NEW property cooling measures, such as raising the ceiling price of properties for foreign buyers to RM1 million, will be a big blow to Johor's Iskandar Malaysia region, says RHB Research.
The research house views that the 30 per cent real property gains tax (RPGT) for foreigners, for disposals within the first five years, will wipe out short-term foreign speculators to a certain extent as the minimum five years' holding period will drive them away.
Given such a situation and potentially higher land holding costs, it is uncertain if the Johor government will go ahead with the proposed four to five per cent processing fee that will be imposed on foreigners, as the impact of the 30 per cent RPGT is already detrimental, RHB said.
"We see downside potential for valuations of some stocks, particularly those that are highly exposed to the Iskandar region and have high proportion of foreign buyers," it said in its latest research note.
RHB said developers with high exposure to the Iskandar region will be the most adversely affected as the area has gained significant traction among foreigners over the past one to two years, especially Singaporeans, due to the strong Singapore currency.
They include UEM Sunrise Bhd, Sunway Bhd, SP Setia Bhd, Mah Sing Group Bhd, IJM Land Bhd and Eastern & Oriental Bhd.
"Medini, in particular, which has no Bumiputera quota, will likely see a knee-jerk slowdown in property sales over the near term, as the market is now less lucrative compared with before.
"While there is still demand for some attractive projects compared to a simple buying decision previously, potential foreign buyers will now think twice before purchasing properties in Malaysia," RHB said.
According to CBRE, foreign purchasers accounted for 54 per cent of total high-rise residential sales (sales by developers) in Nusajaya, and 39 per cent in Johor Baru and major suburbs.
In Penang mainland, RHB still sees healthy growth as local property demand is largely driven by genuine buyers for occupancy purposes.