CBRE WTW Malaysia Budget 2017 – Impact On The Local Property Sector Relatively Neutral

CBRE WTW Malaysia Budget 2017 - Impact On The Local Property Sector Relatively Neutral

KUALA LUMPUR, 24 October: CBRE | WTW Malaysia said that Budget 2017 was relatively neutral in impact on the local property sector. Fund allocations or taxes / costs imposed were focused more on alleviating the home buying problems of the first time buyer.

Stamp duty will be fully waived for the purchase of homes up to RM300,000 by the first time buyer, which will reduce initial cash requirements and is also positive in communicating the message that such homes should cost RM300,000 or less.

On a less positive note, the increase of stamp duty to 4% for property transactions over RM1 million could further dampen market activity in 2017.

The most significant infrastructure project introduced in Budget 2017 is the proposed East Cost Rail which will generate new development opportunities in Pahang, Terengganu and Kelantan. Rapid access from Kuantan Port to the west coast will become a reality and the two days shortened shipment time from China to Kuantan Port may change the dynamics of trade movements from China and even the rest of the Asia Pacific, to Malaysia.

The public servants’ housing loan eligibility is raised to between RM200,000 and RM750,000 which could free latent demand for the purchase of new houses.

The Government has allocated RM300 million to repair and refurbish existing government apartments, providing a better living environment in housing which have fallen into disrepair. Common areas and facilities had not been properly maintained due to most residents defaulting on service charges.

We would have preferred that some of this allocation had been used to educate owners on the management of common property or these apartments will eventually end up in the same state of disrepair.

11,250 housing units are being built under People’s Housing Program (PPR) at a cost of RM576 million. The PM indicated that these houses will be sold at RM35,000 – RM42,000 even though actual construction cost was between RM120,000 and RM160,000.

As long as these are for deserving households who are unable to afford to own a home, this has been a good program.

Through NBOS (National Blue Ocean Strategy), the Government proposes to release government land in strategic locations in town areas, to GLCs and Perumahan Rakyat 1 Malaysia to build 30,000 homes for sale between RM150,000 and RM300,000.

CBRE | WTW Malaysia hopes that this will be maximised by increasing density ratios so that more units can be built.

Many public housing projects are located away from city centres and we would like to see more funds allocated to develop efficient, convenient, speedy public transport systems so that such homes become convenient and economical for workers to commute to work.

10,000 homes in urban areas will be built for rental for a period of 5 years, to eligible youths with permanent jobs who have entered the labour market for the first time. This will greatly ease the housing woes of young graduates and boost their future career opportunities.

The Government is also subsidizing up to RM20,000 per unit to build 5,000 homes under the PMR scheme to further enable more first-time buyers to own homes.

The Government plans to introduce a 2-step housing loan for the PR1MA program in collaboration with BNM, EPF, Maybank, CIMB, RHB and AmBank. An applicant with a monthly income of RM3,000 will be eligible for a loan of more than RM187,000 and up to RM295,000 as banks will take into account the increase of the applicant’s monthly income in future years.

However, such loans will increase the financial costs to home-owners and should be considered carefully as the future is always uncertain.

Foreign direct investment (FDI) up to 1H 2016 was RM28 billion, up 32%. This indicates that the industrial sector in Malaysia is still vibrant and there are opportunities for industrial property investments.

120 destitute schools throughout Malaysia will be rebuilt using the industrialized building system (IBS) at an estimated cost of RM570 million. While this system should also be used for the building of affordable / low-cost houses, this is a positive start and could lead to the wider use of IBS in housing projects.

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