PETALING JAYA: Proposals announced in the Budget 2011 by Prime Minister Datuk Seri Najib Tun Razak is generally positive, said property sector stock analysts.

Among the positve aspects are the emphasis given to the development of the Malaysian Rubber Board (MRB) land in Sungai Buloh and the Kuala Lumpur International Financial District.

“The key projects announced will unlock value of government land holding, which will of course involve land sales or joint ventures with land owners,” Kenanga Investment Bank Bhd research head Yeonzen Yeow told theedgeproperty.com.

However, he was surprised with the urgency given to the 100-storey tower at the Warisan Merdeka project near Stadium Merdeka in Kuala Lumpur as the research house did not see it as a high priority project at the moment.

The absence of a higher real property gain tax in itself is positive for the property sector, ECM Libra Group head of research Bernard Ching said.

Also conspicuously absent from the budget announcement is the widely expected lowering of loan-to-value (LTV) ratio for mortgages in order to curb property speculation.

“However, we believe the imposition of lower LTV cap will likely be announced separately at a later date rather than being scrapped altogether,” he added.

As expected, the government reiterated its commitment to several large-scale projects such as the development of 2,680 acres of MRB land in Sungai Buloh by the Employees Provident Fund (EPF), which carries a gross development value of RM10 billion and is expected to be completed by 2025.

Other large-scale projects that look set to continue include the RM26 billion Kuala Lumpur International Financial District by 1Malaysia Development Board and Mubadala Development Company, and the RM5 billion-worth Warisan Merdeka, which will be developed by Permodalan Nasional Bhd and completed by 2015.

“We are concerned with the oversupply in office space in Kuala Lumpur so we are not bullish of the immediate prospect of these projects. While these developments will invigorate the capital city from the supply side, much still needs to be done on the demand side to ensure a healthy take-up of such new office space upon completion,” Ching said.

Yeow said the Budget overall was relatively muted with regards to the property sector. “What would be important now are the major developments mentioned such as the MRB land and Kuala Lumpur International Financial District, which we think will set a foundation for both local and foreign investors to participate in these key strategically located projects.

“Perhaps the biggest disappointment would be there was no announcement for removal of the 10% Real Estate Investment Trust (REIT) withholding tax. It would have been appropriate in line with the implementation of a national REIT fund. Now it looks like it will be a property trust fund instead, although further details are unknown.”

OSK Investment Bank research analyst Mervin Chow said the budget announced was positive: “Overall it is a positive budget. I think the market was expecting some tightening measures to be announced, but it appears that no drastic measures will be taken until the next general election.”

ECM’s Ching said the initiatives announced to assist home ownership among the lower income group — such as stamp duty exemptions on instruments of transfer and loan agreement for a residential property priced not exceeding RM350,000; Skim Rumah Pertamaku; and RM50 million allocation for low cost housing fund — will boost the demand for low and medium-cost housing.

“Most of the major listed developers are currently focusing on upper-middle to high-end residential properties, and commercial properties. As such, these initiatives will more positively impact township developers that focus on low and medium cost housings. Developers that fall into this category include KSL Holdings Bhd and LBS Bina Group Bhd,” he added.