Friday 29 Mar 2024
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This article first appeared in City & Country, The Edge Malaysia Weekly on October 3, 2022 - October 9, 2022

As with every budget announcement, stakeholders in the property industry, such as developers and consultants, wait in anticipation of goodies from the government that will bolster the real estate market. For Budget 2023, it is no different and the wish list we have compiled reveals needs that, if not addressed, could slow down the growth trajectory of the property market. 

Some of the measures wished for include incentives for developing green buildings, strategies to deal with labour shortages and promotion of the Industrialised Building System (IBS) to help reduce costs. Read on to find out what else the industry is looking for in Budget 2023.

CBRE | WTW chairman 
Foo Gee Jen

To address the housing needs of the B40 and M40 households, we hope the government can encourage private-sector employers (manufacturers/GLCs) to provide staff housing, like civil servant housing, by offering tax deductions on interest expenses of company loans for staff housing, property management expenses for apartment complexes and, possibly, annual capital allowances of 5% to 10% of the cost of the properties. Additionally, to provide stamp duty exemption to the employers for the transaction of acquiring low-cost/affordable overhang properties as the employers’ staff housing, to help manufacturers attract more workers. More foreign ownership by providing a lower minimum housing threshold property price for Asean citizens and to other nationalities who have permanent residence and work permits to reside in Southeast Asian countries. For all unsold bumiputera quota units to be released within a shorter period and with fewer conditions and to limit the bumiputera discount to houses below RM1 million since those who can buy over RM1 million homes have no real need for such a discount, which allows developers to use the savings as cash rebates for their affordable units. Additional incentives for developers and tax relief for manufacturers of IBS components so that these will be reasonably priced to encourage the adoption of IBS in construction to reduce the current pressure of labour shortages. Tax relief for the installation of solar panels in existing properties. This could translate into lower diesel usage, reduced oil imports or increased crude oil exports.

Gamuda Land CEO 
Ngan Chee Meng

In aiding home ownership, especially for first-time homebuyers, we hope the government will implement initiatives that will further stimulate the job market. Initiatives such as large-scale infrastructure works will have a multiplier effect in creating job opportunities for many that will enable them to afford a roof over their heads. In addition to the successful Home Ownership Campaign (HOC), the government can consider mortgage interest tax relief for low-income individuals who qualify for it based on a preset qualification criterion.

Focusing on climate change, we are hopeful of seeing holistic strategies that will bring about positive long-term changes, thus encouraging the sector to adopt sustainable development practices. This would encourage us as a nation to attain our net zero goal by 2050 as construction and real estate in Malaysia account for 40% of carbon emissions.

Gamuda Land also calls on the government to incentivise businesses to spur the adoption and implementation of smart city infrastructure in Malaysia.

IJM Land Bhd CEO 
Datuk Wong Tuck Wai

Rising inflation and higher interest rates in Malaysia continue to impact the property market. We hope that Budget 2023 will offer more assistance to increase home ownership among Malaysians, which includes the reintroduction of the HOC — 100% stamp duty exemption on the memorandum of transfer (MOT) and loan stamp duty for home purchase of up to RM1 million; longer loan tenure of up to 40 years; higher debt service ratio based on gross income rather than net income in the loan application; and the lifting of the maximum loan-to-value (LTV) ratio of 70% for the third housing loan onwards.

Emphasis needs to be given to first-time homebuyers, the most vulnerable group to economic movements, to include a one-off housing grant on properties priced up to RM500,000, to raise the down payment and differential sum.

The impact of compliance costs is high, affecting the developers’ cost of doing business. We hope the government will not impose any more conditions or new charges, to maintain housing affordability.

More incentives for developers to promote the use of IBS and the use of green building materials.

The current Malaysia My Second Home (MM2H) requirements are restrictive, so we hope the government will consider reviewing them to attract more foreigners to invest in Malaysia.

IOI Properties Group bhd CEO 
Datuk Voon Tin Yow

The nation’s transition to endemicity continues to steer us towards recovery in all sectors of the economy and we are grateful that the government is determined to expedite the recovery of the property industry. 

However, we continue to face challenges such as a property overhang and a financing environment that is not conducive to spur demand. Therefore, we hope that the government will provide full stamp duty exemption on MOT and 100% financing for government servants and first-time homebuyers in order to create a more conducive financing environment.

Meanwhile, we foresee that the industry will struggle to revert to pre-pandemic levels due to a lack of manpower and resources. Therefore, we hope the government will address the shortage of foreign labour by accelerating the process of migrant worker approvals.

In the light of the prevailing escalation of building material costs, we hope that tax incentives can be provided for key construction materials, especially for the construction of affordable homes, in order to maintain affordability. Apart from this, the introduction of tax incentives for green buildings will help mitigate the impact of climate change.

