Developers are planning to launch terraces above $1 mil RM. There should be a vacuum in the $800k-1mil range soon. Anything below will rise higher to fill the gap.
Measures might not cool M'sia home prices
Labour, material costs up 10-15%; property launches boost demand
BY PAULINE NG IN KUALA LUMPUR
PUBLISHED OCTOBER 31, 2013
HOME prices in Malaysia may not necessarily come down despite the cooling measures unveiled last week.
Labour and material costs have risen by 10-15 per cent since June after a crackdown on illegal foreign workers, even as property launches rose in Iskandar Malaysia, pushing demand up, said Eastern & Oriental (E&O) deputy managing director Eric Chan.
"Although in the short term sentiment will be affected, to me it's a question of whether people believe in the story of Medini or Iskandar Malaysia. Those who do will continue to buy because they are buying for the mid to long term," he told The Business Times in a telephone interview.
Overall demand for homes is expected to soften following a sharp increase in property taxes and the banning of the Developer Interest Bearing Scheme, which will come into effect on Jan 1 next year. The measures were announced in last week's budget.
Even so, E&O is sticking to a planned year-end launch for Avira, its maiden project in Johor's Medini, for which it is partnering sovereign wealth funds Khazanah Nasional and Temasek Holdings.
Interest in the project has been encouraging. Already, some 2,000 prospects have registered for the 200 units of terraced homes to be offered in the first of three phases of the RM3.5 billion (S$1.37 billion) mixed development on about 85 hectares, which has "wellness" at its core.
Mr Chan said that the link homes will cost at least RM1 million because "from feedback buyers want a more complete product including fittings".
He is confident that demand for Avira's terraced houses (of about 2,200 square feet built-up) will remain strong despite the government doubling the minimum floor price to RM1 million from RM500,000 and more punitive taxes.
Not only is the buying interest 10 times the number of units available, Avira is backed by Temasek and Khazanah. And even at RM500 per sq ft (psf), Mr Chan reckoned that the landed homes "are still a good proposition for the market".
Serviced residences or condominiums may be another issue altogether, however.
The high-end developer will have a better idea in the coming weeks as it is soft-launching its 220-unit Andaman Edition 18 East - the last of three towers in Seri Tanjung Pinang (STP) - in Singapore in about 10 days.
The mixed development, which boasts a water park, clubhouse and a marina, is located on the northernmost cape of Penang Island on 97 hectares of reclaimed land.
The last tower has more sea-fronting condos and better fittings, and are priced from an average RM1,500 psf. A one-bedroom studio suite of 877 sq ft starts from RM1.387 million. In comparison, the first tower sold at about RM1,100 psf and the second at RM1,250 psf when launched respectively in February and September last year.
Singaporeans or foreigners based in Singapore make up about a third of buyers in STP, where landed property was sold in the first phase when launched eight years ago. The minimum landed property price on the island for foreign purchasers is RM2 million. Even so, the Penang state government is reportedly considering another 3 per cent levy on transacted prices to deter foreign speculators.
Of the 2,000 registered for Avira, about 30 per cent are foreigners, and a number of them are existing E&O home-owners.
To curb speculation by foreigners, Malaysia bumped up the real property gains tax to 30 per cent on gains on disposal within the first five years, and 5 per cent in subsequent years. Malaysians also pay 30 per cent tax on gains, but only for the first to third year after which the tax is reduced to 20 and 15 per cent in the fourth and fifth year, respectively.
There is no tax after that, though companies are levied 5 per cent in the sixth and subsequent years.
http://www.businesstimes.com.sg/premium/malaysia/measures-might-not-cool-msia-home-prices-20131031