Signs of over-built situation?
08/01/2007 The Star
PROPERTY TALK BY S.C.CHEAH

AS this is the column's first article for 2007, I wish all readers a Happy New Year. It has been a long break for me. So what's new?

Well, I still see some perplexed faces among my property developer friends after the Government announced relaxed rulings of the Malaysia My Second Home (MM2H) programme and foreign purchase of our property.

Starting Nov 1 last year, foreigners are allowed to buy property like houses, condominiums and buildings costing RM250,000 and above without the approval of the Foreign Investment Committee (FIC).

Here are some of their comments:

Why put MM2H under the Tourism Ministry instead of the Immigration Department, as was done previously? Some argue that if there were problems, they would still have to be handled by the Immigration Department.

• Approval process is very slow.
   

• Why buy property under MM2H since the FIC approval has been waived for properties priced above RM250,000? Foreigners can buy through the normal channel and not get bogged down by MM2H conditions.
  Even if they buy under MM2H, the conditions are still not attractive enough as they are not allowed to work or do business. One agent for MM2H feels that the RM300,000 fixed deposit for those single or married and aged below 50 is too high.
  
  “Why would they need to bring so much money here? Those from China may not have that kind of money. I do not have any applicants for the past six months,” said this agent.
   

• Running around for information: One developer complained that when she enquired about MM2H, she was given the runaround. “I don't see any of my foreign purchasers going for the MM2H,” she said.
  To be fair, the re-launched MM2H has some incentives like the 10-year social visit pass and multiple-entry visa for successful applicants. After 10 years, it is guaranteed renewable, provided the MM2H participants do not violate the laws and rules of this country.
  
  They are also free to stay in Malaysia as often as they like during the 10 years and they can import their own car and bring a maid to Malaysia. Their school-going children will be given student passes to further their studies.
  
  There is also no need for FIC approval for purchasing properties in Malaysia. I also see glum and silent faces, as sales have slowed down. “A bit slow” was the usual comment when I asked them about their sales. I have learnt to read their undertones.
  
  When a developer tells you it's “So-so or a bit slow”, it means it's bad. When they say it's bad, it means terrible – probably the project may not be moving at all. Some have gone abroad to build houses instead.
  
  There are increasing signs of an over-built situation, especially among high-end properties. One serviced apartment project in Petaling Jaya has stalled and changed hands.
  
  Why are we still lagging behind Shanghai or Singapore that are seeing a sharp rise in values of their properties? “We do not get enough foreign direct investment and there is an oversupply,” said one developer.
  
  And yet, we are seeing more super condominiums being built not only in Kuala Lumpur, but also Penang, where some units are 4,000 to 6,000 sq ft! Are there that many rich Malaysians? Some of these super condominiums have only one to two units per floor, which are priced from RM1.5mil.
  
  One good news is the Building and Common Property (Maintenance and Management) Bill 2006 that allows for the setting up of a joint management body, comprising developers and purchasers, before a property is handed over to the management corporations.
  
  This body should give priority to the security of the common property (like offices, shops and condos) even before handing over of keys.
  
  A fund should be set up at the early stage of development to ensure adequate protection of the property.