Understanding tax exemptions. Petikan TheStar Monday October 26, 2009

The PricewaterhouseCoopers team answers questions on the service tax, green technology and real property gains tax.

THIS is the second of a three-part question-and-answer series provided by PricewaterhouseCoopers on various aspects of Budget 2010. The final part will appear in StarBiz tomorrow. Email your questions to:
budget.2010@my.pwc.com


Q. I have been issued a credit card and I subsequently decide to cancel the credit card six months later, will I be able to claim the service tax paid?

A. The service tax law does not contain provisions for a refund of service tax under these circumstances.

If I have been issued a credit card free for life, how does the change in law affect me?

Service tax will be collected on the completion of each year after Jan 1, 2010. A principal cardholder will have to pay RM50 per card and RM25 for every supplementary card.

Will I still be paying service tax when I have meals at restaurants after GST is implemented?

GST will replace the current service tax. The Minister of Finance indicated that the rate of GST will be lower than the current rate of service tax. The current service tax rate is 5%.


With the reintroduction of real property gains tax we do hope that which is of lesser burden to the Rakyat would apply, says the Second Finance Minister

My company is considering purchasing a new building. We are looking at a building incorporated with “green technology”.

I understand there will be an exemption from stamp duty on the purchase of such buildings?

Stamp duty exemption would be available for buyers of buildings and residential properties that have been issued a Green Building Index (GBI) certificate.

The GBI is a rating index for environmentally-friendly buildings.

The stamp duty exemption would only apply to buildings or residential properties bought directly from real property developers and the exemption is only given once to the first owner of the building.

It may not apply to existing buildings that have subsequently been granted the GBI certificate.

The amount of the stamp duty exemption is given only on the additional cost incurred by the property developer to obtain the GBI certificate, and not on the full value of the building.

The exemption will apply for sales and purchases agreements executed from Oct 24 2009 until Dec 31, 2014.

I heard that there will be a tax of 5% to be imposed on gains from the disposal of real property from Jan 1, 2010.

It is proposed that real property gains tax will apply to disposals of real properties effective from Jan 1, 2010.

To date there has been a prevailing exemption on real property gains tax on such disposals since April 1, 2007.

Generally, the exemption would still apply to sale and purchase agreements executed by Dec 31, 2009.

Based on the Finance Bill, the rate of tax applicable will depend on the period the property has been held since it was acquired.

Previously, there was no tax for disposals by individuals from the sixth year onwards.

However, in the current proposal this has been removed. Therefore, both companies and individuals would be taxed at the scale rates that were applicable in the past.

The Second Finance Minister has recently clarified that the tax rate on such disposals of real property would be 5% irrespective of the period of ownership.

Therefore with the reintroduction of real property gains tax we do hope that which is of lesser burden to the Rakyat would apply.

I intend to sell my house next year. With real property gains tax applicable, will I need to file a return?

Does this mean 5% will be retained from money due to me from the sale of the property?

You would need to file a real property gains tax return within 60 days of the date of the disposal. This proposal increases the previous 30 day deadline to submit a return.

The proposed mechanism for payment of real property gains tax from Jan 1, 2010, the acquirer would be required to retain an amount not exceeding 2% of the total value of the consideration for the property.

The acquirer would then be required to pay that amount directly to the Inland Revenue Board within 60 days of the date of the disposal.

The IRB will apply this amount received from the acquirer against the amount of real property gains tax you would need to pay on the disposal of your house.

I am a Malaysian citizen currently lecturing at a local university in Selangor.

I am planning to apply for a full time 2-year teaching position at a tertiary organisation in the Iskandar region. Do I get any special incentive if I accept the offer?

Your employment offer in the Iskandar region would fall under one of the qualifying activities categorised as ‘educational services’.

If you apply and commence your employment in Iskandar Malaysia between Oct 24, 2009 and Dec 31, 2015, provided that you qualify as a Malaysian tax resident, your employment income will be taxed at the flat rate of 15%.

This could be substantially lower compared to the effective tax rate of a Malaysian tax resident.

