KUCHING: The upcoming Budget 2011 is expected to support the government’s Economic Transformation Programme (ETP) aimed at propelling Malaysia into a high income nation.
According to HwangDBS Vickers Research Sdn Bhd (HwangDBS Research), higher real property gains tax (RPGT) and restrictive loan-to-value (LTV) caps would be deterrents to foreign direct investments (FDIs) and high net worth individuals.
The research house highlighted that while important to ensure a healthy property market, risk of a property bubble in Malaysia was relatively low as affordability remained high and the sharp price appreciation seen was mainly limited to landed residential in prime locations.
HwangDBS Research said LTV cap based on number of properties owned, location and value might be difficult to implement, banks would be better off managing risk on their own.
The research house stated that policy tightening in regional markets saw initial negative knee-jerk reaction, but share prices rebounded to surpass pre-policy levels while property prices largely held up.
HwangDBS Research pointed out that demand should continue to be supported by Malaysia’s positive micro factors; young population, urbanisation, shrinking household size, rising income, inflation hedging and strengthening of ringgit.
The research house saw huge re-rating potential from Kuala Lumpur’s transformation into a more liveable and vibrant city.
More details would likely be unveiled on the mass rapid transit (MRT), light railway transit (LRT) extension and government land redevelopment that could involve large private sector participation and FDIs.
HwangDBS Research said sure winners would be current owners of large prime land with international development potential in Kuala Lumpur.
The research house stated while it was trickier to guess the direct beneficiaries of government land redevelopment, government-linked companies (GLCs) and Bumiputera developers had an upper hand.
HwangDBS Research revealed that the Malaysian property sector was one of the biggest laggard sectors post-financial crisis.