KUALA LUMPUR: The race to attract foreign investment in Malaysian property has intensified following Thailand's recent policy adjustments.
Sr. Samuel Tan, executive director at KGV International Property Consultants, said it is crucial for the Malaysian government to revive the local economy and entice foreign investors, especially with challenging times ahead.
Thailand's government has introduced various measures, including reductions in property registration and transfer fees, to stimulate its residential real estate market.
Tan highlighted the significance of these measures, aimed at bolstering Thailand's economy, the second-largest in Southeast Asia.
He noted significant changes, such as lowering transaction fees and tax deductions for home construction, along with revised rules on foreign ownership and lease extensions.
"This shows the gravity of the matter. The Malaysian government should adopt a proactive approach, and review the less favourable policies to encourage foreign property ownership. One of the most glaring is the 4.0 per cent stamp duty levied on foreigners who buy Malaysian properties. This may deter investment," he told NST Property.
He also questioned the necessity of recent policies, such as the prohibition on Malaysia My Second Home (MM2H) residents selling their homes for 10 years, arguing that such transactions could contribute to tax revenue.
"Many foreigners sell their property because they are upgrading or leaving. Any such transactions will bring tax revenues to the coffer," he added.
Despite Thailand's efforts, Tan believes Malaysia should remain attractive to investors due to its favourable legal framework, welcoming environment, security, and cuisine.
Tan Ka Leong, managing director at CBRE | WTW, believes Thailand's new property measures will not significantly impact Malaysia's market due to their differing advantages and appeal.
He said that Malaysia remains one of the countries in Southeast Asia with favorable policies for foreign property ownership.
Foreigners can purchase both landed and stratified residential properties on a freehold basis, unlike in Thailand, where foreigners are limited to non-landed properties, subject to varying minimum prices set by different states, Tan said.
Regarding taxes, he said that Malaysia imposes a flat rate of 4.0 per cent for the transfer of property ownership (MOT) and a 10 percent Real Property Gains Tax (RPGT) on chargeable gains, which are comparatively attractive to foreign investors.
Additionally, the Malaysian government is reviewing its MM2H guidelines, with expectations of introducing more investor-friendly regulations to encourage foreigners to consider Malaysia as their second home.
He expressed optimism about these developments benefiting the Malaysian property market, particularly the high-end and high-rise residential sectors.
"I personally welcome Malaysia's friendly foreign ownership policy and guidelines, but at the same time, I also strongly feel that Malaysia needs to have good and consistent policies and guidelines to ensure the relaxation of any of the foreign ownership policies and guidelines wouldn't compromise the locals opportunity to own reasonable priced residential properties.
"Besides, Malaysia should have consistent policies and shouldn't always introduce different and uncertain policies and guidelines that will deter foreigners's interest and confidence in the Malaysian property market," he said.