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Understanding your tax exposure. TheStar Monday November 16, 2009

By Dr CHOONG KWAI FATT


Exemption order an interim measure to a complete RPGT system

IN Malaysia, real property gains tax (RPGT) is imposed with the intention to curb property speculations. It is imposed on the gains on disposal of Malaysian landed properties and the rate varies from 5% to 30% depends on the holding period.


With effect from April 1, 2007, the Government decided to exempt RPGT in view of the economic slowdown and it was aimed at assisting property developers in disposing of their houses, and spearheading the economic progress.

Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, on Oct 23, however, reintroduced RPGT to put in place a fair administration of taxes.

In a nutshell, an equitable system will now be in place as income tax are imposed on income derived by any person in Malaysia while RPGT, on capital gains on disposal of landed properties. There will not be any loss of revenue to the Government.

In the Budget 2010 speech, the Government’s intention was clear. It is to ensure that the Malaysian tax system is equitable and continue to be able to generate revenue for development purposes. In line with this, the Government proposed that a tax of 5% be imposed on gains from the disposal of real property from Jan 1 2010. Any agreements signed between now till Dec 31 remains RPGT exempted.

Finance Minister II Datuk Seri Ahmad Husni Mohamad Hanadzlah then, exercising his power under section 9(3) of the Real Property Gains Tax Act 1976 (RPGTA), gazetted Real Property Gains Tax (Exemption) Order 2009 which will take effect from Jan 1, 2010. A fixed RPGT rate of 5% on gains from property gains is achieved through the application of this exemption order.

Malaysian individuals are accorded tax exemption of 10% of the chargeable gain (CG) from the computation of RPGT3. Thus, this would effectively mean that they will be paying less than 5% of RPGT rate while companies continue to pay 5%.

The RPGT Exemption Order exempts any person from the application of Schedule 5 of the RPGTA on the payment of tax on the CG arising from any disposal of assets on or after Jan 1, subject to the condition that the amount of CG exempted shall be determined in accordance with the following formula: A/B x C where:

A = Tax on CG at the appropriate tax rate reduced by the Tax on CG at 5%;

B = Tax on CG at the appropriate tax rate;

C = Amount of CG

Effectively, the exemption formula can be simplified as follows:

Chargeable gain x (Appropriate rate – 5%) / Appropriate rate

The appropriate tax rate to be applied on this exemption order depends on the holding period of the property which is summarised as per Table A.

Illustration: Malaysian citizen individuals

Chia Lat acquired a condominium in Bangsar for RM500,000 on Jan 1, 2008. On March 31, 2010 he decides to dispose the property for RM780,000. The RPGT to be paid by him would be as per Table B.

Illustration: Companies

Using the same example as above, and assuming the taxpayer is a Sdn Bhd, the RPGT payable would be as per Table C.

Mathematical confusion

The mathematical formula stipulated in the RPGT exemption basically restores to the fact that the RPGT is 5% on the CG. This is the mathematical equation:

Assuming the appropriate tax rate is y and CG is x, then the RPGT payable after the RPGT exemption would be :

[x – x(y - 5%)/y ] y =xy – xy + 5% x

= 5% of x

The Government has stated that the purpose of the RPGT is to have a fair administration of taxes. Thus the exemption is an interim measure to begin with RPGT of 5% taxes. In years to come, once the exemption order is revoked, RPGT payable would revert to the original position, ranging from 30% to 5%, depending on the holding period.

Policy reform: Currently, taxpayers are only required to keep accounting records for seven years under the law. It may not be feasible to impose 5% on the chargeable gain on gains derived from holding periods more than seven years. This would mean tax payers are required to keep their accounting records for an indefinite time to justify cost attributable to the acquisition.

It is therefore suggested that the Government impose 2% on selling price instead of holding periods exceeding seven years or as in the past, exempt these gains from RPGT. After all, the underlying purpose of RPGT is to curb speculation of properties rather than tax collection.

Moving forward, the Government may likely further align the taxes on landed transactions to be equitable with the income tax system. Therefore, it is crucial that the rakyat understand the Government’s overall objectives and appreciate that this exemption order is an interim measure to prepare the country for a complete restoration of the RPGT system when the time comes.

