Rehda: GST will push up property prices by 2.6%

PETALING JAYA: Home prices will rise by about 2.6% once the goods and services tax (GST) comes into play, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The chairman of the association’s task force on accounting and taxation, Datuk Ng Seing Liong, said that the calculation was based on its consultations with industry experts and member developers.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.

However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.


Source: http://www.thestar.com.my

Service apartment tax of 1% might be imposed

JOHOR BARU: THE freeze on the sale of agricultural land here to foreigners will stay indefinitely as the state government is taking steps to protect the interest of all Johoreans.

It is learnt that state Housing and Local Government Executive Committee chairman Datuk Abdul Latiff Bandi, has put on hold all pending applications from foreigners interested to purchase agricultural land from Malaysians to later convert the land for commercial, residential or multi-development iskandar project.

Latiff said all applications had been put on hold following Menteri Besar Datuk Seri Mohamed Khaled Nordin’s directive last weekend to disallow the sale of agricultural land to foreigners.

Latiff said the move by the state government was an effort to safeguard Johor’s land value, and as a measure to control rising ownership of agriculture land by foreigners. Many foreigners has bought agriculture land from locals and convert them to commercial land for mix iskandar project developments.

“All affairs related to land purchase in the state will be reviewed bv the soon-to-be established Johor Real Estate and Housing Board, which will look into the issue next month,” Latiff said at the launch ceremony of the Malaysia Property Exposition (MAPEX) 2014 exhibition at Persada Johor International Convention Centre, here yesterday.

“We want to stop the activity as it will affect the land value and raise the prices further after it has been developed. We want to ensure that all locals can afford to purchase reasonably priced homes in Johor.”

The decision to disallow sales of agricultural land to foreigners, especially agriculture land granted by the state government (tanah kurnia), was made during the state executive council meeting last week.

Besides that, state government also suggests the implementation of 1% property tax to service apartment developments.That will means that the extra 1 % tax for service apartment gross development value gdv will be added to developers of service apartments. In the current new launch property market in Iskandar Malaysia Johor state, service apartments take up 70% of new launch property market.

According to Latiff, service apartment is suppose to be built for rent, not for sales. Service apartment is like hotel by its nature suppose to have services like housekeeping and receptionist. However, it has change its nature to be like condominium or apartment in current new launch property market without housekeeping and receptionist services but with commercial land title. The commercial land title indirectly push up the new launch property prices causing high property prices in Iskandar Malaysia. This condition is not healthy and causing worry for property market collapse and economy instability especially Malaysia family debt ratio is amongst the highest in the ASEAN which stand up to 89%.

Singaporeans top foreign property buyers in UEM Iskandar project

Recently newspaper reveals that Singaporeans accounted for 74 percent of total foreign property buyers in UEM’s Iskandar project. The rest of 26 percent Iskandar project property buyers are from Indonesia, China, Japan and Korea.

Based on the UEM CEO Wan Abdullah Wan Ibrahim, most Singaporean property buyers are those who always go Johor Bahru for business purpose and people who always spend weekend at Johor Bahru for shopping, food, and vacation or staycation. Singapore property buyers more to buy up market new launch property in Iskandar Malaysia, and landed property and luxury condo near to Singapore is their top choices.

UEM is the main property developer in Nusajaya, Flagship B at Iskandar Malaysia. East Ledang is one of the earliest new housing developments by UEM in Nusajaya area. East Ledang covers bungalow and villas. There are several new property launch developed by UEM at Puteri Harbour.

The high numbers of real estate investments flocking in to Iskandar Malaysia have been push up Iskandar Malaysia property prices to a new height since 2011. East Ledang bungalow resale market has shoot up more than 40 percent since 2011 and still going up. It has been very sought after by Singaporeans and Malaysian that worked in Singapore. In Singapore, a landed property at least price in at 2 million above in Singapore dollars. Yet, it is not a bungalow. East Ledang provides the alternative for them to enjoy the luxury of bungalow and landed property yet at lowest property prices compare to Singapore property prices.

East Ledang

Nusajaya Master Property developer UEM

Country Garden Danga Bay

11 August 2013 is a big day in property market Iskandar Malaysia. With the massive advertisements through Singapore TV, Singapore Newspapers, Malaysia TV and Malaysia Newspaper, Country Garden Danga Bay having its official launch of its Danga Bay new property launch. Free shuttle bus from Singapore to Danga Bay, free fun-fair rides, fireworks display and free yacht a trip at the show flat site and its advertisements campaign attract many Singaporeans home buyers and Malaysians home buyers, and has property sales of over thousand units on offer, with 25% of them snapped up by Singaporeans.

Country Garden Danga Bay iskandar project is located in the Iskandar Malaysia Flagship A, Johor Bahru. It is just 3 minutes ride away from the Malaysia-Singapore Causeway and CIQ (Complex of Immigration and Quarantine). The property developer of Country Garden Danga Bay is Country Garden Group, a well known property developer from China. Country Garden bought the Danga Bay commercial land parcel in this early year at RM300 plus to develop these mix developments iskandar project with expected Gross Development Value GDV of 8 billion.

Country Garden Danga Bay features 9000 units of condominium on the waterfront coastal line ranging from 400 s ft to 1,400 sq ft. Within this iskandar project will have shopping mall, man-made beach and 6 yacth berths. Phase 1 of Country Garden Danga Bay slated to be complete by 2017.

A representative for Country Garden said that 40% of the home buyers are Malaysian, 25% are Chinese nationals, 25% are Singaporean, and the remaining are other nationalities. Many home buyers were attracted by the Country Garden Danga Bay new property launch affordable and relatively low property prices. The average property prices is about RM800 per sq ft. Comparing to average RM1000 per sq ft by its competitor, Capri which is located next to Country Garden, Country Garden have more selling points and better property prices which increase and enhance the willingness for home buyers to buy either for the purposes of investment, stay or vacation.

Country Garden Danga Bay