Major boost for high end
23/03/2007 The Star By KEITH HIEW
PETALING JAYA: Prime Minister Datuk Seri Abdullah Ahmad Badawi, who
announced the scrapping of the real property gains tax (RPGT) from April 1,
hopes the move would “inject more excitement and dynamism to both the
property and financial sectors.”
Speaking at Invest Malaysia 2007 yesterday, Abdullah said the abolishment of
RPGT would improve the property sector.
He said it was among the immediate measures intended to further increase and
facilitate investments in the country.
Property companies and analysts welcomed the news. They said it would
benefit the sector, especially the high-end segment.
OSK Securities analyst Mervin Chow told StarBiz: “We will definitely see an
increase in the earnings prospects of property companies, either through an
increase in demand or sales values. But it is very hard to quantify the
extent at this juncture.
“We will also see increased foreign buying interest in Malaysian
Chow thinks the chief beneficiary would be higher-end developers with
excellent locations. He said RPGT had in the past been one of the prime
hurdles for foreign buyers, given the higher holding risk.
“As for the mass residential market (low- to mid-end), the oversupply
situation still persists, hence we will not be seeing much improvement
there,” he said, noting that the removal of RPGT would encourage a more
vibrant secondary market in this segment.
“We will be seeing more interest in property companies with niches in the
mid- to high-end market segment in the coming months. Although most of the
counters have soared in anticipation of the abolishment, there are still
many that are undervalued,” Chow said.
Analysts expect increased foreign buying interests
His top property picks include United Malayan Land Bhd, Plenitude Bhd and
YNH Property Bhd.
Mah Sing Group Bhd managing director Datuk Leong Hoy Kum said: “It is
heartening that the Government has been so proactive in promoting an
investment-friendly regime to enhance local investment, and draw foreign
direct investment to Malaysia.”
He said Mah Sing would be a direct beneficiary of the RPGT abolishment,
having established a premium branding for its lifestyle products in the
Klang Valley and Johor Baru.
“We are in the right segment and locations. The Government's announcement is
timely and we anticipate this feel-good factor will be an additional
crowd-puller for our preview of Hijauan Residence this weekend.”
Sime Darby Bhd property divisional director Jauhari Hamidi hailed the tax
waiver as the “best news” for the property industry, homebuyers and
investors, because it “will revive the market which has been soft in recent
“The abolishment will help create more excitement in the property market.
“As for our newly-launched Ara Hill project, the move will encourage earlier
upgrades among the growing affluent,” he said.
Scomi Group Bhd chief executive Shah Hakim Zain said the move would further
attract foreign investments, while former Road Builder (M) Holdings Bhd
executive vice-chairman Tan Sri Chua Hock Chin said it would spark interest
in the secondary property market.
Sunway Group founder and chairman Tan Sri Jeffery Cheah said the move would
help attract more foreign buyers to the group's properties.
Malaysian Resources Corp Bhd managing director Shahril Ridza Ridzuan told
reporters that the scrapping of the property gains tax would encourage more
secondary trading and liquidity in the secondary property market.
And IJM Corp chief executive Datuk Krishnan Tan said the lifting of the RPGT
would benefit property investors and developers would see improved demand
Tan did not expect an immediate impact on companies' bottom line.
Despite the mostly positive sentiment, some fund managers think the tax
waiver could encourage speculation and increase property prices.
They also said the lower income group could be hurt as it would be more
difficult for them to own properties.
A fund manager said: “Property prices could surge when speculative
activities start. Lower income people could bear the brunt, especially if
their salaries do not increase as quickly as property prices.”