MM2H new rules a bane for property prices

Expat groups expects up to RM800m loss of property sales

by NUR HANANI AZMAN / Pic by TMR FILE PIX

THE number of property purchases by Malaysia My Second Home (MM2H) visa holders would hardly drive up property prices as each state has its own minimum purchase price for foreigners while some states set lower limits for MM2H visa holders.

“There have probably only been around 10,000 purchases since the programme started in 2002.

“I cannot see the volumes having much impact on local property prices compared to Malaysian buyers,” TEG Media CEO Andy Davison told The Malaysian Reserve (TMR).

TEG Media, previously known as The Expat Group, is an approved agent for the MM2H programme. According to Davison, since the programme started, the estimated total number of approved Chinese applicants make up about 30% of all applicants — probably around 14,000.

He said many received the MM2H visa when they brought properties here and liked it because it avoids them applying for a visa each time they visit Malaysia and a residence visa has other value for example banking services.

“Some Malaysia’s property developers included the MM2H visa as part of the purchase package. It’s not clear how many moved here but by all accounts, the majority did not relocate,” he added.

Davison said there are less than 2,000 Singapore applicants.

“There would also be a drop in foreign buyers as many could not get into the country.

The TEG Media survey estimated up to RM798 million loss if 1,000 foreign property owners decided to leave, as the average value of property owned by 57% of respondents is RM1.4 million.

“I think this could be enough to drive property prices downward,” he said while adding that the survey was done in the week after the MM2H new rules were announced.

TMR previously reported that the Malaysian International Chamber of Commerce and Industry has urged the government to immediately suspend the new MM2H rules or risk having capital outflow.

Johor’s Sultan Ibrahim Sultan Iskandar had expressed a similar sentiment, saying that the rules are too restrictive and that will drive foreigners’ interests away.

Home Minister Datuk Seri Hamzah Zainudin told Dewan Rakyat yesterday that the revised criteria for the MM2H programme is for security purposes.

“Some of them are disguising as the MM2H participants, but they are actually using it as a ‘transit’ to carry out unwanted activities.

“That is why focus was given to security for the programme. Let us attract those of high quality to spur economic activities,” he said.

Meanwhile, Juwai IQI group co-founder and CEO Kashif Ansari said Singaporeans are the sixth-largest participant group. The official statistics show that through 2018, Chinese citizens accounted for about 31% of issued MM2H visas, Japanese (11%), Bangladeshis (10%) and the UK (6%). MM2H Consultants Association president Anthony Liew said some Singaporeans are ex-Malaysians and they would normally have a retirement here.

“Some will invest in the property as their vacation house. Therefore, some are not coming to stay in Malaysia because of their plans,” he told TMR.

“For existing customers, if they are unable to fulfil the new term, many will terminate the MM2H programme, the next step is to sell off the property with a lower price,” he added.

He foresees the market price will drop and the Malaysian economy may suffer as foreigners may be hesitant to invest.

“If the new terms are still implemented, very few people are interested in the programme,” he said.

Nawawi Tie Leung Property Consultants Sdn Bhd ED and regional head of research and consulting Saleha Yusoff said in the past, on average there were about 3,190 applicants for the MM2H approved per year.

“Malaysia is not the only country that has become the second home for expatriates. To compete, we need to be more realistic in the criteria to be imposed so that we can attract a higher number.

“Provided the applicants have gone through a proper standard operating procedure imposed to curb the spread of infections, we believe this is the right move to reactivate the real estate market as we have continued to see interest among the prospective MM2H buyers.

Saleha believed the economic impact of investments made by MM2H buyers goes beyond the direct impact of buying the property, but also indirect impacts, such as their presence will increase demand for other facilities (such as education, leisure and entertainment, international food and beverage outlets).

“We are not very optimistic that Malaysia is still an attractive location should all the stricter 10 criteria be imposed. We suggest the government get input from the property industry players so we can attract the right MM2H buyers,” she said.