The recent relaxation of residential ownership rules for foreigners and the real property gains tax (RPGT) waiver, high-end residential properties in Malaysia have attracted a fair amount of interest from abroad. Surveys have also shown that interests and transactions on high-end properties have picked up considerably. However, there remains to be issue of over hang at the medium and low-end properties. The result is an increasing price gap between high-end and mass market real estate properties. This trend has also extended to land pricing, where the highest transacted to date is somewhere between RM1,300 and 1,400 per square feet. The piece of land is located near Kuala Lumpur City Center (KLCC), presently occupied by a Chinese (Hakka) restaurant.
So what about the mass property market? There are certainly hope for the better going forward as the Government is considering to inject further stimulus into this sector of the market. Some potential stimulus include:
- restructuring of EPF (Employee Provident Fund) holder's account allocation to tip towards greater balance (possible 50:50) and thus higher amount for housing withdrawal. Also, one may not have to wait until the first house is fully settled before withdrawal;
- temporary waiver or reduction in housing stamp duty. The current stamp duty are: 1st RM100K : 1%
next RM100K – 500K: 2%
Next RM500K – 2.5 m : 3%
Excess over RM2.5 m : 4%
Besides, there could also be further added incentives for Malaysia's Real Estate Investment Trusts (REIT) and relaxation of policies on foreigner purchase of commercial properties. Malaysia REITs market is currently lagging other major countries REITs market such as Hong Kong and Singapore due to inferior tax incentives.
When will we know if this happens? Well, wait for September's 2008 Budget announcement. For those who want to buy or sell properties, you may want to hold on your decision until then.
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