By Farah Wahida:
The Johor government’s plan to impose a higher property tax on foreigners drew mixed reactions as details of the proposal are still under discussion, reported The Star.
According to Chief Minister Mohamed Khaled Nordin, approximately 130,000 foreigners owning properties in Johor will need to pay higher tax rates. Although the rates are still being discussed, they are expected to be introduced later this year after a state-wide property re-evaluation exercise.
While there was a kneejerk reaction in the stock market, with UEM Land — a proxy to Iskandar’s property market — down nine sen to RM3.41, some experts believe the higher tax would have little impact. This is because positive market sentiment and foreign property buyers only account for a small percentage of the market.
Foreign property ownership in the state stands at five percent, noted Koo Moo Hing, branch chairman of the Real Estate and Housing Developers Association (REHDA Johor).
“We hope to get more details on the proposal and better still if the state government could get feedback or views from developers,” he added.
Samuel Tan Wee Cheng, Executive Director at KGV International Property Consultants, also believes that the proposal will not significantly affect Johor’s property market, as property prices in the state are still cheaper compared to nearby Singapore.
However, the move could create uncertainty and may lead to foreigners adopting a “wait-and-see” approach, said Siva Shanker, President of the Malaysian Institute of Estate Agents (MIEA).
“If I’m looking to invest in property in Johor, I’d hold off my purchase until I’m sure what it’s all about. If the whole thing is going to take say, six months to be finalised, then investors are going to wait and see for six months.”
Lim Boon Ping, COO of Johor Baru-based Tiram Realty, added: “If it’s a drastic increase, it may dampen the market for a while. But it’s likely to be for high-end properties and I don’t think it would be a major adjustment. Also, sentiment in Johor is strong and probably won’t have an impact.”
Farah Wahida, Editor of PropertyGuru Malaysia, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
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