The Johor government’s plan to levy higher tax on foreigners drew mixed reactions as details of the said proposal are still under discussion, reported The Star.
According to Chief Minister Mohamed Khaled Nordin, approximately 130,000 foreigners owning properties in Johor will need to pay higher tax rates. Although the rates are still being discussed, they are expected to be introduced by end-2013, following a state-wide property re-evaluation exercise.
Although there was a negative reaction in Bursa Malaysia, with UEM Land — a proxy to Iskandar’s property market — down nine sen to RM3.41, some experts believe that the higher tax would have little impact. This is because positive market sentiments and foreign property buyers only account for a small percentage of the market.
Foreign property ownership in the state stands at five percent, noted Koo Moo Hing, branch chairman of Real Estate and Housing Developers Association (REHDA Johor).
“We hope to get more details on the proposal and better still if the state government could get feedback or views from developers,” he added.
Samuel Tan Wee Cheng, Executive Director at KGV International Property Consultants, also believes that the proposal will not significantly affect Johor’s property market, as property prices in the state are still cheaper compared to nearby Singapore.
However, the move could create uncertainty and may lead to foreigners adopting a “wait-and-see” approach, said Siva Shanker, President of Malaysian Institute of Estate Agents (MIEA) President.
“If I’m looking to invest in property in Johor, I’d hold off my purchase until I’m sure what it’s all about. If the whole thing is going to take say, six months to be finalised, then investors are going to wait and see for six months.”
Lim Boon Ping, COO of Johor Baru-based Tiram Realty, added: “If it’s a drastic increase, it may dampen the market for a while. But it’s likely to be for high-end properties and I don’t think it would be a major adjustment. Also, sentiment in Johor is strong and probably won’t have an impact.”
Right…… the growing positive sentiments would surge on, despite this tax hike.