Knight Frank: Penjana to boost industrial, residential and hospitality markets

PETALING JAYA (June 9): The RM35 billion Short-Term Economic Recovery Plan (Penjana) will benefit the industrial, residential and hospitality sectors in the property market, said real estate consultancy Knight Frank Malaysia.

Its executive director of Capital Markets Allan Sim said the generous tax incentives under Penjana are timely in capturing Foreign Direct Investments (FDIs) from the US-China Supply Chain Reconfigurations.

Qualifying criteria under Penjana are simplified to the value of capital investments, with a more generous tax holiday period of up to 15 years for corporates with capital investments of more than RM500 million. This is coupled with the fast track approval mechanism for manufacturing licences and tax incentives with the establishment of the Project Acceleration and Coordination Unit (PACU) under the Malaysian Investment Development Authority (MIDA).

"This will help to raise the country’s attractiveness in the eyes of foreign investors.

“Post Covid-19, we expect to see more major companies looking to diversify and decentralise their supply chains across countries and regions to mitigate geographical risks on production lines or material sourcing. The decoupling of US-China supply chains is also evident as trade tensions continue to intensify,” Sim said.

According to him, the outlook of the industrial property market is positive as the incentives under Penjana will help to position Malaysia as a strong contender in seizing these relocation opportunities as well as next shoring for their manufacturing businesses.

“Hence we are likely to witness a positive spill-over effect in the industrial property market predominantly in larger purpose-built factories/large tracts of industrial lands, with the potential entry/relocation of new global industrial players. The logistics and real estate sectors will benefit by way of demand from set-ups of new manufacturing operations,” he added.

On the residential segment, Knight Frank Malaysia managing director Sarkunan Subramaniam said as developers are focusing on clearing existing stock and holding back new property launches at this moment, the reintroduction of the Home Ownership Campaign (HOC) will likely act as an immediate catalyst to address the current property overhang and help in easing developers’ cash-flow tensions.

Meanwhile, he foresees that the exemption of Real Property Gains Tax (RPGT) for disposal of residential units between June 1, 2020 and Dec 31, 2021 limited to three units per individual, will offer traction to the secondary market.

“We are also positive on the comeback of certain categories of qualified investors to the property market with the uplifting of margin of financing limit for the third housing loan onwards for property valued at RM600,000 and above during the revived period of the HOC campaign,” he added.

Sarkunan opined that these initiatives will help to restore confidence of property investors and contribute to the growth of the economy.

As for the hospitality and tourism sector, he said the RM1 billion Penjana Tourism Financing (PTF) facility could support the transformation initiatives for small-and-medium sized enterprises (SMEs) in the tourism sector.

“The personal income tax relief of RM1,000 for domestic tourism expenses until Dec 31, 2021 will also help to encourage more domestic travel and revive the country’s tourism sector in the short to medium term.

“In addition, the existing service tax exemption for hotels will be extended to June 30, 2021, and a new exemption for tourism tax from July 1, 2020 to June 31, 2021 has been introduced. This will most likely encourage more tourism activities in the country for the next 12s months, as the exemption of both tourism tax and service tax will certainly reduce the cost of hotel stays for both local and foreign travellers,” he said.

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