News: Iskandar developers may get reprieve from curbs
Iskandar developers may get reprieve from curbs
The Straits Times. Published January 20, 2014
By Anita Gabriel Senior Correspondent
DEVELOPERS in Malaysia’s bustling Iskandar could soon get some reprieve from one of the new property curbs that kicked in on Jan 1.
One new rule raised the minimum price of property that foreigners can buy from RM500,000 (S$193,400) to RM1 million.
But The Straits Times understands that projects that receive approval from the Johor state authority before May 1 this year will be exempt from this.
A reprieve would come as a relief to builders in the region across the Causeway, which has drawn keen interest from Singaporean buyers.
“They (Johor’s state authorities) understand that the market is a bit shaken by these measures, particularly the projects that have gone quite far ahead,” said an industry source.
“There’s a tendency now to let them go through and extend the cut-off point to May 1. So developers that have submitted and received approval before that should be safe.”
This move, together with the announcement of three new areas in Iskandar that will enjoy exemption from the new curbs, is expected to be made in a matter of weeks.
Medini is the only node in the growth corridor that enjoys tax breaks.
The new rule was announced in October last year and is aimed at stemming the spiralling property prices in the area. It sparked frustration among builders, who felt they were being forced to tweak their project designs.
The higher price threshold for foreign buyers could force developers to build bigger units to price them accordingly if they want to attract these buyers.
The hit for smaller developers with more modest landbanks is harder to stomach.
“(These developers) have smaller parcels of land with limited capital. Although their traditional market is local buyers, foreigners could still be potential buyers,” said an executive of a Malaysian-based property firm.
“But now they have to make the hard choice between making bigger units which could erode margins to woo foreigners or completely lose out on the foreign buyer segment. They are in a dilemma.”
There also appears to be some expectation that the real property gains tax that went up effective Jan 1 this year could also be tweaked.
Developers have been lobbying hard on concerns that the property market could be hard hit by these tightening measures.
The Malaysian government also raised the capital gains tax for non-citizens to 30 per cent for properties sold within five years of purchase and 5 per cent in the sixth and subsequent years.
Malaysians will also have to pay higher gains tax, although at less onerous levels than foreigners.
“The main thing here is that the policymakers need to make sure they don’t kill the market by making potential investors nervous about Iskandar,” said a senior executive with a major firm which is investing big in the region.
“We are comforted that, to some extent, they are being considerate to the businesses by making these adjustments.”