Curbs to hit Iskandar developers hard
The Business Times
In Kuala Lumpur
DEVELOPERS with substantial exposure to the Iskandar Malaysia region are expected to be the "worst hit" by recent property measures, as heftier taxes would deter short-term foreign purchasers who also account for a significant portion of residential sales in some areas, a research house has said.
At the same time, overseas developers are expected to be more cautious about land transactions as more punitive taxes could lead to higher landholding costs, said RHB Research.
CBRE data indicates that foreign buyers account for 54 per cent of total high-rise residential sales (by developers) in Nusajaya, and 39 per cent in Johor Baru and major suburbs.
But the new 30 per cent real property-gains tax on foreigners who gain on disposals within the first five years of acquisition is likely to "wipe out short-term foreign speculators to a certain extent", RHB observed in a real-estate report dated Nov 27.
The higher floor price of RM1 million (S$388,000), from RM500,000, and the scrapping of easy financing schemes such as the developer interest-bearing scheme, are additional deterrents to foreign buyers with speculation in mind.
In the past one to two years, the Johor economic zone has gained traction among foreigners, especially Singaporeans, for a number of reasons, including the strong Sing dollar.
With robust demand, property prices soared, catching up with Kuala Lumpur city-centre prices. A number of KL high-end, high-rise properties have been going at more than RM1,000 psf.
The steep price increase in such a short period may not be sustainable for a number of reasons, including the lack of commerce in Johor Baru.
To date, the bulk of Iskandar investments has been centred on real estate, as developers from Kuala Lumpur as well as overseas made a beeline for the new hot spot.
Take Country Garden Holdings, which acquired 22.25ha in Danga Bay for nearly RM1 billion. In August, it launched with much fanfare its integrated development, which has an estimated gross development value of RM18 billion.