Soruce from : Homeguru.com.my

Regulations to curb investment in the luxury property market, which is expected to be introduced by the government in the upcoming Budget 2012 in October, may not be a good move.

According to Gavin Tee, Founding President of Swhengtee International Real Estate Investors Club, curbing the wrong investment segment may cause a less favourable situation for the Malaysian property market.

Malaysia's high-end property market has been quieter since 2009. Today's market trend focused mostly on landed apartments, commercial properties and medium-cost apartments. Thus, tightening measures for the high-end segment should have been implemented way back in 2008 and 2009. Tee said that the luxury property market needs a boost to stimulate the economy instead of cooling measures.

Currently, medium cost units at the outskirts can reach between RM700 psf and RM800 psf, while areas like Mont' Kiara and the city centre can go as low as RM600 psf. Tee suggested that some clarity from the government would be a good move. It is important to understand the difference in each market segment and not to implement measures that would affect the wrong market, he said.

Meanwhile, high-end units in the city centre are being marketed at around RM800 psf, and within the range of RM1000 psf to RM1500 psf. This is said to be the lowest price among the region and five times lower compared to luxury units in Singapore.

"We are in the initial stage of globalising our capital to reach metrocity stage, and it is important to attract foreign and local investors to drive our country's Economic Transformation Programme (ETP)," said Tee.

The government's plan to make world-class cities in places like Kuala Lumpur, Kota Kinabalu, Penang, Melaka and Johor need the property market to be globalised. However, the country suffers from lack of foreign interest compared to neighbouring countries.

"So if the government introduces measures which discourage investment and create a negative impact, this could result in a slow-down in the processes of the Economic Transformation Programme. In fact, incentives to encourage foreigners and locals to stay in high-end areas should be offered especially in city centres, which have not been very conducive to stay in."

The profitable properties are primarily in mega-projects, globalised commercial buildings, institutional shopping malls and tourism real estate. Tee pointed out that if Real Property Gains Tax (RPGT) will be used as a tightening measure, the focus should be on those sectors and not on individuals, especially after housing loan policies have already been tightened.

"The possible measurements of increasing the Real Property Gains Tax (RPGT) or tightening of property loans would have an impact on the globalisation of our real estate market. A wrong move will affect our current historic moment in the long-term growth of our real estate market, and it should not be discouraged from growing so," he said.