There should be no restrictions imposed on foreigners purchasing commercial property in Malaysia, says Dato’ Sri Gavin Tee.
‘Open up commercial property for foreigners’
Foreigners should be allowed to have unrestricted access to buy commercial property in Malaysia, argues property expert Dato’ Sri Gavin Tee. This is because there is no threat to the housing situation for locals.
“These two- residential and commercial -are mutually exclusive. When foreigners purchase commercial property such as hotel rooms or offices, they are not affecting or depleting the housing stock meant for locals,” he explained.
“Furthermore,” he added, “Hotel rooms or Small Office, Home Offices (SOHOs) of about 400 sq ft are not the type of properties that affect locals’ housing needs. Hence, the restriction does not make sense.”
However, the type of property that is highly in demand which is the trend nowadays are small sized properties in urban areas. But, supply is low for these properties because developers are forced to build bigger-sized units and increase the price per square foot to meet the minimum price requirement for foreigners.
This has the effect of creating a mismatch situation. The end result is low occupation rate for the bigger units and low ROI for investors; ultimately adding to the overhang situation.
The rationale behind the minimum purchase price that is currently imposed on all properties sold to foreigners is to protect locals. In reality, small sized commercial properties owned by foreigners do not affect local interest contrary to popular perception. Instead, it has the effect of boosting the economy due to higher transaction levels, he told Property People Places (YES) in an exclusive interview recently.
Tee, who is also the Founder and President of Swhengtee Group, further said, nationwide, the rules on foreign ownership for commercial property should be standardized across all stales. “There should be a single policy that allows all foreigners to acquire commercial properties without restriction including serviced apartments, hotels, shoplots, offices and retail lots. Instead, we should make our policy as simple as possible for foreign investors to understand.”
This is because it is a fact that Malaysia needs Foreign Direct Investment (FDI) and foreign tourists in order to stimulate our economy.
‘Own, Visit & Promote’
We want foreigners to have a strong link to Malaysia and usually, ownership of property represents a strong attachment. Once they stay here, they will study, travel, invest or get medical attention here.”
There are many positive spillover effects when more foreigners come and buy properties here. “They will share their experiences in Malaysia in their social media like Facebook and this free publicity will help put Malaysia on the global map – in a low cost and authentic way.” [rml_read_more]
The important point is the restriction should not be imposed across the board but may be selectively imposed whenever needed. The minimum price imposed across the board is not healthy nor reasonable.”
Restriction on owning link houses
To further protect local interest, Tee proposed that the government may consider restricting foreign purchase of link houses even if the price is above RM1 mil. This is because this type of housing is sought after by locals for their own occupation.
The government may however grant special exemptions, for example, for medical, education or industrial purpose, upon application.
However, high-end condos, semi-Ds and bungalows as these are still open to foreigners and remain subject to the RM1 mil minimum purchase price.
Tee is of the view that the price hike seen over the last few years in selected locations maybe partly attributed to the minimum purchase price requirement for foreigners which is imposed across the board. The restriction may have caused some developers to increase prices to stay above the minimum price in order to sell to foreigners.
This has a knock-on effect of increasing prices across the board causing hardship to locals who cannot afford the hiked-up prices. As a result, economic development is stunted. Tee hoped the proposals can help boost the Malaysian property market.
“Today, we live in a globalized world where foreign participation is beneficial for the country. Malaysians themselves are going overseas to trade, invest, study and buy properties. By the same token, we should allow foreigners to buy properties here without too many restrictions.’’