Chinese international property portal Juwai.com, forecast there will be stronger interest from Chinese buyers next year with the lowering of the minimum price threshold for foreign buyers on high-rise property.

In its 2020 budget, the government proposed helping the industry sell some of its unsold new homes by temporarily lowering the minimum price threshold for foreign buyers on high-rise property in urban areas from RM1 million to RM600,000.

The lower threshold will only apply between January 1 and December 31, 2020, after which date the threshold reverts to RM1 million.

Juwai IQI executive boardmember, Kashif Ansari said, the real estate industry views positively the government’s move to temporarily reduce the minimum price threshold for foreign buyers.

That is the conclusion of the Juwai IQI survey of 386 Malaysian real estate agents, conducted between 6 and 21 November 2019, he said.

“With the lower threshold in 2020, we forecast stronger interest from our buyers. Is it good, or is it bad? Nationwide, 71 per cent of surveyed agents approved, calling the lower threshold either “a little good” or “very good.” More than one-third, or 35.1 per cent, of surveyed agents believe the lower threshold is “very good.”

“The fact that everyone agrees upon is that the markets are suffering from an excess of unsold property. By lowering the price threshold for a short time, the government hopes some of these unsold properties will find buyers. Developers will then have the funds to invest in and begin construction on projects more suited to the local buyer in today’s market,” said Kashif.

Kuala Lumpur, Penang, Selangor, and Johor combined have an overhang of 9,315 high-rise units valued at RM6.775 billion.

Data from the Valuation and Property Services Department of Malaysia (JPPH Malaysia) shows that Kuala Lumpur has the highest overhang of unsold completed condominiums and apartments. As at the first quarter of 2019, the high-rise overhang in Kuala Lumpur stood at 2,544 units, worth about RM2.338 billion, followed by Penang with 2,684 units valued at RM2.13 billion, Selangor (2,113 units; worth RM1.144 billion) and Johor (1,974 units; RM1.163 billion).

According to Kashif, the property market was most positive about the lower thresholds in Kuantan, Penang, Melaka, and Sarawak.

Kuantan had the highest rate of approval, with 75 per cent of agents from that state calling the initiative “very good,” he said.

In every state with sufficient survey responses for analysis, at least 62.5 per cent of respondents consider the lower threshold to be “a little good” or “very good.”

The states with the highest number of negative responses, in which agents call the lower price thresholds either “a little bad” or “very bad,” are Melaka (15.8 per cent), Kuala Lumpur/Selangor (7 per cent), and Sabah (8.1 per cent). Nationwide, 8.6 per cent called the change “a little bad” or “very bad,” said Kashif.

Malaysia a good market for mainland Chinese

Kashif said, recent reports by Juwai found that mainland Chinese buyers accounted for RM8.4 billion (US$2 billion) of total Malaysia residential property sales per year, and less than one per cent of all transactions.

He also said, Chinese buyers made 16.5 per cent more enquiries on Malaysian property in the third quarter of this year than in the same quarter of 2018.

In the first half of 2019, Malaysia was the fifth most popular country for Chinese property buying inquiries in the world, he added.

“Malaysia is especially appealing to buyers motivated by lifestyle, retirement, or education. It has affordable standards of living, high quality of life, medical facilities, and accessible educational institutions. Malaysia consistently ranks among the best places to live,” he said.

Kashif said the trade war encourages global corporations to relocate their operations to Malaysia due to the country’s productive labour force and strategic location.

These new investments in factories and distribution centres also lead to a certain amount of housing investment as foreign business people move to Malaysia.

“Malaysia is an essential player in the Belt and Road Initiative, as 80 per cent of China’s trade moves through the Straits of Malacca. The difficulties in Hong Kong have contributed to a strong increase in demand from Hong Kong. Total numbers of Hong Kong buyers will not be as large as some imagine because Hong Kong itself has a relatively small population,” he said.

Source: NST Online