By mid-2012, the minimum limit for foreigners buying Penang property will be raised to RM1m (RM2m for landed property).
According to Guan Eng:
As a first step to protect the interests of local Malaysians, the state government is proposing to increase the minimum limit for foreign purchases of all properties from the existing level of RM500000 to RM1 million with a higher limit of RM 2 million for landed properties only in Penang island and retaining the present RM500000 limit for Permanent Residents.
In 2010 and 2011 there were 774 and 890 property transactions involving foreigners. These transactions constitute only 2.98% and 2.26% respectively of the total number of transations in Penang. However to protect the interests of locals to ensure that they enjoy priority for less expensive properties, this restriction will help to provide a level playing field since foreigners have the advantage of a higher currency.
The Penang state government stresses that we welcome foreign participation in our economy including our property market. The state government feels that foreign participation can be profitable to both Penangites and foreigners in the higher end market where they can add value by helping Penang to transform itself into an international and intelligent city.
We would like to get feedback and opinions from NGOs, property developers, foreigners and the public on this proposal. The state government hopes to implement this proposal the earliest by 1 June 2012 or the latest by 1 July 2012.
The big question is whether this will be enough to curb speculation in Penang property that is driving up prices. My guess is, unlikely, as most higher end condos are already touching RM1m, while the more expensive landed properties are already touching RM2m.
And as developers build for the foreigner in mind, the value of the land rises correspondingly, affecting all classes of property.