GEORGE TOWN: Penang has lowered the threshold for foreigners to buy property by reducing the ceiling prices for foreign purchases by up to 40%.
The decision is part of efforts to arrest the overhang in the market due to the Covid-19 pandemic.
State executive councilllor Jagdeep Singh Deo said the lowered ceiling rate will be accorded to foreigners for one year.
For stratified properties on the island, the ceiling price of RM1 million will be reduced to RM800,000.
On the mainland, the (price) cap of RM500,000 will be reduced to RM400,000.
For landed properties on the island, it has been reduced from RM3 million to RM1.8 million, while on the mainland it has been lowered from RM1 million to RM750,000.
“It is worth noting that lowering the ceiling price for real estate purchases for foreigners is justifiable, taking into account the minimum ceiling limits set by the federal government,” Jagdeep said.
He pointed out that land value in Penang was higher and that land plots suitable for development were also limited.
However, he stressed a balancing act between disposal of the overhang units and the interest of local buyers needed to be considered.
“Based on data by NAPIC (National Property Information Centre) from 2017 to the first quarter of 2020, Penang showed a significant and consistent decline in unsold units, at 22.3% compared with Johor (+ 24.9%), Perak (+ 116.1%) and Selangor (+ 30.5%).”
As global economies have been affected by the pandemic, so has the state’s economy, including its real estate outlook.
Despite the pressure to raise prices for affordable units, Jagdeep said developers here have been told to keep with present market prices.
“Penang will continue to maintain low- and medium-cost property prices at RM42,000 and RM72,500, unlike other states which have raised their tags to RM60,000 and RM100,000, respectively.
“Affordable home prices will also be reduced by 10% over a period of one year,” he added, but assured that quality would not be affected.
“Despite the reduction in property prices, the quality of development will be maintained, in line with the Construction Industry Development Board’s Quality Assessment System in Construction, or QLASSIC rating score, of not less than 70%.”
The current overhang value in residential units is valued at about RM2.6 billion in Penang.