Once the country’s economy is paced and sustaining desired growth, this exemption may likely to be revoked and property gains will be back causing gains will be taxed at the appropriate rate.

Till then, this exemption order will continue to allow us to enjoy most of our short-term trading gains from real property transactions.

● Dr Choong Kwai Fatt is deputy dean, Research and Development, Faculty of Business and Accountancy, University of Malaya.

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A double whammy. Petikan TheStar Saturday November 7, 2009

THE REAL ESTATE WITH ANGIE NG


PROPERTY buyers and investors are facing a double whammy – the proposed reimposition of the real property gains tax (RPGT) come Jan 1 and the inevitability of having to pay higher mortgage rates.

Coming at the heels of each other, they certainly spell the end of the short “honeymoon” for property buyers that kicked off early this year when developers started to introduce various housing packages and easy payment schemes to promote sales.



Since the announcement of the proposed reimposition of the real property gain tax (RPGT) on Oct 23, real estate investors and owners are still hoping that the Government will review the proposed tax reinstatement.

Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir’s remark on Wednesday that the Government may reconsider the RPGT’s reimposition after receiving feedback from all parties gave them hope that a reprieve may be in order.

Although some argue that a flat 5% tax on gains from property disposal is quite fair and not overly excessive, property buyers and investors worry that this may mark the beginning of reverting to the original tax scale.

Prior to the exemption of the RPGT in April 2007, tax on gains from property sales was on a progressive basis from 30% to 0% depending on the holding period of the property. Any gains made from properties that have been held for more than five years will not attract any tax.

However, the latest measure to extend the 5% RPGT to all gains from property disposal irrespective of the holding period, will mean that long held properties that may be centuries old will also be affected.

This has not gone down well with property owners as they see it as an enactment of an inheritance tax although Malaysia has no such tax legislation.

Their main grouses are that non property speculators have never been subjected to such a tax before and why impose one now and tax them at the same rate as those who speculate or “flip” their properties for quick profits.

If the proposal under Budget 2010 for the flat 5% RPGT is just a temporary measure and changes are made down the road, they will be regarded as “flip flops” on the part of the Government on real estate matters.

Certainly, the timing is also a factor as efforts to promote Malaysian properties to overseas investors are just kicking off.

The Government has recently allocated RM25mil to kick start efforts by Malaysia Property Inc (MPI), a joint public and private sector initiative, to bring Malaysian projects to overseas investors.

MPI has set a target to sell RM2bil worth of properties next year and the countries in its radar include Japan, South Korea, China, India, Britain and the Middle East.

In fact, MPI officials were leading a team of Malaysian developers to participate in a property exhibition in London when they heard news of the proposed reimposition of the RPGT. They have to answer to the many concerns of the potential British investors on the tax measure.

If such promotional efforts are properly coordinated and do not lead to over speculation in Malaysia’s property market, having more inflow of foreign investment in local real estate will be able to promote more depth and breadth in the local market. This is especially true if developers continue to improve on their project design capability to international standards.

Meanwhile, rising mortgage rates since early this month and plans by banks to introduce risk-based pricing in the calculation of interest rates will raise entry cost for new home buyers.

Some of the banks have also stopped absorbing the legal fees, stamp duties and other disbursement fees for loan documentation from their home loan offerings.

If the interest rates continue to move up, there will be knee-jerk reaction in buying interest and take-up rate in the short term.

Whether sentiment will be affected in the medium to longer term remains to be seen and it will largely depend on the strength of the country’s economic recovery.

Buyers will certainly shop around for value property and hopefully some freebies before signing up.

● Deputy news editor Angie Ng says although sunnier days may be here again, Malaysians are not out of the woods yet and any new tax proposals that may be burdensome to the people are untimely

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Can real property gains tax be minimised? Petikan TheStar Tuesday November 3, 2009

By POON YEW HOE


It may be possible by transferring properties to a company, but there are many pitfalls to consider

AT the recently concluded budget seminar of our firm, a major focus of the 650 attendees was the proposed real property gains tax (RPGT) of 5% to be imposed on disposals of property after Jan 1


Resigned to the inevitability of the tax and the futility of objections, the ingenious ones posed the question to us on the possibility of tax minimisation by transferring their current properties to a company before Jan 1.

