHD AZRIL

1
3.0

FEEDBACK

CHAIRPERSON ADDRESS
Chairperson starts the meeting by asking every member to present
the information

2.0

ACTION BY

Work are assign to each member

Everyone aggreed
with the given work

CLOSING
Chairperson ask for report progress in the next meeting

Prepared by:

Approved by:

______________________

____________________

Nur Izzaty Binti Azni

Andik Mohd Azril Bin Mohd Nasir

(Secretary)

(Chairperson)

MINUTE OF MEETING 1/2016

ENGINEER AND SOCIETY PROJECT
FACULTY OF CIVIL & ENVIRONMENTAL ENGINEERING

19

DATE
TIME
PLACE

: 20 NOVEMBER 2016
: 2:00 P.M. 4:00 P.M.
: Library UTHM

Members Present: (5/5)

1.

Mr. Andik Mohd Azril Bin Mohd Nasir (Chairperson)

2.

Miss Nur Izzaty Binti Azni (Secretary)

3.

Mr. Muhammad Haziq Bin Saipolbahri

4.

Mr. Mohamad Ikhwan Bin Missnon

5.

Miss Syazwani Binti Zamzam

Members Apologies:
None

NO

1.0

SUBJECT

ACTION BY

CHAIRPERSON ADDRESS
Chairperson starts the meeting by asking for the report progress

2.0

Everyone

Everyone shows the

progress

PAPER PRESENTATION BY MR. ANDIK MOHD AZRIL

Chairperson discuss on how to do the video presentation and slide

presentation
3.0

FEEDBACK

Haziq offered to do
the video and
ikhwan so the slide

Everyone take note

and aggreed

CLOSING
Chairperson want to see the work complete before submission
date

Prepared by:

Approved by:

______________________

____________________

Nur Izzaty Binti Azni

Andik Mohd Azril Bin Mohd Nasir

(Secretary)

(Chairperson)

MINUTE OF MEETING 1/2016

ENGINEER AND SOCIETY PROJECT
FACULTY OF CIVIL & ENVIRONMENTAL ENGINEERING

20

DATE
TIME
PLACE

: 28 NOVEMBER 2016
: 4.00 P.M. 6:00 P.M.
: Library UTHM

Members Present: (5/5)

6.

Mr. Andik Mohd Azril Bin Mohd Nasir (Chairperson)

7.

Miss Nur Izzaty Binti Azni (Secretary)

8.

Mr. Muhammad Haziq Bin Saipolbahri

9.

Mr. Mohamad Ikhwan Bin Missnon

10. Miss Syazwani Binti Zamzam

Members Apologies:
None

NO

1.0

SUBJECT

ACTION BY

CHAIRPERSON ADDRESS
Chairperson starts the meeting by asking about the work

2.0

Everyone

Everyone shows the

work

PAPER PRESENTATION BY MR. ANDIK MOHD AZRIL

Chairperson approved the report

3.0

FEEDBACK

CLOSING
Chairperson give speech and hope everyone do well on
presentation day

Everyone take note

and aggreed

Prepared by:

Approved by:

______________________

____________________

Nur Izzaty Binti Azni

Andik Mohd Azril Bin Mohd Nasir

(Secretary)

(Chairperson)

21