Press Release: Lower Foreign Buyer Price Threshold WINS APPROVAL OF 71% of Malaysian Real Estate Agents: SURVEY
Kuala Lumpur, Malaysia (December 5, 2019) — The real estate industry views positively the government’s recent Budget 2020 announcement to temporarily reduce the minimum price threshold for foreign buyers. That is the conclusion of the Juwai IQI survey of 386 Malaysian real estate agents, conducted between 6 and 21 November 2019.
Nationwide, 71% of surveyed agents approved, calling the lower threshold either “a little good” or “very good.” More than one-third, or 35.1%, of surveyed agents believe the lower threshold is “very good.”
What’s your opinion: is the government’s move to temporarily reduce the foreign buyer price threshold from RM1 million to RM600,000 a good decision?
The real estate industry was most positive about the lower thresholds in the states of Kuantan, Penang, Melaka, and Sarawak. In each of those locations, more than 40% of respondents considered the lower threshold to be “very good.” Kuantan had the highest rate of approval, with 75% of agents from that state calling the initiative “very good.”
The survey asked, “What’s your opinion: Is the government’s move to temporarily reduce the foreign buyer price threshold from RM1 million to RM600,000 a good decision?” Respondents could choose from “very good,” “a little good,” “neither good nor bad,” “a little bad,” and “very bad.”
In every state with sufficient survey responses for analysis, at least 62.5% of respondents consider the lower threshold to be “a little good” or “very good.”
The states with the highest number of negative responses, in which agents call the lower price thresholds either “a little bad” or “very bad,” are Melaka (15.8%), Kuala Lumpur/Selangor (7%), and Sabah (8.1%). Nationwide, 8.6% called the change “a little bad” or “very bad.”
Juwai IQI Executive Boardmember, Kashif Ansari, said:
“It’s crucial for Malaysians to understand the real-world impact of this innovative public policy initiative. Is it good, or is it bad? In its 2020 budget, the government proposed helping the industry sell some of its unsold new homes by temporarily lowering the minimum price threshold for foreign buyers on high-rise property in urban areas from RM1 million to RM600,000. The lower threshold will only apply between January 1 and December 31, 2020, after which date the threshold reverts to RM1 million.
“The fact that everyone agrees upon is that the markets are suffering from an excess of unsold property. By lowering the price threshold for a short time, the government hopes some of these unsold properties will find buyers. Developers will then have the funds to invest in and begin construction on projects more suited to the local buyer in today’s market.
“The states of Kuala Lumpur, Penang, Selangor, and Johor together have an overhang of 9,315 high-rise units valued at RM6.775 billion. The market in Kuantan is quite challenging at the moment, so it’s reassuring the industry there believes this policy will help.”
Data from the Valuation and Property Services Department of Malaysia (JPPH Malaysia) shows that Kuala Lumpur has the highest overhang of unsold completed condominiums and apartments. As at the first quarter of 2019, the high-rise overhang in KL stood at 2,544 units, worth about RM2.338 billion, followed by Penang with 2,684 units valued at RM2.13 billion, Selangor (2,113 units; worth RM1.144 billion) and Johor (1,974 units; RM1.163 billion).
“Our recent reports found that mainland Chinese buyers account for RM8.4 billion (US$2 billion) of total Malaysia residential property sales per year, and less than one per cent of all transactions.
“The trade war encourages global corporations to relocate their operations to Malaysia due to the country’s productive labour force and strategic location. These new investments in factories and distribution centres also lead to a certain amount of housing investment as foreign businesspeople move to Malaysia.
“Malaysia is an essential player in the Belt and Road Initiative, as 80% of China’s trade moves through the Straits of Malacca. The difficulties in Hong Kong have contributed to a strong increase in demand from Hong Kong. Total numbers of Hong Kong buyers will not be as large as some imagine because Hong Kong itself has a relatively small population.”Chinese buyers made 16.5 per cent more enquiries on Malaysian property in the third quarter than in the same quarter of 2018. In the first half of 2019, Malaysia was the fifth most popular country for Chinese property buying inquiries in the world.
“With the lower threshold in 2020, we forecast stronger interest from our buyers. Malaysia is especially appealing to buyers motivated by lifestyle, retirement, or education. It has affordable standards of living, high quality of life, medical facilities, and accessible educational institutions. Malaysia consistently ranks among the best places to live.”
— end of press release —
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