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Friday, January 15, 2010

Higher floor price may hurt second-home programme

The government's move to raise the minimum property purchase price for foreigners may hurt its campaign to promote Malaysia as a second home.

The Economic Planning Unit released a statement yesterday, saying that the ruling, first announced in June 2009, is effective January 1 2010.

In June, the Prime Minister Datuk Seri Najib Razak said the minimum threshold for acquisition of residential units by foreign interest at RM250,000 and above, would be increased to RM500,000 and above come January 1 2010.

It was part of a wider deregulation of FIC guidelines.
Malaysia My Second Home programme or MM2H is an international residency programme promoted by the Ministry of Tourism to allow foreigners to live in the country on a long-stay visa of up to 10 years.

"It won't be so much of a problem for Kuala Lumpur, where properties easily cost half a million ringgit, but states like Terengganu and Ipoh ... where can you find properties in that range?" International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong told Business Times yesterday.

A survey done by FIABCI found that half of foreign purchases were for properties between the price of RM250,000 and RM500,000.

"So you are really wiping out half of the market by increasing the threshold limit," Fong said.

Some 2.5 per cent of total property investments are by foreigners.

However, real estate firm Zerin Properties chief executive officer Previndran Singhe told Business Times that it would not affect the property market, as foreigners are already buying properties of RM500,000 and above.

Real Estate and Housing Developers Association (REHDA), meanwhile, concurred with FIABCI's view.

"The ruling will not affect the property agents, who mainly look at Kuala Lumpur, but I have to look at it on a national level and it will affect outlaying areas such as Terengganu and Malacca," REHDA president Datuk Ng Seiong Liong told Business Times.

While applying the rule to Kuala Lumpur would be fine, a blanket policy for the whole country would hurt foreign property investments, he said.

By Business Times

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