KUALA LUMPUR: Amid the controversy over the recent changes to the Malaysia My Second Home (MM2H) programme rules, there are split views over their impact on the property market.
According to RHB Research, while the new rules will not be a positive driver for the property market, they are unlikely to result in any significant negative impact either.
The research house said given the market has been sluggish over the past six to seven years, the potential disposal of properties is unlikely to exert a significant downward pressure on property prices.
"If at all, it should be only the high-end segment that will be affected, given the pricing threshold for foreigners to own properties in Malaysia," it said in a note.
Based on Home Ministry figures, there are a total of 57,478 registered MM2H participants of which 28,249 people are principlas and the balance being dependents. Of the principals, only about 10,000 have bought assets in Malaysia.
"While the new rules may be perceived to be too hostile given the steep tightening, we understand from media reports that the Government has not revised any of the criteria since 2002.
"Indeed, when compared to the respective expat/migration programmes in our neighbouring countries, the old MM2H criteria does seem to be 'too friendly'", said RHB.
The brokerage added that without raising the requirements for the MM2H programme, it would be unjustifiable for "normal quality" foreigners to also enjoy the subsidies the government is offering, such as petrol, sugar and gas.
As an alternative measure, it suggested the government could introduce more targeted measures or incentives to attract the return of foreign investors to the local property markets such as the relaxing of the real property gains tax regime.
Better economic growth prospects, stable political landscape, and steady currency should help to spur foreigners’ interest over the longer term, it added.
RHB remains "neutral" on its property sector outlook with Matrix Concepts as its top pick at a target price of RM2.36.
According to RHB Research, while the new rules will not be a positive driver for the property market, they are unlikely to result in any significant negative impact either.
The research house said given the market has been sluggish over the past six to seven years, the potential disposal of properties is unlikely to exert a significant downward pressure on property prices.
"If at all, it should be only the high-end segment that will be affected, given the pricing threshold for foreigners to own properties in Malaysia," it said in a note.
Based on Home Ministry figures, there are a total of 57,478 registered MM2H participants of which 28,249 people are principlas and the balance being dependents. Of the principals, only about 10,000 have bought assets in Malaysia.
"While the new rules may be perceived to be too hostile given the steep tightening, we understand from media reports that the Government has not revised any of the criteria since 2002.
"Indeed, when compared to the respective expat/migration programmes in our neighbouring countries, the old MM2H criteria does seem to be 'too friendly'", said RHB.
The brokerage added that without raising the requirements for the MM2H programme, it would be unjustifiable for "normal quality" foreigners to also enjoy the subsidies the government is offering, such as petrol, sugar and gas.
As an alternative measure, it suggested the government could introduce more targeted measures or incentives to attract the return of foreign investors to the local property markets such as the relaxing of the real property gains tax regime.
Better economic growth prospects, stable political landscape, and steady currency should help to spur foreigners’ interest over the longer term, it added.
RHB remains "neutral" on its property sector outlook with Matrix Concepts as its top pick at a target price of RM2.36.
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