Published February 25, 2014

RM1m floor price won't impact Iskandar projects

By Pauline Ng in Kuala Lumpur

THE new RM1 million (S$385,500) floor price for foreign property buyers will not have much impact on Iskandar Malaysia as only an estimated one in five purchasers is a foreigner, according to a property consultant.

Speaking at a 2014 property outlook briefing by the Malaysian Institute of Estate Agents (MIEA) in Kuala Lumpur yesterday, Loo Kung Hoe of Rahim & Co (Johor) said that half of the residential property buyers in the economic zone are Malaysians working in Singapore and about 30 per cent are locals.

As foreigners are more inclined to acquire properties costing more than RM1 million, Mr Loo said the new ruling, which takes effect on May 1, would have little impact. Some areas of Iskandar, including Medini, Putri Harbour and China Garden's Danga Bay development, are also exempt from price restrictions or quotas, though homes there are more likely to exceed RM1 million than not.

Mr Loo said a Feb 13 circular by the state land office stated that there is a 2 per cent approval fee for all property transactions, whether primary or secondary.

The RM1 million floor price - previously RM500,000 - for non-Malaysians was announced in the 2014 Budget but does not necessarily apply nationwide as land is a state matter. In Sarawak, the minimum price remains RM350,000, said the state's MIEA representative, Alex Ting.

The decision by Johor state to also levy a 2 per cent approval fee (versus a flat RM10,000 charge previously) is aimed at curbing spiralling home prices and boosting its coffers.

Realtors say that after a three-to-four-year property boom, prospective buyers are now more guarded as property taxes have been raised and easy financing schemes by builders banned.

Moreover, there are fears of an oversupply of luxury units in a number of places, particularly in Iskandar.

HwangDBS Vickers estimated that the new supply of high-end condos in Iskandar would accelerate three-fold to more than 4,000 units this year "and is expected to remain elevated up to 2017".

In a mid-February report, the broker said this does not take into account Country Garden's 9,000-odd units, of which some two-thirds are said to have been sold, with foreigners making up 70 per cent of the buyers.

"There is an oversupply in the short term, but in the long term the oversupply will take care of itself," said MIEA president Siva Shanker.

He said Bank Negara statistics indicate the bulk of home loan lenders have a single loan, with multiple borrowers being a small proportion, though he did not have specific data.

"They (single-loan lenders) will fight to keep their property from going into NPL (non-performing loan)."

Zerin Properties managing director Previndran Singhe thinks the upcoming supply is sustainable because more homes would be needed as employment opportunities grow when catalytic projects start to show results.

On China Gardens' vast potential supply, he believes most Chinese buyers would not be too bothered if their units are tenanted. "If it's empty, I don't care," he said of their likely attitude. "My worry is infrastructure spending - that there's not enough of it."

Rahim's Mr Loo was similarly optimistic, pointing to the housing needs of 5.5 million people across the Causeway.