The threshold for foreigners to purchase urban high-rise properties has been reduced from RM1mil to RM600,000 next year.
Speaking during his Budget 2020 speech in Parliament on Friday (Oct 11), Finance Minister Lim Guan Eng said this was to reduce supply overhang of condominiums and apartments amounting to RM8.3bil in the second quarter of 2019.
The government’s decision to lower the threshold on the prices of condominiums and apartments in urban areas for foreign ownership was made to prevent the country from descending into an economic crisis caused by a property supply overhang.
Prime Minister Tun Dr Mahathir Mohamad said that without the move, Malaysia will suffer problems currently faced by Hong Kong and Tokyo, Japan.
He said the decision, which was announced by Finance Minister Lim Guan Eng when tabling the 2020 Budget on Friday, will help the government reduce the supply overhang and subsequently bring stability to the country’s property market.
“Since there are not enough Malaysians buying (high-rise condominiums and apartments in urban areas), there is a property overhang.
“We have to sell them or (property) developers will get into trouble. And overhang in property will result in a national crisis, which has happened in Hong Kong and Tokyo due to overdevelopment.
“We have to get rid of this overhang so that the market for property becomes healthy again,” he told reporters at the International Medical Device Conference (IMDC), Malaysia Medical Device Expo 2019 (MYMEDEX) and Medical Innovation Exhibition and Conference 2019 (MEDINOVA) here, today.
Also present was Health Minister Datuk Seri Dr Dzulkefly Ahmad.
For the 2020 Budget, Lim had announced that the price threshold for high-rise property in urban areas for foreign ownership will be reduced from RM1 million to RM600,000 starting next year.
Meanwhile, Dr Mahathir clarified his stand on the sale of properties to foreigners, which he had reportedly been previously opposed to.
“I was critical because of the development in Johor, where the property is said to be freehold, and that it is a very luxurious property developed only for foreigners to buy,” he said.
On the controversy surrounding the redevelopment of Kampung Baru, Dr Mahathir said that the government did not originally offer the market price, as it feared the Malays would not be able to afford property developed on the land, thus wiping them out from the Malay enclave.
He said according to market prices, the current rate of land in Kampung Baru could fetch a whopping RM7,000 per sq ft.
“That is why we are offering the residents a special rate (for the redevelopment plan), so that we can develop apartments and flats for the Malays at affordable prices.
“There are cases in which Malays from not so well-to-do backgrounds are selling their lands at high prices – but subsequently lose ownership of the land because they cannot buy it back.
“This (Kampung Baru) needs to be inhabited by residents who are from the Malay community. Should the government follow the market price, the Malays will cease to exist here (in Kampung Baru).”
Federal Territories Minister Khalid Abdul Samad had said that the government will make a new offer to Kampung Baru landowners to make way for the redevelopment of the area.
Khalid had said that the decision was made following discussions with Dr Mahathir.
He had also said that Dr Mahathir would be announcing the new rate, which the former described as the “final offer” from the government to the Kampung Baru landowners.
When asked about the new and final offer, Dr Mahathir replied: “Saya kalau duduk tawar, dia tawar semua (If I keep on negotiating, I will negotiate all).”