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RHB stays neutral on property sector as new MM2H rules seen having minimal negative impact

KUALA LUMPUR (Sept 7): RHB Research has maintained its “neutral” rating on the property sector, and said it expects the new Malaysia My Second Home (MM2H) programme rules not to have a positive impact on the sector, nor a significant negative impact. 

Its analyst Loong Kok Wen in a note today said the new MM2H rules, effective October, are not expected to yield any positive drivers on the property market, while their negative impact is expected to be quite limited.

The government’s proposed new MM2H rules and regulations are aimed to ensure the quality of foreigners and potential benefits that this group of people bring.

She said that according to the Home Ministry, there are a total of 57,478 registered MM2H participants, of which 28,249 are principals, with the remainder being their dependants.

However, she noted that only about 10,000 of the principals have bought assets in Malaysia.

“For some that are not able to extend their stay in Malaysia given the new rulings, we think the potential disposal of properties will unlikely exert a significant downward pressure on property prices, as the market has already been sluggish over the past six to seven years,” she added.

Loong said that, if at all, only the high-end segment will be affected given the pricing threshold for foreigners to own properties in Malaysia. 

She added the new rules may be perceived to be too hostile given the steep tightening, but noted that the old MM2H criteria do seem “too friendly” when compared to the respective expat or migration programmes in neighbouring countries.

She maintained her “neutral” call on the property sector, with her top sector pick being Matrix Concepts Holdings Bhd with a target price of RM2.36.

Meanwhile, Loong said that in order to stimulate the return of foreigners to the local property market, the government should consider introducing more targeted measures or incentives in the upcoming Budget 2022.

“Policies such as the real property gains tax (RPGT) regime can be relaxed as speculative buying of properties has been fairly minimal in recent years.

“More importantly, better economic growth prospects, stable political landscape, and steady currency should help spur foreigners’ interest over the longer term,” she said.

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