The plan calls for properties which were acquired many years ago at a cheap price (say RM1mil) to be transferred to a company controlled by them at the prevailing market price (say RM3mil).

The transfer will be effected before Jan 1, thus attracting no RPGT on the disposal.

In the future when the property is disposed off by the company, the company will only be taxed on the capital gain over and above the new cost of RM3mil.

If the disposal price by the company is RM4mil, the company will only pay tax on the capital gain of RM1mil (RM4mil less RM3mil) at the rate of 5%, thus resulting in RPGT of RM50,000.

A very ingenious idea indeed. The comparison of taxes payable shows a tax saving of RM100,000 calculated as seen in the table.


Before anyone embarks on such a potentially lucrative move, one has to bear in mind many of the pitfalls, some of which are discussed below.

Date of disposal

For the purpose of this discussion, the term “chargeable assets” is used to refer to properties and other assets that can be caught under RPGT.

Chargeable assets include shares in real property companies which are companies that predominantly hold assets in the form of properties or shares in other real property companies. Only chargeable assets disposed on Jan 1 or after will be assessed to RPGT. Those disposed of from April 1, 2007 to Dec 31, 2009 will not. A day is literally night and day for tax purposes!

But the term “disposal date” has a technical definition and it is not the date when the sales price is paid over as we usually consider a sale to be. In sales circles, as they say, a sale is not a sale until the money is collected!

However, for RPGT purposes, a sale is a sale on the day a written agreement is entered into.

Hence, the date that a sale and purchase agreement is entered into for the sale of a property is usually the date of disposal for RPGT purposes. But what if there is no written agreement?

The law provides that the date of disposal is the earlier of two dates – the date that the sales price is fully received or the date that the ownership is transferred. Disposals of this nature may have disposal dates being deferred to a later date, which may fall in the 5% taxable period!

Likewise, disposal dates may be deferred even much later if the sale is dependent on securing approvals from the “Government or an authority, or committee appointed by the Government” – for example, the state government, the Securities Commission (SC) or Foreign Investment Committee.

For these “conditional contracts” which are covered by Para 16 of Schedule 2 of the RPGT Act, the disposal date is when the last of the approvals is obtained.

If a sale and purchase agreement is signed in December 2009 that is subject to SC approval which is obtained in February 2010, the disposal will be treated as having taken place in 2010 and thus subject to the 5% RPGT!

Stamp duty on the transfer

Stamp duty is imposed on the documents for the transfer of title; for example, the memorandum of transfer for transfer of property.

The rates applicable are fairly steep for properties which range from 1% to 3% with the highest rate of 3% being applicable for transfer prices which exceed RM500,000.

Transfers of shares attract duty at the rate of RM3 for every RM1,000 of the transfer price or 0.3%.

However, to avoid stamp duty, one may wish to transfer the property without the transfer of title; for example, the owner holds the property in trust for the company.

What if no transfer of title is effected as in these circumstances? Will the issue of tax avoidance then arise? Perhaps.

Anti-tax avoidance in the RPGT Act

Section 25 of the RPGT Act contains the general anti-avoidance provisions which allow the tax authorities to disregard transactions, vary transactions or impose taxes that should have been imposed.

The law specifies that this right is available if the transactions had the effect of “altering the incidence of tax”, “relieving a person from tax liability” or “evading or avoiding any liability which would otherwise have been imposed”.

Besides these general anti-tax avoidance measures which are also found in the Income Tax Act to discourage income tax avoidance, Section 25 of the RPGT Act also provides for persons who provide loans to related parties; for example, Mr A providing loans to Company A which is owned by him.

The law provides that if Company A sells a property and the property was financed by a loan provided by Mr A, the disposal may be regarded as a disposal by Mr A and not by Company A.

However, the cost of acquisition to Mr A is the market value of the property when Company A acquired the property from Mr A. If Company A had acquired the property from Mr A at the true market value, this anti-tax avoidance provision of the RPGT Act should not pose any problem.

