Highlight: 'Wait and see' in Iskandar
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Tuesday, 4 June 2013
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by Fatin Rasyiqah Mustaza of theedgemalaysia.com on Tuesday, 04 June 2013 01:04
KUALA LUMPUR: Property market hot zone Iskandar Malaysia may witness a "wait and see" attitude among investors in the next few months while they await the Johor government's announcement on the "higher taxes" to be imposed on foreign-owned properties in the state, real estate experts said.
"Iskandar Malaysia is currently booming. But with this news, we may be looking at a 'wait and see' attitude from buyers, especially foreigners," said Siva Shanker, president of the Malaysian Institute of Real Estate Agents, when contacted.
Property agents are concerned that the higher taxes on properties owned by foreigners may put off foreign purchasers, especially Singaporeans who had only recently warmed up to the Iskandar story.
On Sunday, Johor Menteri Besar Datuk Seri Mohamed Khaled Nordin told reporters the state government would impose "higher taxes" on properties owned by foreigners. He said the tax rates were still being discussed, adding that they are scheduled to be imposed by the end of the year.
While the menteri besar did not elaborate, developers who have property projects in Johor were quick to explain that a special levy may not be imposed on top of the purchase price of properties bought by foreigners, instead there would be an increase in the assessment rate.
"An assessment rate hike is being proposed for properties owned by foreigners and potentially local owners whose properties are valued at above RM1 million. We hope any implementation will take into proper consideration the industry feedback and current market conditions," said a spokesperson from Mah Sing Group Bhd
.She said Johore has been maintaining the existing assessment rates for close to 30 years. "Currently, the annual assessment rate for residential properties in Johor is 0.14% of the property value, which means for a RM500,000 home, the owner has to pay RM700 a year. The rate for commercial properties is 0.2%.
"We believe genuine investors will continue to see the long term value proposition in owning a quality property by branded developers with good track records in a prime location like Johor/Iskandar Malaysia," said the spokesperson.
Hua Yang Bhd chief financial officer May Chan also agreed that it is unlikely for the state government to impose a special levy on top of the property price for foreigners.
"But while the cost impact from a higher assessment rate is likely to be small, buyers' sentiment may be affected pending more details from the Johor government," Chan told The Edge Financial Daily.
When contacted, Real Estate and Housing Developers Association (Rehda) president Datuk Seri Michael Yam said all stakeholders should engage and discuss the matter with the state government because the tax rate implementation "needs more clarification and more consistency", adding that there is also a need for a long term policy.
He noted that Malaysia's tax rate on property is relatively low compared to that imposed by other countries. However, in the absence of proper communication by the state government, foreign investors may hold back if they assume that Malaysia's tax rate is as high as that of their own countries.
"The state government must quickly clarify the new tax rate so that the investors' wait and see attitude does not prolong. I can imagine prospective buyers calling up Iskandar developers to seek clarification over the new tax rate issue," said Yam.
"An announcement like this does not resonate with the federal government's efforts and initiative to develop the Iskandar region, which is aimed at attracting not only local investors but also foreigners.
The imposition of a new property tax rate might dampen sales of properties in the Iskandar region. Foreigners will now think twice before investing in Iskandar."
