Johor property tax hike unlikely to affect demand from S’pore: industry players

Plans to raise taxes on properties owned by foreigners in Johor are not likely to affect demand from Singaporean investors.

Industry players said that is because current tax levels are relatively low, and property tax makes up a very small component of a home owner’s total cost.

Property tax rates are set to increase for foreign home buyers in Johor at the end of the year.

On Sunday, local authorities revealed plans to increase tax rates for about 130,000 foreign property owners.

Demand for the 147 new homes at Afiniti Residences in Medini Iskandar Malaysia has not been affected.

In fact, the developer, a joint venture between Khazanah Nasional and Temasek, received over 100 applications of interest after the announcement.

Roslina Arbak, general manager at Pulau Indah Ventures, said: “So far we haven’t received any negative phone calls or feedback from our registrants, particularly the foreign registrants. If you look at property tax at the moment, it is already very low. Therefore, I don’t see any significant impact on the property market in Malaysia or in Johor specifically.”

As of 31 May, the developer had received another 1,570 purchase applications.

60 per cent come from Malaysians, while Singaporeans contribute to 32 per cent of the applications. Other foreign buyers from countries like Indonesia, South Korea and the UK make up the balance 8 per cent.

Despite higher taxes, analysts said properties in Johor will remain a choice investment for Singaporeans.

Nicholas Mak, research head at SLP International, said: “The adjusted amount may initially seem large because it hasn’t been adjusted for the last 20 years. But right now, take for example a RM 1 million property, based on the current tax rate of 0.14 per cent. The annual tax rate is only RM 1,400. So even if this amount were to increase two to three times, many Singapore investors would find the final tax amount acceptable.”

Units at Afiniti Residences are priced at RM 850 to RM 1,000 per square foot.

This works out to at least RM 500,000 (S$202,000) for a 484-square-feet studio apartment.

In Johor, foreigners can only buy properties above RM 500,000.

Home buyers interested in a unit at Afiniti Residences will go through a balloting process on Saturday in Johor. One ballot ticket will buy just one unit and the developer is not intending to make any bulk sales.

Selected buyers at the balloting session must put down a RM 30,000 deposit.

Source : Channel NewsAsia – 4 June 2013

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