Budget 2020: A bold move to address property overhang, says Knight Frank

PETALING JAYA (Oct 12): Knight Frank Malaysia in a statement today said the federal government's Budget 2020 announcement is a bold move aimed at the overhang of condominiums and serviced apartments amounting to RM8.3 billion.

Finance Minister Lim Guan Eng tabled Malaysia's Budget 2020 in Parliament yesterday. It included a measure to lower the minimum price threshold for the foreign purchase of high-rise property from RM1 million to RM600,000.

Knight Frank Malaysia managing director Sarkunan Subramaniam said: “It may be an immediate remedy for the overhang situation. However, there are no rules that foreigner must buy from developer, like in Australia. Such rules could be implemented to avoid creating stiff competition with foreigners buying in the same field of secondary market properties.

“However, the property overhang is attributed to various factors such as mismatch of products and location rather than pricing alone. Some units remain unsold due to less favourable location in terms of accessibilities, distance and lack of amenities as well as product type,” he added.

The budget also announced an extension to the Home Ownership Campaign (HOC) and the rent-to-own (RTO) financing scheme which Sarkunan said were very good initiatives introduced by the government which addressed the overhang issue and increased home ownership among Malaysians, in particular the lower income group.

“However there is concern that the property price sold may include the expected capital gain which may lead to higher property price as compared to the current market value. This scheme has to be regulated and shall be fairly practised by both the public and private sectors," he said.

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