Changes in store for property sector

Review of taxes and mega projects likely to affect the market

By Aisyah Suwardi

THE change in government after the historic GE14 and the appointment of Tun Dr Mahathir Mohamad as the seventh Prime Minister of Malaysia sent shock waves across the country and the international stage as well as jolted business owners and share market players.

The subsequent lifting of the 6% Goods and Services Tax (GST), the scrapping of the High-Speed Rail (HSR) and Mass Rapid Transit (MRT) 3 mega projects, plus the reported national debt of RM1tril by the Pakatan Harapan government have left property market investors and stakeholders wondering what lies ahead for the sector.

Uncertainty in the market

Halting the HSR and MRT 3 projects, which amount to about RM155bil, will hit those property investors who believe in the concept of Transit Oriented Development (TOD) and its potential for connecting townships and regions.

Hartamas Real Estate Sdn Bhd associate director Tan Kian Aun

Hartamas Real Estate Sdn Bhd associate director Tan Kian Aun

According to Hartamas Real Estate Sdn Bhd associate director Tan Kian Aun, the cancellation of the HSR project has affected investments in townships that are earmarked for HSR stations, among them Muar, Batu Pahat, Malacca and Bangi. He reckons the review of mega projects such as the Tun Razak Exchange (TRX), East Coast Rail Link (ECRL) and Bandar Malaysia has created uncertainty in the market with the public adopting a wait-and-see attitude.

However, Tan hopes that the mega-projects could be reinstated at a lower cost when the issue of national debt has been resolved because such projects bring growth into undeveloped areas and benefit the nation as a whole.

Hoping for positive changes

Seri Setia assemblyman Nik Nazmi Nik Ahmad

Seri Setia assemblyman Nik Nazmi Nik Ahmad

Setiawangsa MP Nik Nazmi Nik Ahmad said that while abolishing GST would impact the transactional costs of real estate, property prices often involve a complex matrix that need to take into account other measures. He agreed that zero-rating the GST would increase the people’s purchasing power and reduce the cost of living. Some industry players are optimistic that the tax reduction will bring positive changes to the property market.

Nilai Harta Consultant Sdn Bhd head of department (valuation) Umran Suffian Hussein

Nilai Harta Consultant Sdn Bhd head of department (valuation) Umran Suffian Hussein

Nilai Harta Consultant Sdn Bhd head of department (valuation) Umran Suffian Hussein believes that Malaysia’s property market will see an improvement by early next year. He said the lifting of GST is the most awaited event by Malaysians, especially first-time homebuyers. While GST was not imposed on residential housing, the addition of GST on building materials meant that developers had to bear a higher project cost. At the same time, most developers have been quick to react to the policy changes by the new government.

Mah Sing Group Bhd chief executive director Datuk Ho Hon Sang (centre) at the launch of the Desire campaign.

Mah Sing Group Bhd chief executive director Datuk Ho Hon Sang (centre) at the launch of the Desire campaign.

Mah Sing Group Bhd chief executive officer Datuk Ho Hon Sang said that the company would pay close attention to the adjustments brought about by zero-rated GST and plan their strategies accordingly.

CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen

CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen

CBRE|WTW managing director Foo Gee Jen pointed out that from Sept 1, the Sales and Service Tax (SST) will be reintroduced and definitely affect the property market. “The economy is still soft at the moment, so we can’t expect too much. The market may experience a positive sentiment but in somewhat minimum effect due to the uncertainties and re-introduction of SST,” he said.

Sunway University director of Economic Studies Dr Yeah Kim Leng

Sunway University director of
Economic Studies Dr Yeah Kim
Leng

Sunway University director of Economic Studies Prof Dr Yeah Kim Leng urged property developers to take the opportunity at this time of 0% GST to boost sales by providing more attractive packages.

More transactions for this segment

Malaysian Institute of Estate Agents (MIEA) secretary-general Chan Ai Cheng said commercial and industrial properties should experience more transactions because the purchase cost is expected to be 6% lower. She said the segment has been stagnant for the past few years since the implementation of GST, although she noted that this sector was also affected by the economic performance of the country. Chan added that the demand for this property segment will improve if the business in the country picks up.

Minister of Housing and Local Government Zuraida Kamaruddin

Minister of Housing and Local Government Zuraida Kamaruddin

During this time of uncertainty, newly sworn-in Minister of Housing and Local Government Zuraida Kamaruddin remains cautiously optimistic on the prospects for the local property market. “One has to have a holistic view; no single factor affects the property market. Although there is an indication that 0% GST will cause a positive effect in the real estate sector, other factors need to be considered,” she added.

To Read More: TRX investors heave sigh of relief

To Read More: KPKT to revisit Highland Towers development

To Read More: Key developments affected by the HSR project

To Read More: Developers back move to cancel HSR despite setback

To Read More: Transport experts: Time to look for cheaper alternative

To Read More: Govt scraps MRT 3 project

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