Penang property market likely to slow down

Penang's property market is expected to slow down in the short term as it experiences knee-jerk reaction to measures in the 2014 Budget.

Henry Butcher Malaysia Penang Sdn Bhd director Dr Teoh Poh Huat said the market can self-correct or cushion the impact of the measures in the medium-term, owing to the healthy fundamental demand for real estate there.

"Market sentiment for upper-end properties is expected to consolidate," he said at a roundtable dialogue on "The Impact of Budget 2014 on the Property Market", here, on Tuesday.

Teoh said the upward revision of the real property gains tax and removal of the Developer Interest Bearing Scheme are measures already expected by home buyers, investors and developers to "cool off" the property market in Malaysia.

"Penang's property market is relatively strong, given that the state is underpinned by healthy fundamentals, such as its young population demographics, shrinking average household sizes, low unemployment rate, vibrant local and foreign investments, state income levels and bright job opportunities."

On the Penang government's plan to impose a three per cent levy on properties bought by foreigners from January next year in a bid to curb speculation, Real Estate and Housing Developers' Association Penang chairman Datuk Jerry Chan said the move is a politically-correct one but not a deterrent to foreigners who are keen to invest in properties there.

"Three per cent is not a deal breaker, since the stamp duty imposed on foreign buyers of properties is still lower than neighbouring countries like Singapore and Hong Kong," he added.

The proposed levy is reported to apply to residential, commercial and agricultural units.

On how to make Penang more competitive as a property investment location, especially to foreigners, KPMG Penang partner Ooi Kok Seng said as one of 31 emerging business process outsourcing locations in the world, Penang is likely to retain its appeal owing to its close proximity to the hills, beach, food and heritage attractions offered to those living on the island. - By Marina Emmanuel (Business Times)

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