Written By: Henny Maherah
Malaysia has been swept by new changes as the economy begins its recovery since the relaxation of the Movement Control Order (MCO). Key developments include revisions designed specifically to respond to the impact of COVID-19 on the property market.
PENJANA Stimulus Package and the Reintroduction of the Home Ownership Campaign
On 9 June 2020, the Malaysian government issued its fourth economic stimulus package, the Pelan Jana Semula Ekonomi Negara (PENJANA) package. Valued at 35 billion ringgit (US$8.1billion), the package aims to help Malaysians who have lost their jobs or experienced pay cuts as a result of the pandemic. The measures included in PENJANA include job protection and tax incentives as well as financial assistance for small and medium-sized businesses (SMEs).
The Home Ownership Campaign (HOC) will also be reintroduced as part of the PENJANA package to encourage more property buyers among Malaysians. Previously, the HOC successfully ran in 2019, clearing 31,415 residential units, valued at RM23.2 billion as of November 2019, surpassing the initial target of RM17 billion.
Malaysians will be able to benefit from the HOC in 2020 in several ways:
- Tax exemptions when purchasing property
- 10% discount from participating developers on the price of the property
- All properties sold from 1 June 2020 till 31 December 2021 will be exempted from real property gains tax
Since the introduction of these measures, there has been increased interest from homeowners looking to sell their property. “We are seeing more motivated sellers willing to negotiate prices as they know buyers have more choices,” stated Lim Boon Ping, president of the Malaysian Institute of Real Estate Agents reports.
Malaysian Tourism Sector amid Nationwide Tourism Campaign
Prior to the outbreak of COVID-19, the Ministry of Tourism, Arts and Culture (MOTAC) announced the fifth Visit Malaysia 2020 (VM2020). According to Minister Datuk Seri Nancy Shukri, the campaign aims to “strengthen the country’s competitiveness and sustainability in tourism while ensuring the industry is inclusive.”
Unfortunately, the pandemic resulted in the immediate cancellation of VM2020 as both domestic and international travel are prohibited worldwide. Within the first quarter of the year, the tourism industry suffered a loss of RM9 billion.
In a recent survey, about 15% of the hotels in Malaysia voiced apprehensions that they will not survive the impact of the outbreak and will have to resort to permanent closure. Several hotels ceased operations for good during the MCO, among them the Holiday Inn Resort in Batu Ferringhi. Despite its four-decade history as a tourist favourite in Penang, this landmark hotel was not spared from the economic impact of the pandemic.
Property Developers Change Strategies in New Normal
Property developers are encouraged to follow a two-pronged approach in managing the property market as demand gradually picks up.
Developing more affordable housing priced at RM500,000 and below
Continued efforts to clear overhang units, 80% of which come from the premium real estate sector
More Affordable Housing Units
Ceiling prices of affordable houses will face a reduction in an attempt to ensure housing remains accessible to all. In Penang, a 10% reduction for affordable homes priced beyond RM72,500 has been applied in June 2020.
Property developers in Malaysia are also adopting business strategies to fit the new normal. Some of them are focusing on competitively priced essential homes in strategic locations.
Essential homes refer to developments that focus on sustainability. Eco-friendly features would be integrated into these developments. Proposed locations of such developments include Melawati in Selangor, Sentul in Kuala Lumpur and Rubika in Butterworth.
Efforts to Clear Overhang Units
Speaking at a press conference after the launch of Grand Marais Suite, Housing and Local Government Minister Zuraida Kamaruddin explained that plans to revise property sales price and terms for foreign buyers have been made with the government in order to address the backlog of overhang units.
Responding to these revisions, the Penang local government has reduced its minimum price threshold for foreign property ownership. This reduction will aid in the clearance of the remaining 3,043 overhang units worth RM2.6 billion total.
As the property market continues to grapple with the effects of COVID-19, targeted incentives and state initiatives will continue to help the Malaysian economy recover fully in the new normal.
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