BUDGET 2011: POSITIVE FOR HOME OWNERSHIP, VAGUE ON GREATER KL PLANS

Petaling Jaya, 15 October 2010

The Real Estate and Housing Developers’ Association (REHDA) Malaysia views the Budget 2011 as positive and helpful for home ownership for nation, and seeks further clarity and emphasis for the property industry in Greater KL.

REHDA is grateful that the previously anticipated increase in real property gains tax (RPGT) and imposition of a loan-to-value (LVR) mortgage ratio that was being weighed by the Government was not finalized during the budget. REHDA thanks the Prime Minister Yang Berhormat Dato’ Seri Najib Tun Razak for giving heed to our proposals and feedback on the above.

The “Rumah Pertamaku” scheme is good news for the housing sector, as just over 73% of property houses transacted falls under the category of below RM220,000. The 50% stamp duty exemption for houses below RM350,000 covers an estimated additional 10% of the market. These incentives benefit all-in-all roughly 87% of housing transactions throughout the country.

While REHDA views this as a very positive step forward towards closing the income gap, the Association wishes to highlight that properties which are found within these price brackets are not easily found in priority areas of growth, namely Greater KL or even Penang due to higher land and construction costs in these vicinities. As Greater KL and other key cities such as Penang are hotspots for interstate migration and in future, international migration, these incentives would have a muted effect on the cities where affordable housing is also much needed.

Greater KL

The Association is also looking forward to the future developments in Greater KL and lauds the Government’s commitment to raising the standards of living and quality of life, particularly in making the banks of the River of Life a social and cultural attraction. We also wish to congratulate the Government in finding a partner for the development of the Kuala Lumpur International Financial District (KLIFD), as well as having plans underway for the Malaysian Rubber Board land in Sungai Buloh.

REHDA wishes also for the Government to view the property industry as a priority sub-sector especially in the case of Greater KL, where efforts should be put towards bringing in foreign direct investment (FDI) in the property and real estate sector. Currently, foreign investment into real estate in Malaysia is only 2.3%, comparatively insignificant compared to Singapore, which has 35% foreign ownership of real estate.

“The role that the housing and property sector plays in the overall economy cannot be undermined—as seen in the first half of 2010, where 48% of total loans were made up of loans made to the property sector. We urge the Government to place more emphasis on the property sector,” says Dato’ FD Iskandar Mohamad Mansor, Deputy President of REHDA.

The Association hopes for fuller details of the high impact strategic developments (namely KLDIF, RRI Land in Sungai Buloh and Warisan Merdeka) and urges the Government to lock arms with private property developers in the planning and implementation of the high impact developments.

REHDA also notes that the high impact commercial development announced at the budget, Warisan Merdeka, was not previously detailed out in the NKEA plans under Greater KL. Currently, official figures from NAPIC states that occupancy rates in KL and Selangor are in the ranges of 80%. Combined with another planned and incoming 1.7million square meters of office space in Kuala Lumpur (current stock being 6.7million sqm), the additional square meters from the other high impact projects, together with a risk of oversupply of commercial properties, such a massive project should be approached with caution. Although the 100-storey building may be an iconic feature to the country, REHDA recommends that the Government conduct feasibility and market studies with consultation from the private sector before embarking on this ambitious project.

Conclusion

While REHDA views the Economic Transformation Programme and its NKEA’s as promising for the country’s growth, the Association hopes that the Government would continue to involve and include private sector developers, via REHDA, in its planning, deliberations and final execution of these projects. We also wish to see such projects successfully come to life through effective implementation of the NKEAs through close working relationship between the private sector and civil service. In concert with the Government Transformation Programme, the Association looks forward to a level playing field and is keen to engage the Government more in days to come under the spirit and philosophy of 1Malaysia.

Issued by:
Datuk FD Iskandar Tan Sri Mohamed Mansor
Deputy President
Real Estate and Housing Developers’ Association Malaysia