18 December 2013

Iskandar Malaysia Property Sales Seen Slow Down - Dec 2013

It seems that after so many developers rushing into Iskandar Malaysia after Klang Valley / Penang property boom and Singapore property cooling measurement, Johor government started to implement several action to discourage investors especially foreigners to invest here.

Some of the steps taken were:

  1. Introducing 2% of Buyer Stamp Duty for foreigners, instead of maximum RM10,000 previously
  2. Introducing 30% of Real Property Gain Tax (RPGT) within the first 5 years and a permanent 5% tax after that to foreign buyer 
  3. Minimum foreigner purchase price increased to RM1.0M from RM500K previously
Which such measurement taken in place, I believe that it may rule some speculators without holding power out. So far, some of the launches this year has poorer take-up rate compared to about 1 year ago. For more detailed information, you may refer to the link below:


Another issue that brought to the spot light was that Johore Sultan announced weekend holidays to fall on Friday and Saturday. It may create inconvenience to private businesses that have a business tie with Kuala Lumpur / Singapore offices. Many investors will be worrying what other changes of policy that Johor government would make later. 

In my humble opinion, Iskandar Malaysia should strive to be a so called suburb of Greater Singapore. But it only can be happened if and only if both government could push to make it happen. High Speed Rail project details is set to be confirmed by next year (2014) and let's see if it could be materialized by year 2020. I sincerely hope Iskandar Malaysia could set to be a good example in Modern Islamic Countries. 


2 comments:

  1. Think the situation is not as dire as perceived.
    Firstly, the change in work week is no more than a re-enactment of an old law prior to 1994. However, it did not stop commercial organizations from operating on the normal work week and only government offices complied with the mandate. Thus minimal impact expected.
    As for capital gains tax. In all account, it seems fair that the local government attempts to cool down speculation of its housing markets. Countries such as China and Singapore, have likewise implemented cooling measures in recent years. Also to note that many western countries have capital gain tax which is perpetual (not just 5 years).
    2% stamp duty is a drastic increase from RM10k. But to put matters in perspective, Singapore has implemented a 15% stamp duty for foreign buyers.
    Finally, Malaysia does not have estate duties for property investments, similar to Singapore. Estate duties can be very hefty and the payable sums are typically a percentage of the gross value of the property, not a percentage of the "gain". For instance, US' estate duties can be as high as 40+% of gross estate values above a approximately US$60k.

    The slow down is probably a knee jerk effect. For investors looking at investing in Johor, perhaps it would be better to spend more time examining the viability of the economic outlook there and the possibility of job growth in the next couple of years.

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    Replies
    1. Thanks for your comments.

      Talk about estate duties in any other countries, I believe that most if not all, high net worth investors already park their properties under so called a trust, or at least in company's name, to protect them from estate duties (this is part of estate plannings which is more relevant to those super-rich investors).

      Ya, the only catalyst in Iskandar Malaysia (if compared to KL, capital of Malaysia) is the location near to Singapore. We still could not find any MNCs from Singapore moving into Iskandar region. To my own personal opinion, Singapore government would only allow labor incentive and low technology SMEs to move out from there to JB. You would notice that the Singapore government not even want Changi airport to co-operate with Senai Airport, not to mention about "co-opetition".

      Second Home Campaign, which only promote investors to treat it as a second home, or so called paradise for retirement life (Malaysia was announced as 3rd best place to retired in the world) may help to boost up health care demands in this area.

      I believe that most people would still prefer to work in Singapore instead of JB. And I sincerely hope that both government could have a better tie in future so that Iskandar Malaysia could be treated as "suburb of Greater Singapore".

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