ST : Foreign home buyers hit by ruling

Jan 16, 2010

Foreign home buyers hit by ruling

KL's move to double minimum price level may hurt bid to draw foreigners: Report

KUALA LUMPUR: Foreigners buying houses in Malaysia can acquire only properties that cost a minimum of RM500,000 (S$208,000) from this year, reported local media. Previously, they could buy houses that cost a minimum of RM250,000.

The move by the government to double the minimum price level for foreigners may hurt Malaysia's campaign to promote the country as a second home for foreign citizens, the New Straits Times (NST) reported yesterday.

Under the Malaysia My Second Home (MM2H) programme, successful applicants will be granted long-stay visas, which allow them to live in the country for up to 10 years.

Applicants below 50 years old must have liquid assets of at least RM500,000 and RM10,000 in monthly income earned from abroad. Those aged 50 and above need to have assets of RM350,000 and a monthly offshore income of RM10,000.

Industry players said the new ruling, which was confirmed by Malaysia's Economic Planning Unit on Thursday, could dampen the property market.

The new ruling was first announced by Prime Minister Najib Razak six months ago.

Datuk Richard Fong, president of the International Real Estate Federation (FIABCI) Malaysia, said properties outside Kuala Lumpur might be badly hurt by the government's move.

'It won't be so much of a problem for Kuala Lumpur, where properties easily cost half a million ringgit, but in areas like Terengganu and Ipoh...where can you find properties in that range?' he told NST.

A survey by FIABCI found that half of the properties purchased by foreigners were priced between RM250,000 and RM500,000.

'So you are really wiping out half of the market by increasing the threshold limit,' Mr Fong said.

Mr Ng Seing Liong of the Real Estate and Housing Developers' Association said the new ruling will affect outlying areas like Terengganu and Malacca.

However, chief executive officer Previndran Singhe of real estate firm Zerin Properties told NST that the new policy will not affect the property market, as foreigners are already buying properties worth RM500,000 and above.

About 2.5 per cent of total property investments in Malaysia are made by foreigners, said NST.

In 2008, Indian nationals made up the fourth largest group of residential property investors after those from Singapore, Britain and South Korea, reported India's Economic Times.

The Malaysian government will hold its first property expo in Chennai, India, from Jan 22 to 24.