Developers say minimal impact from new S'gor property rules, buyers differ

PETALING JAYA: Various stakeholders in the property sector hold divergent views on the new set of guidelines governing property purchases by foreigners in Selangor, with some believing it will prevent them from sweeping up properties and driving up prices.

National House Buyers Association secretary-general Chang Kim Loong applauded the state government’s move to set a minimum purchase price of RM1mil for the Hulu Selangor and Sabak Bernam districts (Zone 3) and RM2mil elsewhere (Zones 1 and 2).

According to an Aug 28 circular, the guidelines, effective Sept 1, apply to foreigners, permanent resident holders and foreign companies.

It added that the land office also only permits these groups to buy strata and landed strata properties.

Chang said this rule would prevent foreigners from grabbing up properties, using their superior exchange rate, which would result in increased prices and depriving Malaysians the opportunity to own such properties.

“Take, for example, the Singapore dollar against the ringgit. It’s peanuts to them,” he told StarBiz, urging other state governments, especially Penang and Johor, to follow Selangor’s footsteps to stop the steep rise in property prices.

Chang said Kuala Lumpur City Hall should also increase the minimum threshold to RM2mil, as RM1mil was considered a basic level entry price of a new property with a Kuala Lumpur address.

Meanwhile, the Real Estate and Housing Developers’ Association Malaysia opined that the new set of guidelines would not have much impact because the total number of foreign buyers here was minimal.

Its vice-president Sivanyanam Sinnathamby said that according to statistics from Malaysian Properties Inc, the number of foreign buyers on a national basis stood at a mere 4% to 7%.

“The number of foreign buyers in Selangor is even smaller. In short, the Selangor state authorities are making rules which affect such a small part of the market,” he said.

He added that foreign buyers were concentrated in Kuala Lumpur, Penang and Iskandar Malaysia, Johor.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector president Siders Sittampalam opined that it was an “overall fair move”, but expected little impact.

He said Zone 1, which includes the districts of Petaling and Sepang, was the main attraction for foreigners, but said this number was very small even in these areas.

He said that the policy itself was fair in terms of quantum and structure, as prices had indeed moved up quite a bit in the last several years.

“So, even with the RM3mil threshold for the commercial and industrial sub-segments, it is fair. This move is not something that should shake the market,” he said, adding that it was also fair to limit Malaysia My Second Home participants to one property.

Property consultant Khong & Jaafar group of companies managing director Elvin Fernandez said this was a pre-emptive strike to prevent foreign developers from Johor from entering Selangor because they had been scouting around Kuala Lumpur for land.

“This policy is a deterrent to foreign developers,” he said.

Alzac Viva Sdn Bhd project director Mak Foo Wei agreed, saying this move was to deter foreign Chinese developers in Johor from operating here.

He said the move would also protect the locals should property prices go up further, pointing out that an RM800,000 property might move into a range eligible for foreigners to purchase had the threshold not been moved up to RM2mil.

However, Ken Holdings Bhd group managing director Sam Tan said the Selangor market was very different from Johor’s and questioned the need for the new guidelines.

“There are foreigners who just need a small pad. They don’t need to buy a RM2mil property,” he said.