JLL Property Services (Malaysia) Sdn Bhd 
country head 
Y Y Lau

We would like to see an adjustment to some of the requirements for the premium visa programme (PVIP), such as processing fee and minimum liquid net worth, so that more investment and economic growth can come from it.

Increasing the efficiency of operations in sectors such as manufacturing and services would help reduce the country’s dependence on foreign labour. There should be more incorporation of advanced technology and automation in, say, the agriculture and logistics sectors, or increase in the adoption of IBS in the construction sector, as these can be some of the sustainable solutions to the current labour shortage.

As the global interest in sustainable and green buildings is growing rapidly, the capital expenditure to design and develop sustainable and carbon neutral buildings can be a hindrance to local developers and investors, especially when it can be 15% higher than conventional buildings. We wish to see aid in this regard, such as incentives for developing green and sustainable buildings, including the use of carbon neutral systems and materials. Financial support for “green financing” with lower interest rates should also be considered.

We hope for a higher budget allocation for the improvement of the flood prevention design/system to minimise disruptions to people’s livelihoods and the economy, as well as new developments in flood-prone areas.

Knight Frank Malaysia 
deputy group managing director 
Keith Ooi

For the long term, to address climate change. We propose incentives to be introduced to property owners, landlords and developers who are aligned with the nation’s target of becoming a “net zero” nation by 2050. Hopefully, there can be an extension of existing incentives to incorporate tax relief or grants to industry players that include green features, like renewable energy, in their developments, and sustainably-built properties using timber and low-carbon cement.

For immediate measures, it would be to encourage home ownership and accommodate hybrid work policies.We propose that the stamp duty waiver be extended across a wider spectrum of residential properties priced at RM1 million and below. Specifically, to all residential property purchases, not just first-time homeowners, in both the primary and secondary markets. The existing incentives already address first-time homeowners, and this proposal will allow owners to upgrade to accommodate more work or study space.

We further encourage the government to embrace the work-from-home/work-from-anywhere policy, and allow individual tax rebates on internet connection and computers, purchase of furniture or equipment for a home workspace; and perhaps tax rebates for companies practising hybrid work policies.

For ongoing measures, it would be for continuous foreign direct investment. We hope for clear and consistent policies to drive economic investments into our country, and encourage all direct measures to revitalise and sustain the growth of the property sector.

LBS Bina Group Bhd 
executive chairman 
Tan Sri Lim Hock San

We hope the government will consider the reintroduction and permanent implementation of the HOC or to consider offering rebates of up to 10% to first-time homebuyers to encourage and kick-start their homeownership plans.

According to a survey conducted by Rehda (Real Estate and Housing Developers’ Association Malaysia), construction costs are anticipated to increase by an average of 19% this year, which may cause house prices to increase as costs are passed through. Therefore, we are hopeful that the government will consider introducing subsidies or implementing a ceiling cap on construction raw material prices to help affordable housing prices remain intact.

We hope the government can consider providing environmental grants to developers to encourage industry players to incorporate more green features into their projects. The government may also consider providing additional tax deductions so that building owners can enjoy income tax deductions. Ultimately, this would encourage the adoption and promote efficient use of, among others, energy and water throughout a building.

With the reopening of borders, we anticipate the gradual return of foreigners, which will prompt property developers to offer attractive packages. We are hopeful that the government will reduce this limit to RM600,000 for all states, thus allowing developers to reduce existing unsold units while encouraging the entry of foreign ownership.

Mah Sing Group Bhd 
founder and group managing director 
Tan Sri Leong Hoy Kum

As the property industry has a critical multiplier effect on more than 140 industries, it will have a broader impact on the overall economy. We hope the government will ease financing schemes for first-time homebuyers on properties up to RM500,000. The minimum threshold for foreign property ownership could also be standardised at RM600,000 across all states.

Due to the rising cost of materials, the government could consider lifting the taxes and levies imposed on imported construction materials until prices normalise. To resolve labour shortage problems in the construction industry, the government could expedite the process of approvals for migrant workers.

In line with the government’s efforts to make Malaysia a carbon neutral nation by 2050, we hope small grants will be provided to developers to encourage the incorporation of more green features into their developments.

Mah Sing also calls on the government to consider extending incentives for property developers who adopt IBS and Building Information Modelling (BIM), particularly for affordable residential developments.

OSK Property CEO 
Ong Ghee Bin

As development costs have been increasing aggressively in recent years, a reduction in the premium payable for land conversions and development charges will contribute to the lowering of selling prices by way of cost reduction to the developer and in turn increasing affordability for home seekers, especially the lower-income groups.

