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Tuesday, October 21, 2008

Relaxed FIC rules boon for residential property

PETALING JAYA: Further liberalisation of the Foreign Investment Committee (FIC) guidelines to attract foreign investors to the local property market, especially for commercial property, is most welcomed, industry players said.

It would be a most timely measure to raise the country’s attractiveness as a real estate investment destination, they said.

Lauding the economic stabilisation plans announced by Deputy Prime Minister Datuk Seri Najib Tun Razak yesterday, industry players said the Government’s proposed measures to review the FIC guidelines for the property sector would cushion the market from a demand slowdown caused by the global financial meltdown.

International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong said while the FIC guidelines for residential property purchases by foreigners had been relaxed over the years, the commercial property sector was still subject to strict regulations.

Datuk Richard Fong

“Currently, a foreigner who wants to invest in any commercial property such as offices, retail malls, shop lots and factories but does not intend to occupy the premises himself, is required to have a bumiputra partner taking up 30% stake in the investment before he can go ahead with the purchase.

“This has been a huge restriction to commercial property sale as the guideline is deemed impractical and not advantageous to either party. It is not easy to find the right bumiputra partner who has the financial means to tie down their money for a commercial property purchase which usually runs into millions of ringgit,” Fong said.

Calling for the restriction to be relaxed, he said FIABCI Malaysia had proposed to the Government to impose such a requirement only on investments above RM100mil.

“There have been many instances where foreign interest for commercial property of RM50mil to RM100mil have been rejected because the right bumiputra partners could not be found,” he pointed out.

Fong said the relaxed FIC guidelines for the housing market that were introduced in December 2006 had attracted stronger interest from Middle Eastern, Korean, Japanese, Chinese, British and American buyers.

Since then, FIC approval for housing units priced from RM250,000 and restrictions on the usage and the number of units foreigners can purchase had been lifted.

Stressing that the property sector had the potential to attract higher foreign investments, Fong said the joint public-private sector initiative to launch Malaysia Property Inc next year to promote Malaysia’s real estate overseas had targeted to attract RM10bil in foreign investments over the next five years.

Meanwhile, Real Estate and Housing Developers Association president Datuk Ng Seing Liong said while the FIC had been relaxing guidelines for property purchases by foreigners, there were still restrictions imposed by state authorities.

At the state level, each state authority has the discretion to consider acquisition by a foreigner based on the location and type of property and the percentage of total units in a project. The transfer of property title is under the jurisdiction of the state government.

“These pertain mostly to issuance of property titles for projects involving state-alienated lands and bumiputra lots. State governments should abide by the Federal Government’s directive to relax rulings on foreign purchases to ensure the success of these measures,” Ng said.

By The Star (by Angie Ng)

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