PETALING JAYA: The proposal to ease conditions for the Malaysia My Second Home (MM2H) programme is set to help boost foreign real estate investments and potentially address overhang issues in the country.
Savills Malaysia Sdn Bhd group managing director Datuk Paul Khong said easing the move is set to encourage the arrival of foreign investors and tourists.
“The government has agreed to ease the MM2H terms to a more favourable and competitive position to attract tourists and foreign investors to Malaysia again by revising the guidelines accordingly.
“This is helpful to bring more foreigners back to our shores and will provide a positive impact on the real estate market,” he told StarBiz.
However, Khong noted that the revised stamp duty for foreigners buying real estate in Malaysia has been locked in at a flat rate of 4% from 2024.
“The earlier sliding scale of 1% to 3% up to RM1mil is now removed and this 4% is applicable for the entire purchase price instead of from RM1mil onwards.”
Khong said that this basically goes against the spirit of the MM2H programme for 2024 of attracting foreign buyers in the market.
“An additional RM16,000 (maximum) is payable here if the property price exceeds RM1mil,” he said.
During the tabling of Budget 2024 last Friday, Prime Minister Datuk Seri Anwar Ibrahim said the government has agreed to ease the existing conditions for the application MM2H to increase the arrival of tourists and foreign investors to Malaysia.
He said this is expected to increase investment activities in the Malaysian financial market and the country’s property industry.
AmInvestment Bank in a report said the easing of the MM2H conditions will help spur the local property market.
“As a part of the Madani economic framework, the Malaysian government is currently reviewing and considering relaxing the conditions for the MM2H programme.
“Notably, the MM2H programme saw a 90% drop in applicants since 2021, due to stricter conditions and forced foreigners to opt for other countries including Thailand, which offers a similar programme called the Thai Elite Visa.”
Additionally, AmInvestment Bank said the potential positive revisions are expected to attract a larger number of foreign property purchasers and address overhang issues in Malaysia, particularly in Kuala Lumpur, Johor and Penang, which have been popular destinations for foreigners seeking to reside in the country.
“We believe that key beneficiaries from the relaxation of MM2H conditions are developers that focus on premium pricing houses.
“These include UEM Sunrise Bhd
, Sunway Bhd, IOI Properties Group Bhd and Sime Darby Property Bhd,” it said.
MIDF Research also echoed this sentiment.
“We expect property in Kuala Lumpur, Johor and Penang to see stronger buying interest with the easing of MM2H conditions,” it said.
Meanwhile, Mah Sing Group Bhd founder and group managing director Tan Sri Leong Hoy Kum commended the government’s decision to ease the MM2H conditions.
“On top of this, the new initiatives under the Visa Liberalisation Plan for easier employment procedure to attract strategic investors will give Malaysia an extra boost as the investment destination for this region.
“These adjustments are expected to stimulate investment in both the Malaysian financial market and the country’s property industry,” he said.
Introduced in 2002, the MM2H programme was an initiative by the government to attract and allow foreigners who fulfil certain criteria to stay in Malaysia for as long as possible on a 10-year renewable Social Visit Pass with Multiple Entry Visa.
The programme is open to all countries that have diplomatic relations with Malaysia, with the applicants permitted to bring their spouses, children and parents as dependents.
In August 2021, the government announced new conditions for the MM2H programme, including the requirement for applicants to have permanent savings of at least RM1mil and a declaration of liquid assets of at least RM1.5mil.
Previously, applicants would have only needed to have savings of between RM300,000 and RM500,000.
Additionally, a potential MM2H applicant would also need to have an offshore income of at least RM40,000 a month, up from RM10,000 per month required, previously.
Earlier this year, Johor state housing and local government committee chairman Datuk Mohd Jafni Md Shukor urged the federal government to review the MM2H programme’s strict conditions.
He pointed out that more than 80% of the unsold properties in Johor were serviced apartments priced between RM500,000 and RM1mil on average, which were generally unaffordable for locals.
According to the National Property Information Centre, Johor recorded the highest overhang in the country in the first half of 2023, with 59.4% (13,366 units).
This was followed by Kuala Lumpur and Selangor with 24.2% (5,450 units) and 12% (2,689 units), respectively.