KUALA LUMPUR: While there are conflicting views over the new criteria imposed on the Malaysia My Second Home (MM2H) programme, these changes may not have a significant impact on the property market.
These changes – effective in October – are not expected to have any positive drivers for the property market, but RHB Research opined that the negative impact would also be limited.
Citing Home Ministry data, the research house pointed out that of the total 57,478 registered MM2H participants, 28,249 people are principals, with the balance being their dependants. And of these, only about 10,000 of the principals have bought assets in Malaysia.
As such, the potential disposal of properties for some of those who are not able to extend their stay in Malaysia under the new ruling may not exert a significant downward pressure on property prices as the market was already sluggish over the past six to seven years.
“If at all, it should be only the high-end segment that will be affected, given the pricing threshold for foreigners to own properties in Malaysia,” it said.
The government recently announced the proposed new MM2H rules and regulations with the objective of ensuring the quality of foreigners and potential economic benefits that this group of people bring to the country.
“While the new rules may be perceived to be too hostile given the steep tightening, we understand from media reports that the government has not revised any of the criteria since 2002. Indeed, when compared to the respective expat and migration programmes in our neighbouring countries, the old MM2H criteria does seem to be ‘too friendly’.
“Without raising the bar, it would be unjustifiable for these ‘normal quality’ foreigners to also enjoy the subsidies that the government is offering, such as petrol, sugar and gas,” RHB Research said.
The changes to the programme have drawn a lot of conflicting views from various stakeholders who generally viewed the conditions as too restrictive and, thus, counterproductive to any economic recovery plan.
However, the government has said it is prepared to re-examine the new criteria.
Alternatively, RHB Research said the government could introduce more targetted measures or incentives to attract the return of foreign investors to the local property market.
“Policies such as the real property gains tax regime can be relaxed as speculative buying of properties has been fairly minimal in recent years. More importantly, better economic growth prospects, stable political landscape and steady currency should help to spur foreigners’ interest over the longer term,” it said.
The research house has kept its neutral stance on the property sector with its top pick of Matrix Concepts Holdings Bhd given its solid balance sheet and consistent dividends.
On the other hand, KAF Equities is more optimistic on the property sector with an “overweight” view. The brokerage noted that developers under its coverage have shown signs of earnings recovery in the first half of the year and were confident of achieving their year-end sales target.
“Residential property prices in major cities in several countries such as the United Kingdom, the United States, Singapore and Taiwan had shown a post-pandemic rebound with residential prices, to some extent, rising by even more than 30% year-on-year.
“We have yet to see this happen in the local property market. We believe that to create a more vibrant market, the market first needs to be confident in the change of the new government. This may only come with the passage of time with more concrete and stable housing policies in place. This would potentially lead to a capital reflation of the real asset prices,” it said.