Brunei has announced an ambitious programme to solve the country's housing shortage, one that could also provide a major boost both to the construction industry and to the building materials sector.
On October 14, the Ministry of Development issued a statement announcing plans to build more than 10,000 residential units to assist in overcoming the scarcity of housing.
While considering various options to deliver housing units in a more timely manner within existing laws and regulations, the Ministry said it would ensure that standards of design, structural integrity and community needs were maintained.
Options under review include increasing land density to accommodate more houses per hectare of land, contracting larger housing projects and introducing alternative construction contracts. One possible result could be that infrastructural and housing works would be bundled together in one contract.
In addition to the Ministry's construction programme, the Brunei Economic Development Board (BEDB) - the state-funded economic development agency tasked with creating employment and business opportunities - has also announced plans to build an additional 2000 houses over the next two years.
The Ministry said it was looking into the possibility of involving more third party participants to complement the efforts of the BEDB, and was cooperating with other agencies such as the Brunei Islamic Religious Council in identifying and building houses for low income earners.
The construction programme will be conducted through the National Housing Scheme (RPN) and the Skim Tanah Kurnia Rakyat Jati (Landless Indigenous Citizens Housing Scheme or STKRJ). The budget for the 2007-2012 National Development Plan (NDP) has already provided funding for 2263 housing units at five different sites, with 139 units expected to be completed in 2010, 762 additional units in 2011 and a further 1362 units to be finished in 2012.
Under the NDP, $1.05bn was set aside for housing development, or 16.4% of the total allocation, the largest single component of the planned $6.46bn expenditure.
One of the biggest problems facing both the state and the housing industry is the lack of land for residential units. With a total land mass of 5765 square kilometres, Brunei needs to strike a balance between providing adequate housing for all its citizens, preserving the natural environment and improving its primary and secondary industries.
Having designated some 70% of the country's territory as a natural preserve, Brunei has limited land available for housing, agriculture and industry. With the state seeking to improve food security by increasing both yields and cultivated land while at the same time actively promoting the development of an industrial base, land for housing is in short supply.
This shortage of land, combined with an anticipated annual increase in the population of around 2.2% according to a United Nations study, poses something of a dilemma. While the government is considering increasing the housing density in residential areas by adding additional units, it will also have to take into account personal preferences and established cultural practices.
Most Bruneians prefer free standing housing, fully detached from their neighbours, according to Azimin Ibrahim, a sales representative for property developer Cityneon Displays & Construction Sdn Bhd.
"A lot of Bruneians like to have their own space and their own individual unit separated from everyone else," Ibrahim recently told local media on the sidelines of the Brunei International Property Exhibition (Bipex) 2008.
The programme is expected to bolster the local construction industry. While many of the contracts for major industrial construction projects are awarded to international firms, with only limited input from the domestic building sector, residential construction is more easily catered to by smaller scale Brunei contractors.
While local builders should benefit from the government's housing programme, they will have to contend with high prices for many materials. Though Brunei's commercial forests can provide much of the timber needed for housing construction, other essential materials such as cement and steel must be imported. It is noteworthy, however, that the international price for rebar has dipped from record highs of above $1500 in July to below $1100, according to industry web sites.
Contractors signing on for the government's housing projects will have to factor in the current volatile nature of the materials market. However, the ongoing international financial crisis appears to be causing a slowdown in the global construction industry, which could see prices fall in line with dropping demand. Thus the current economic turmoil may yet see one beneficiary - those Bruneians on the waiting list for state housing.