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Thread: Medini Iskandar property buyers seem unfazed by impending tax rules

  1. #1
    Blue blood

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    Default Medini Iskandar property buyers seem unfazed by impending tax rules


    SINGAPORE: Singaporeans seemed undeterred by the recent property tax rules announced by the Malaysian government.

    More than half of the 192 indicative bookings for the latest project in Medini Iskandar -- Paradiso Nuova -- came from Singaporeans.

    [B]Its developers say they are confident that the Medini properties will be exempted from the new cooling measures but analysts note that it might be best to wait for official confirmation to avoid disappointment.[/B]

    Like other developments in Medini Iskandar, the new Paradiso Nuova is likely to remain exempt from any rules regarding the capital gains tax and the minimum investment value of properties.

    Zhuoyuan Iskandar, a joint venture company backed by Chinese property developer Zhuoda Group and Malaysia's Iskandar Investment Berhad, say this is the assurance given to them by the Iskandar Regional Development Authority (IRDA).

    From January 1, 2014, property sold within the first three years of purchase will be subject to higher capital gains tax of 30 per cent.

    This is an increase from the 15 per cent for property disposed of within the first two years under Budget 2013 and the 10 per cent for property disposed of between the third and fifth year.

    In addition, foreigners can only buy properties valued at RM1 million and above.

    "'Generally I think all Medini projects have been exempted, prior to all these announcements, from property tax for first buyers, and are also exempted from minimum threshold from foreign investments,” said Zhuoyan Iskandar sales and marketing director Liang Thow Ming.

    “We expect this to be extended despite the new announcements. We do not think we will be affected by the (new rules). On the contrary, it will push other buyers from the other parts of Malaysia to Medini."

    The developers expect confirmation from the authorities in the next one to two weeks.

    IRDA has written to Malaysia's Ministry of Finance to confirm that Medini is exempted from the real property gains tax. It has also written to the Johor Land Office on the area's exemption from the minimum investment value of at least RM 1 million.

    Until then, market watchers say those keen on new projects like Paradiso Nuova can only register their interest to buy, before developers obtain the Advertising Permit and Developer Licence (APDL).

    “Currently buyers are registering their interest for projects that have not obtained the APDL yet,” said Johnny Chng, OrangeTee head of international projects.

    “If the APDL is not obtained prior to the implementation of the new regulation, which is minimum RM1 million investment value, then all these registration of interest of deals would not be able to go through. So the registration would be treated as null.”

    At an average price of RM950 per square foot, the units cost between RM600,000 and RM1.6 million. So far, most of the 192 units booked are smaller units.

    [B]Half of the bookings are from Singaporeans with another 40 per cent from Malaysians, while the rest are from other nationals who are mainly from China and Indonesia.[/B]

    The 382-unit development is just a tenth of the units that the developer will be putting out.

    While the current development will target Singaporeans and Malaysians, the upcoming condominium on a nearby plot of land is slated to house 700 units and will also target Chinese and Indonesian buyers.

    In the next seven years, some 16 acres of land in Medini will be developed into high-end residences through a joint venture backed by Zhuoda Group and Iskandar Investment at a gross development value of RM2.6 billion.

  2. #2
    Blue blood

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    Default Malaysia grants tax break for showcase zone

    Good news for Medini buyers!


    Malaysia has granted a substantial tax break to a zone in a showpiece investment project near Singapore, a move likely to provide crucial support to a US$800 million initial public offering of the area's developer next year.

    The Medini area in the southern state of Johor is the only section of the US$30 billion Iskandar Development Region to get an exemption from a 30 per cent property gains tax announced in October to cool soaring property prices, government officials said.

    The area is being developed by Medini Iskandar Malaysia, a company that is 60 per cent owned by Iskandar Investment, a corporation controlled by sovereign fund Khazanah Nasional Bhd. Japanese conglomerate Mitsui & Co Ltd and Dubai-based realtor United World Infrastructure each own 20 per cent.

    "Medini in 2006 and 2007 was a sparsely populated area and not a preferred investment location," Datuk Ismail Ibrahim, chief executive of Iskandar Regional Development Authority (IRDA), told Reuters when asked why the area received an exemption.

    "The objective is to provide the catalyst to drive investments into Medini," he said. Since its inception in 2006, Medini was exempt from property gains taxes.

    Medini Iskandar declined to comment about the latest tax exemption.

    The tax break, however, means the company should be able to attract more funds into the Medini area, helping the prospects for its IPO as well as the government, which is seeking to lure more investors, especially from cash-rich Singapore, into the Iskandar region without inflating a broader property bubble.

    "It (the exemption) certainly gives it an edge over others in Iskandar," said a banker involved in Medini Iskandar's IPO, which is excepted to be launched in the first half of 2014.

    Bank of America Merrill Lynch, Goldman Sachs and Maybank have been chosen to manage the planned listing, according to Thomson Reuters publication IFR.

    Other major listed developers in the Medini zone include Mah Sing Group, Sunway Bhd, Eastern & Oriental and WCT Holdings Bhd.

    The whole Iskandar region has seen property prices climb in recent years due to speculators and higher demand from Singaporeans seeking a break from sky-high prices in the city-state. US, European and Chinese firms have also realised the potential of the area as a manufacturing hub.

    The recent tax hike has left other Iskandar developers like Iskandar Waterfront, partly owned by Johor state, and UEM Sunrise Bhd, Malaysia's biggest real estate company, bracing for a chill next year.

    Both companies declined to comment when asked about the tax exemption for Medini.

    Iskandar Waterfront, which is developing a zone directly across the causeway that links Singapore with Johor Baru city, has, however, delayed a US$300 million IPO to the end of 2014 from the first quarter to gauge the impact of the property cooling measures, people with knowledge of the matter said last month.

    The sources declined to be identified because the information was confidential.

    The Iskandar Development Region struggled to attract investors at first, but improved infrastructure and soaring property prices in Singapore burnished its appeal.

    Total committed investments by local and foreign firms in the area until September this year amounted to RM128.21 billion, almost ten times a much as when the zone was first set up in 2006, IRDA officials said.

    Local investors account for almost 65 per cent of the total.

    Medini, the largest township across the narrow strait from Singapore, is only a small part of one of the five sections that make up the Iskandar Development Region.

    The area that was once mostly rubber and palm plantations is now home to a popular Legoland theme park resort, a production centre for Britain's famed Pinewood Studios as well as some of the most developed infrastructure in the whole Iskandar region, government officials say.

    Medini Iskandar has so far spent RM5.9 billion on developing the area, with US$600 million going on well-lit roads and sewage treatment facilities. The rest was an initial capital injection, according to the company website.

    "Medini came in at a time of doldrums, nobody wanted to go to Iskandar," Tan Sri Shahrir Abdul Samad, a member of parliament for Johor Baru, the state capital of Johor, told Reuters.-- Reuters [LEFT][/LEFT]

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