The acute shortage of labour at construction sites is also a major concern, which has led to a dramatic increase in labour costs for many developers due to the inability to fulfil workforce requirements. The government can assist in easing this problem by expediting approvals on the intake of foreign labourers to ensure adequate manpower to stabilise labour demand.

Tax incentives should be provided to developers that are required to build infrastructure such as flyovers, community markets or pedestrian link bridges for their developments as they are supporting efforts to build sustainable communities, as well as for developers that achieve high QLASSIC scores without compromising on the aspects of delivery, after-sales service, quality and safety.

Rahim & Co International Sdn Bhd 
Director of Research 
Sulaiman Saheh

Incentives and home-buying programmes should continue and be enhanced for first-time homebuyers in the B40 and M40 groups. For eligible first-time homebuyers, assistance in down payments through special grants of RM10,000 to RM30,000 could be introduced.

Stamp duty exemptions should be extended for units below RM300,000 and partial exemptions for those priced up to RM500,000. These programmes should be applied to the primary and secondary markets.

The financing margin and loan eligibility criteria should be reassessed based on the merits of individual borrowers. Financial education programmes for would-be homeowners should be promoted, especially for extended loan tenure commitments so that they are made aware of the long-term implications when deciding on their home financing arrangements. The option to rent should be promoted and destigmatised.

Incentivising the adoption of technology, automation and green initiatives in the property sector should be actively promoted and enhanced further. Consider a quasi-­nationalised IBS programme to allow sufficient economies of scale that can be promoted across the country.

For foreign buyers and investors, more clarity and consistency in policies and programme differentiation are needed. Promotions and accessibility to potential foreign buyers should not only come through residential-based investments, but also business investments that bring employment opportunities for Malaysians.

Savills Malaysia 
group managing director 
Datuk Paul Khong

For Budget 2023, we hope to see a blanket waiver in RPGT (Real Property Gains Tax) for all sectors, such as in 2007 to 2009, to give a much-needed boost to the property market. We also hope that the government will waive stamp duty for property transfers for both primary and secondary purchases in 2023; and allow and attract foreigners to reinvest in all categories of residential and commercial properties and attract more foreign capital back to our shores. Also, all exemptions should be targeted at all categories of properties, and not only at the low-end market segment.

 We push for the revival of the entire property market with a big reboot to lift capital values to a new level and to bring up the construction industry in tandem, thus benefiting the entire populace and ecosystem.

It is timely for the property market to act as a “major growth catalyst” to see positive growth again after being flattish for several long years. We hope that Budget 2023 will give a paradigm shift and deliver an upswing in property values via its stimulus packages in 2023.

Tropicana Corp Bhd 
group managing director 
Dion Tan

As the nation and businesses remain resilient, we hope the government will place more focus on strengthening the momentum of Malaysia’s economic recovery. It would be good to see pressing issues such as the skilled labour shortage as well as rising prices of construction materials addressed soon.

We also hope the government and financial institutions will introduce attractive incentives for all property buyers to spur buying power and localised economic growth.

We applaud the introduction of the soon-to-be-launched PVIP that targets affluent foreign investors. The government may also consider relaxing the MM2H guidelines by reviewing current policies and statutory requirements.

Finally, we seek the government’s support to revitalise the tourism sector, while promoting Malaysia as a prime investment destination offering a mix of investor-friendly policies. This will certainly attract local and foreign capital inflow, bringing more job opportunities to all, stimulating national productivity and making Malaysia more globally competitive.

UEM Sunrise Bhd CEO 
Sufian Abdullah

The return of schemes such as the HOC and developers’ interest bearing scheme (DIBS) can help relieve the financial burden of homebuyers.

For banks and the relevant authorities to accept digitally signed SPAs and virtual signing of loan offer agreements to allow end-to-end online/virtual property sales.

Talent-attracting initiatives that could make our property market more competitive among neighbouring countries for Malaysia’s economic benefit. This will have significant spillover effects and help alleviate the overhang situation.

Reverting to the previous MM2H guidelines will help spur foreign investment.

Proposals of other incentives such as tax holidays, less stringent immigration and employment policies, and foreign property ownership to attract multinational corporations and highly skilled workers to move to Malaysia.

Introduce a price ceiling for raw materials and tax subsidies for imported construction materials, reduce compliance costs such as the contribution of an improvement service fund, utility cost, main infrastructure cost, land premium fees (land conversion), and to standardise and expedite authority approvals and the process timeline, enabling developers to generate income from the land at a faster rate.

We hope the government will consider adding tax rebates for developers and retail asset owners who had to provide rent relief, waivers and rebates during the pandemic.

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