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Foreigners balk at RM500k minimum purchase Print E-mail
Monday, 27 July 2009 16:50

Expatriates were less enthusiastic about the increase of minimum price of the property purchased under MM2H.

Many expatriates felt the recently announced moves to liberalise the market were a welcome step forward. However, they were less enthusiastic about the decision to double the minimum price (from RM250,000 to at least RM500,00) at which they can buy property begining Jan 1, 2010.

Neither was the property industry, which had hoped the existing minimum of RM250,000 would remain unchanged. It was not entirely unexpected because rumours had been circulating about a possible increase and some states had already introduced higher minimums.

Sarawak had never implemented the RM250,000 minimum. According to the state government’s website, it has a limit of RM300,000.

Most recently, Selangor raised its minimum to RM500,000 and Pahang went further, increasing it to RM750,000 in Kuantan, Cameron Highlands and Bentong.

Most expats have taken Pahang’s very high limit to mean the state doesn’t want foreigners buying real estate there, particularly in view of the fact nearly all residential properties in the three areas would be below the minimum price.

The idea of keeping foreign buyers out of properties meant for the lower-and middle-income Malaysian is to avoid inflationary pressures on properties sought by those who want to own their own home. No one can argue with the logic and it makes perfect sense.

However, the prices of properties vary a lot depending on which part of the country you’re buying.

In central Kuala Lumpur you won’t be able to buy very much for under RM500,000 but in other parts of the country it can buy a lot.

According ti the National Property Information Centre under the Ministry of Finance, most foreigners prefer to buy apartments or condominiums and the majority spend between RM250,000 and RM500,000. So it seems fairly obvious that the new rules will negatively impact this sector.

While some may move up to more expensive properties, others maybe reluctant to spend more. This is likely to be the case with people buying a holiday home, who usually look for cheaper places, and retirees who prefer a small apartment to a landed property as it is more secure and easier to maintain.

Many Malaysia My Second Home (MM2H) participants choose to buy smaller apartments suitable for a couple without children and these are often relatively inexpensive even in cities such us Penang, which seems to run around half the price of KL.

This group of MM2Hers will also be impacted by the new rules.

Source: NST – July 24, 2009.



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