Commercial property, REITs the big winners


  • Business
  • Saturday, 01 Oct 2005

THE commercial property sector and the real estate investment trusts (REITs) appeared to be the biggest winners from the Budget, which has proposed the setting up of a bumiputera property trust foundation, Yayasan Amanah Hartanah Bumiputera, as well as tax incentives for REITs. 

The foundation, Yayasan Amanah Hartanah Bumiputera, would have an initial capital of RM2bil to purchase commercial properties, especially in major towns. 

Real Estate and Housing Developers' Association (Rehda) president Datuk Jeffrey Ng said the proposed tax deduction for legal, valuation and consultancy expenses incurred by REITs would bring down the cost of setting up such trusts. 

“More developers and REITs promoters will be encouraged to invest in investment-grade buildings and get into the REIT act,” he said.  

Ng said the creation of the Yayasan Amanah Hartanah Bumiputera would also be a boost to the commercial property sector and also increase bumiputera commercial property ownership.  

Sunrise Bhd managing director Datuk Michael Yam said the move would not only help bumiputras but also developers who had always experienced difficulty in disposing of bumiputra designated units.  

“Such delays or non take-up negatively affected developers' cash flow and margins,” he added. 

Mah Sing Group Bhd president and group chief executive Datuk Leong Hoy Kum concurred that the tax deduction for REITs would promote this new class of investment and add depth to the industry. 

“The growing number of REITs will enhance the liquidity of real estate companies and facilitate product diversification for investors,” he said. 

He added that the new bumiputera property trust would revive interest in the lacklustre commercial property sector.  

Yam said the RM3.2bil allocation to build 37,600 low-cost houses for essential personnel would be a boost for the smaller contractors and builders. 

To reduce the dependency on unskilled foreign workers, the Budget has also proposed that capital allowances be given for three years for moulds to manufacture Industrialised Building Systems (IBS) components that meet Malaysian Standard MS 1064. 

Leong said this would ensure consistent quality and lower construction cost, ultimately leading to the extensive use of IBS, especially in landed houses, and reduce the country's reliance on foreign labour.

For the full text of the Budget 2006 speech to Parliament click here.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights
   

Next In Business News

KLCI steps back 1.42 points as telcos weigh
Maybank extends over RM77bil in repayment assistance to customers as at Aug 31
CIMB Group to accelerate ambition to be Asean sustainability leader
Indonesian shares lead Asia recovery on Evergrande assurance
Oil prices rise over US$1 after report of big draw in U.S. crude stocks
Ecomate offers 49m new shares under IPO
Minimum wage can be revised in stages
Wahid sees a lot of opportunities in Islamic social finance
Solarvest launches Powervest solar financing
TAFI unit signs JVs with RM621.5mil combined GDV

Stories You'll Enjoy


Vouchers