RM1 mln property price threshold for foreigners to protect interest of locals — Teo

KOTA KINABALU: The reason for the RM1 million and above threshold for property acquisition by foreigners is to protect the local interests in the long run as the majority of the local buyers will not be able to compete with foreign buyers for residential properties below RM1 million.

Minister of Special Tasks Datuk Teo Chee Kang said the capped value of RM1 million also served to encourage developers in Sabah to give priority to develop more affordable homes rather than building more high-end residential properties which the majority of the locals cannot afford.

Teo said this in response to Sabah Real Estate and Housing Developers Association’s (Shareda) call to reduce the minimum price for real estate that could be purchased by foreigners from RM1 million to RM650,000 instead to attract more foreigners to participate in the Malaysia My Second Home (MM2H) programme.

Based on data provided by the Immigration Department, Shareda has said that only 300 foreigners have successfully applied for the MM2H programme to live in Sabah between 2011 and 2015, which showed that the minimum property pricing imposed on foreign buyers was too high.

Teo, who also oversees the State Economic Planning Unit (EPU), said this was not the first time Shareda had proposed to lower the capped value of RM1 million to the State Government which the latter had explained and responded in July this year.

“And on November 15, 2016, just three days ago, the State EPU received an official letter from Shareda with the proposal to lower the capped value to RM500,000 and above while on November 18, 2016, three days later, SHEREDA changed its proposal to capped value of RM650,000 and above per unit.”

Teo explained that the RM1 million and above threshold for foreign acquisition was to encourage developers in the State to continue developing residential properties below RM1 million for the long term benefit of the local residents.

He said doing so would curb the already increasing trend of high prices of residential properties which a majority of the locals cannot afford.

Additionally, Teo pointed out that the RM1 million and above threshold would encourage only high income foreigners to own properties in Sabah.

“With the weakening of the Ringgit and the stronger purchasing power of foreigners, the RM1 million and above threshold is affordable for foreigners.

“Nonetheless, only high income foreigners are encouraged to own properties in Sabah.”

On another note, Teo pointed out that the data provided by Shareda from the Immigration Department only showed the number of applicants who applied for Social Visitor Pas MM2H from 2011 to 2015.

“However, it is not reflective of the total number of foreigners who have purchased residential properties in Sabah as not all foreigners who have purchased residential properties in Sabah are under the Social Visit Pas MM2H.

“Even with the capped value of RM1 million and above, Kota Kinabalu has been ranked six on the list of most livable cities for retirees.

“The State Government welcomes retirees with high income to live in Sabah,” he said.

Teo said the proposal for foreign acquisition of properties to reduce the capped value to RM650,000 and above should not be considered in order to discourage influx of foreigners who were not high-end income earners to own properties in Sabah.

“With the capped value proposed by Shareda, the influx of foreign buyers will further increase the already high prices of residential properties in the State which are detrimental to potential local buyers.”

He said to cap at RM650,000 and above would surely increase undesirable competition by foreign buyers with local buyers.

“With the newly announced Federal Budget 2017 where civil servants housing loans has been increased to RM750,000 limit, such undesirable competition with locals will exist if foreigners are permitted to purchase houses RM650,000 and above which will further cause prices of houses to hike unnecessarily.”

To help the people of Sabah, Teo said developers in the State were encouraged to develop more houses below RM650,000 per unit or more affordable homes so that more locals can afford to purchase.

“If the RM650,000 and above threshold is allowed for foreign acquisition of properties, then developers will tend to develop more residential properties which are RM650,000 per unit and above in the long run.”

In terms of housing provision, Teo said the government’s main role was to help the lower income group by building low cost housing for them.

“In fact, the main role of the government is not to build residential properties or affordable homes for the rakyat in the long run if the private developers are doing it.

“It is hoped that private developers in Sabah continue to build more affordable homes for the rakyat as it should not be the main responsibility of the government to continuously build affordable housing in the long run.

“Private developers in the State will tremendously help to minimize the role of government as developers if private developers will build more affordable homes for the rakyat.”