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#Budget 2010:* Mixed feelings from property consultants

PETALING JAYA:  Proposals announced in Budget 2010 seem to lack the needed impact for the property sector. Prime Minister Datuk Seri Najib Razak tabled the Budget in Parliament on Oct 23.  Property consultants in their initial reactions have little to say about the Budget.

Allan Soo, managing director at Regroup Associates Sdn Bhd, even described it as a “no-goodies” Budget.

He says the Budget has no direct and immediate impact on the property market, as it does not offer additional physical stimulus for the economy in general and the property sector specifically.

“There are no major surprises and the property market is basically left as it is except for the proposed 5% RPGT (real property gain tax) to be imposed from Jan 1, 2009. RPGT has been exempted since April 2007,” he said.

In the 2010 Budget, the government proposed a flat 5% RPGT rate on gains from the disposal of real property effective Jan 1, 2010, with certain exemptions.

Tang Chee Meng, COO of Henry Butcher Marketing Sdn Bhd, also shared Soo’s sentiments. While the exemption of RPGT in April 2007 gave a big boost to the residential property market, Tang feels that foreign investors may now be worried about increases in the RPGT rate that may impact on their gains when they decide to sell their properties in the near future.

On the government’s plans to greater promote the MM2H (Malaysia My Second Home) programme, Regroup’s Soo said incentives should be given to developers to promote their developments to foreigners and to tourists to motivate them to make Malaysia their second home.

He added that well-organised programmes with clear packages and initiatives are crucial in attracting foreigners to stay in Malaysia. He said with Cyberjaya and Putrajaya designated as pioneer Green Technology townships, they and other developments can be showcased to attract foreigners to the country.

Henry Butcher’s Tang said the higher allocation to the tourism sector is a good move and it may benefit the property industry in the long run because more foreigners will become aware of Malaysia and its attractive investment environment.

“This may lead to an increased interest in Malaysian real estate, especially if the relevant authorities take the right steps to tap the increased influx of tourists to promote real estate investment.

“A significant budget, however, should be allocated to organisations entrusted to promote Malaysian real estate overseas to enable them to carry out their jobs more effectively,” he added.

The government’s move to allow EPF contributors to use their current and future savings in Account 2 to obtain higher financing to purchase higher value or additional homes have also been lauded. This will increase the purchasing power of EPF contributors but is limited to the purchase of one house at any one time and subject to conditions stipulated by the EPF. Regroup’s Soo said it is good step but added that the positive impact will not be seen in the near term.

Henry Butcher’s Tang said the measure will help those who do not have sufficient savings to pay for the differential sum not financed by the banks, especially those from the lower income group. It will empower them to buy houses of higher value, he said.

“Nevertheless, an across-the-board stamp duty exemption would have been a godsend to the industry and help boost property sales as it did during the Asian financial crisis. This Budget is great for the rakyat and environment but a bit of a damper for the property industry,” Tang added.

Tang welcomed the government’s focus on green technology for Budget 2010 -- the incentives given should spur more developers to go green and encourage investors to buy green-rated properties. He also said that the rakyat at the lower end of the income spectrum would benefit from the government’s initiative to build low-cost houses and allocation of funds to revive abandoned projects.

Chan Wai Seen, research & consultancy director at JS Valuers Property Consultants Sdn Bhd, expects green technology and green buildings to be a new trend in the property market. He said the government’s emphasis on green technology would encourage more green developments.

He also hopes to see more infrastructure developments such as LRT lines as well as industrial and commercial hubs introduced in secondary locations to spread out demand.

Go to the audio section of www.theedgeproperty.com for a discussion on Budget 2010 with Regroup’s Allan Soo.

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