Previous rules by Ministry of Finance (MOF)

A few years ago, the Government had granted a similar tax free period from June 1, 2003 to May 31, 2004.

During that period, the MOF had issued some guidelines to curb the avoidance of RPGT by mandating that any disposal of property must be evidenced by a sales and purchase agreement which must be duly signed and stamped within the exemption period.

Sale of property to a company in exchange for shares

Care should be taken if the property owner transfers a property to a company controlled by him in exchange for shares, or at least 75% in the form of shares. If the transfer is done this way, the shares may be considered to be chargeable assets.

In the future when these shares are sold, the gains will be subject to the RPGT of 5%. The cost of shares for RPGT purposes is not the par value of the shares but the price paid by the property owner for the property plus incidental expenses incurred by him on the acquisition; for example, legal fees.

As such, if Mr B transfers a piece of property acquired for RM1mil to his company (Company B) at market price of RM3mil in exchange for 3 million RM1 shares, and the shares are subsequently sold for RM4mil, the gains on disposal are calculated at RM3mil which is RM4mil sales price less the acquisition price to Mr B of RM1mil.

Indirectly therefore, Mr B is taxed on his full capital gains and not merely on the gains made by Company B owned by him.

RPGT or income tax?

Another aspect which has deep implications is whether the disposer had held the property as stock-in-trade or as a long term investment.

If held as stock-in-trade, the gains on disposal will attract income tax whereas if held as a long term investment, the gains will attract RPGT.

Some property investments which are disposed as part of a quick sale, or as a single isolated transaction in circumstances which give it a cloak of “adventure in the nature of trade”, could be caught under income tax.

Due to space constraints, we are unable to elaborate on this issue. If these disposals are caught under income tax, what then is the advantage of disposing the properties before Jan 1 if the disposer has to pay income tax at 25% on the gains upfront?

The obstacles can be quite challenging as seen above and careful navigation of the tax law is necessary. But I am sure good tax advisers will find a way out of the conundrum!


Poon Yew Hoe is a partner of Horwath.

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A waiver good for some property owners. Petikan TheStar Sunday November 1, 2009

THE reintroduction of the Real Property Gains Tax (RPGT) in Budget 2010 has generated much interest and concern.

The acquisition and disposal of property is subjected to a levy by the Government in the form of stamp duty or RPGT


There are many instances when the disposals are made not with a view to profits. People acquire and hold property as a store of wealth and they dispose it when they are in need of funds.

Certain individuals should be exempted from the RGPT. Senior citizens aged 55 years and above who dispose of their properties should be exempted. This category of people needs the funds to meet exorbitant medical bills and for their continued healthcare.

Those who are forced to sell property to meet their debts should be exempted; and disposals as a result of bank foreclosures should also be exempted.

There are those who have to sell their properties to finance their children’s education. The incidence of a levy on property transactions should be a one-off payment at the time of acquisition. Therefore, an increase of a quarter to half a percentage point of the stamp duty could be introduced.

I believe this increase will be adequate to generate revenue equivalent to that derived from the RPGT collection.

Those who can afford to buy property or buy new houses should be able to pay the stamp duty. Stamp duty is easy to compute as it is based on the transacted price. On the other hand, the chargeable gain with the acquisition and disposal price is sometimes difficult to ascertain since the supporting invoices, bills and other documents go missing after so many years.

Other benefits include:

> There is no need to complete any forms and hence saves time.

> The collection is prompt as there would be no registration of the title of the property without first receiving the stamp duty.

> The seller receives his proceeds without having to wait for the tax clearance.

PETER C,
Shah Alam.

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Looking for tax clarity Petikan TheStar Saturday October 31, 2009

OPTIMISTICALLY CAUTIOUS
By ERROL OH


BUDGET speeches are not the kind of reading material that you can just breeze through. They talk about important matters that affect many people and businesses.

The business community and plenty of others pore over these documents to better understand the thinking behind the Government’s fiscal moves. Budget 2010 was no different.


Soon after Prime Minister Datuk Seri Najib Tun Razak began reading his speech in Dewan Rakyat on Oct 23, thousands of copies of the text were distributed and read around the country. As usual, there was much to digest.

