KUCHING: Analysts cautioned that property developers could be negatively affected in the short-term by the introduction of the vacancy tax which was mooted by the Housing and Local government Ministry (KPKT) earlier this month.
According to earlier media reports, KPKT was reported to be formulating a tax that could be imposed on developers who fail to sell their properties by early next year. This was said to be an effort to reduce the current overhang of residential units in the country.
Its minister, Zuraida Kamaruddin, said the introduction of the tax could induce developers to be more sensible and responsible in the projection of their projects, particularly for high-rise developments.
She added that the government would provide lead time of about six to nine months for houses to be filled when they are completed. However, the research team at AmInvestment Bank Bhd (AmInvestment) said: “While such measure may be able to curb the property overhang situation in Malaysia, in short term, we believe our developers will be negatively impacted by the additional tax or offering larger discounts to clear their unsold inventories.”
Based on the latest financial statements, the research team noted that the average inventory turnover (development projects in Malaysia) of developers under its coverage is about 6.5 months.
“With the government offering a threshold of six to nine months on unsold completed units, most of the developers may not need to pay or pay very little vacancy tax,” it said.
However, it is cautious on IOI Properties Group Bhd (IOIP) and MRCB with their average inventory turnover of more than nine months.
“With the introduction of the vacancy tax, we believe developers will be more rational and careful in planning their future launches. Moreover, we reckon that developers are already doing their best to sell all their units,” it opined.
Nevertheless, as the ministry has not revealed further details on this measure, AmInvestment retained its forecast on Malaysia’s property sector and maintained its ‘neutral’ view on the sector as it does not anticipate huge changes in property sales and earnings in the short-to-medium term.