This time around, though, there was some confusion over a change in real property gains tax (RPGT).

This was what Najib announced in his speech: “The Government needs to ensure that the Malaysian tax system is equitable and able to generate revenue for development purposes. In line with this, the Government proposes that a tax of 5% be imposed on gains from the disposal of real property from Jan 1, 2010.”

Appendix 15 of the speech provided more details. It states that gains from the disposal of real property are subject to tax under the RPGT Act 1976 to curb speculative activities in the property market.

The tax rates are progressive from 0% to 30%, depending on the holding period of the property. No tax is imposed on the disposal of a property that takes place more than five years after its acquisition.

To broaden the tax base, it is proposed that tax at “a fixed rate of 5%” be imposed on gains from the disposal of real property.

Based on Najib’s speech and the appendix, just about everybody has understood the same thing – that the RPGT net has been widened to capture practically every sale of property (no matter how long ago you bought it), and that the gains from the disposals will be subject to a 5% tax.

This alone has made quite a number of people unhappy (see Angie Ng’s The Real Estate column on page 24), but what has muddied things was that it was not made immediately clear that the Government was putting through this change in two steps.

First, via the Finance Bill, it has proposed to raise the minimum RPGT rate (for property held for more than five years) from 0% to 5%. So far so good. That’s in keeping with what’s stated in the speech and Appendix 15. However, the higher rates (30%, 20% and 15% for disposals within two years, in the third year and in the fourth year after the acquisition) are kept intact. Several of those who had compared the Budget speech and the Finance Bill quickly spotted what they saw as a discrepancy.

If the higher rates are still maintained in the Act, doesn’t it contradict the Budget proposal of imposing RPGT at “a fixed rate of 5%”? It’s a fair question to ask because at that point, few people knew about the Government’s second step in changing the RPGT regime.

That only came out on Oct 25, when Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah issued a statement to confirm that the RPGT rate would be fixed at 5%, irrespective of the holding period of the property.

He said the 5% rate would be implemented through the Real Property Gains Tax (Exemption) Order 2009, a ministerial order that effects a rule change without requiring Parliamentary approval.

So that eliminates the Budget day confusion. However, the use of the order leads to a few interesting points to discuss.

This is not the first time that the Government has issued a ministerial order relating to RPGT. In 2003, it waived RPGT for a year to boost the property sector and to encourage corporate restructuring.

At the opening of the Invest Malaysia 2007, then Prime Minister Tun Abdullah Ahmad Badawi announced that “the Government has decided not to impose RPGT throughout the country commencing April 1”. That will stand until January next year, when the Budget 2010 proposal kicks in.

Some people misconstrued the 2007 move as a scrapping of the RPGT Act. We all certainly know now that this was not the case.

Such a ministerial order usually has a finite life. It gives the Government the flexibility of speedily switching tax strategy when circumstances change. If the Budget 2010 aim was to restructure the RPGT rates for the long haul so that there would only be the 5% rate, this could have been done by amending the RPGT Act only.

Instead, the Government retains the option of being able to charge higher RPGT rates to discourage people from buying property and selling within a year or two in a hot market to make a quick buck. That’s just planning ahead.

However, it would have been good if this aspect was communicated as well in the Budget. Benjamin Franklin wrote that nothing in this world can be said to be certain, except death and taxes. He may be right, but certainty is not necessarily the same as clarity and transparency.

l Although he doesn’t quite share the frustration and resentment that must have been stewing inside George Harrison when writing The Beatles’ Taxman, deputy business editor Errol Oh understands well the sentiments.

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Signs of green shoots. Petikan TheStar Saturday October 31, 2009

By ANGIE NG


THE housing property market which also succumbed to the dampening impact of the global financial crisis may be showing some “green shoots” of recovery, especially in the medium-range landed housing sector.



However, the high-end condominium market around the Kuala Lumpur City Centre vicinity is still fragile.

Since the middle of this year, the take-up rate for landed housing units has improved and developers are seeing a return of buying interest for good projects in well sought after locations. Even the high-rise residential market is showing some glimmer of hope.

The Malaysian Institute of Economic Research’s Residential Property Index (MIER RPI) hit 91.5 points in the second quarter of this year, which is a strong rebound from the all-time low of 69.3 points in the fourth quarter of 2008.


Tan Sri Liew Kee Sin says developers are still careful with planning their launches.
As a sign of their improved confidence, more developers are lining up new greenfield projects for launch from the later part of this year.

This is a much improved situation from late last year when things practically came to a halt and the sale registers at developers’ offices stopped ringing.

Just when developers are about to look forward to brighter days ahead, the proposed reimposition of the real property gains tax (RPGT), albeit at a flat 5% rate irrespective of holding period and category of owners, is seen as a dampener of the “overall feel good” sentiment.

Although some are not overly concern that the RPGT will slow down sales substantially, especially among first time buyers and owner occupiers, some say it will impact the investor market.

Overall, with the prevailing low interest rates and improving economy, the environment is still relatively positive.

IJM Land Bhd managing director Datuk Soam Heng Choon says with the current benign interest rates and the pent up demand due to lack of new launches in the last nine months, the sentiment should remain positive.

“Most of our projected launches are on track and we will be putting more projects into the market. By our financial year ending March 2010, we would have launched about RM1.3bil worth of products nationwide,” Soam adds.

Among IJM Land’s latest launches are the Nusa Duta project in Johor Baru in July and The Light Waterfront Penang in August. A new commercial project in Melaka will be launched next month.

On challenges ahead, he says land prices are still on the rise and the cost of doing business remains high.

“Industry players should take the lull period to improve their product delivery and refocus on quality products to lift the industry’s image in the years ahead,” Soam points out.

According to SP Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin, the country’s economy is showing strong signs of recovery. Coupled with prevailing low interest rates and ample liquidity, the outlook looks more promising.


Tan Sri Leong Hoy Kum ... ‘The market is gaining momentum for an up cycle in the second half of 2010.’
Although sales is picking up, he says developers are still careful with planning their launches and only time will tell if the recovery is sustainable.

Liew adds that product innovation which caters to the people’s changing lifestyle and needs will continue to fuel demand, adding that the company will continue with its launches in its townships in Johor, the Klang Valley and Penang.

Mah Sing Group Bhd group chief executive Tan Sri Leong Hoy Kum says: “The market is gaining momentum for an up cycle in the second half of 2010.

This would be true for mid- to high-end landed residential projects as well as commercial projects in prime locations.”

The company is lining up some new project launches next year, including Garden Residence in Cyberjaya by the first quarter of 2010. The project has received more than 600 registrants so far for the superlink homes and semi detached houses.

Mah Sing is also planning to launch the iParc project in Bukit Jelutong comprising semi-detached factories with flexible layouts for corporate warehousing.

Leong says as property demand in the country is largely driven by fundamentals, there has been no price bubble so far and hence, any downside for property prices is limited.

“We have not seen any fire sales, and good properties that are developed by reputable developers in prime locations still see strong take up.”


An artist’s impression of The Light Waterfront Penang’s residential precinct. More developers are lining up new greenfield projects for launch from the later part of this year

As of the middle of July, Mah Sing achieved RM543mil in sales, exceeding the full year target of RM453mil.

Its unbilled sales stood at RM812mil, approximately 1.6 times the revenue recognised from the property division last year.

Hunza Properties Bhd executive chairman Datuk Khor Teng Tong says prevailing low interest rates, a growing population, relatively low unemployment, and no significant overbuilding are strong factors to fuel growth in the market.

Industry players should also be well versed with the industry cycles, trends and changing needs of the society.

Concurring with him, Gamuda Land Sdn Bhd managing director Chow Chee Wah says innovative master plans with strong concept, good systematic implementation and execution will result in quality delivery system.

“Projects by developers with strong track record, good capital appreciation and rental yields will continue to do well even during difficult economic times,” he says.

Chow says to ensure more sustainable growth, it is necessary to maintain the current financing rates. “To provide a further lift to the property market, it is important to liberalise the bumiputra quota issue and state consent on purchase of leasehold property.

“Streamlining the process to cut down red tapes for speedier approvals in the two areas will be great help to the property industry,” he says.

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