New restrictions on foreigners buying Penang property (updated)

New restrictions on foreigners buying Penang property (updated)

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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.

33 COMMENTS

  1. My wife and I are Australian and live in Perth. My wife was born in Penang. We are retired. We are not going to buy a property in Penang. It will be too expensive. Penang will lose out as we would have spent a lot of money over the years and many of our friends and family would have visited us with tourist money to spend. Not all westerners are flush with money to be able to buy expensive condos.
    The new regulations smack of State intervention in a free enterprise system. Very sad.

     
  2. I think, the malaysian current government is the dumbest gov of all. In singapore when ever there is a new cooling measure, the gov announces 1 day before the implementation of the new rule. But in malaysia they announce that they may increase the min purchase price to 1mil. Dont this dumbass know that once they say this, all the foreigners would want to buy the property now rather than later? This has increased the local property price 2 fold. In JB a normal intermediate house with gated guarded which was sold at 300k+ by the developer is now being sold at 650k++.The singapore gov has so far introduced 7 cooling measure to control the property price, what has the BN gov done? So far they have only introduced RPGT tax and set min purchase price to 500k for foreigners years ago.

     
  3. I am Australian returee who wanted to come and live in Penang under the Malaysia my second home visa. I could afford to buy a home under the old rule of 500,000RM but increasing it to 1 Million is too expensive so I cannot come and live there. THe real problem is speculative investors and the way to stop that is only sell to foreign owner occupiers.

     
  4. Let the foreigners buy. It spurs property development and create jobs. If Penang wants to transform and pull away from the rest of the states in Malaysia, Penang must be bold.

    Build more affordable housing for locals and let those that are capable of buying higher priced properties to go ahead and buy them with no price ceiling, Let the free market flow. The free market will reset the price when it goes out of balance. There is ups and downs and there is no such things as straight up. Newton’s 3rd laws always apply. What goes up must eventually comes down.

     
  5. The end result is developers building RM2m landed properties and RM1m condos. Should be pretty obvious.

    It’ll be even more unaffordable for the young adults in Penang to own a home. It’s like setting a floor price – landed ===> RM2m.

     
  6. UK Based international lifestyle magazine, MONOCLE has featured Penang on their 52nd issue. The 2-page spread focused largely on the conservation of architecture and heritage buildings in Penang, while promoting property in the Heritage Core Zone. The article also mentioned heritage buildings that has been turned into hotels, services and restaurants: Muntri Mews, 23 Love Lane, the Blue Mansion, Teksen Restaurant and China House.

    With such good publicity, more foreigners may opt to make Penang its 2nd home, driving up demand for properties, and the price as well. Developers will cash in to build expensive condos to tap such market, making housing less affordable for the locals.

     
    • Not to forget Penang Street Food will get more expensive!
      And more Tham Chiak Kuis from elsewhere will crawl the streets for Ori-Maestros’ great street cuisine.
      Penang Street Food Museum, (if ever set up) will also not be spared by these TCKs.
      Salivas everywhere!!!
      Mmmm. Selling “Good Morning” mini China towels at famed hawker food streets may not be a bad idea!

       
  7. Anil, the reason (besides speculation) can also be attributed to the hundred thousands malaysians working overseas especially in Singapore and maybe Australia. Of course working overseas earns them a lot more money, but their long term plan is to eventually retire in Malaysia as the cost of living is much lower. The high income makes them less discerning of the price they pay because they can afford it. People nowadays are more mobile, you find Malaysians all over the world making a living. How do you fix that? Malaysia needs to move up the value chain, better pay coinciding with better productivity.

     
  8. Transactions by foreigners is NOT ONLY 3%. This data is based on transactions for the whole of Penang Island plus mainland. If the data is calculated for transactions in the North East district of the island where all the high end properties are located, the percentage of foreign transactions would be significantly higher.

     
    • Yes, SH, and these foreign purchases of property along the prime coastal areas of the island are what is driving up land and property prices across the state.

       
      • This doesn’t make any sense yet developers are asking & demanding blanket higher property price for all new homes & new homes built bigger with added features for a higher price.
        It used to be pricing according to location of demand, whether new or used.
        Wildebeests of Penang Serengeti Property Chase has begun the stampede again this summer! Coaxed by rainy green horned property gurus & new bob-hair-styled property salesmen.

         
      • And not forgetting property owner who are playing and kao kao chan the market lately. Many owners after taking deposit will then decided not to sign the S & P and rather lose another month deposit as they could sell to another at higher price. There is a market frenzy at the moment.

         
  9. Really cannot imagine.

    This LGE really NO GOOD !!! Why LGE very happy to help developers and neglecting the needs of the poors ??? Why LGE never impose restriction for developers to build 50% really low-cost housing ??? Why ??? Why ??? Why ??? Something very wrong in LGE. We need a local leader who will SAYANG local people.

     
  10. If Penang Gomen & Developers can assure general public that these high spenders (foreign or even local outstation) can bring economic benefits below than in long term ok but i still have reservations ….

    1) more localised businesses employing the locals with global standard and competitive salary.

    2) more activities (of course not vice types like GROs & RM3.35/hr type of cyber-gambling etc) that than spin-off more local legal enterprises.

    3) more genuine and creative sustainable development without impacting the environment.

    4) more highly qualified professionals that can nurture the brains of our younger generations to think creatuively and not book/exam oriented students.

    5) bringing in good genes to cross populate Penangites to have honorable features like inner beauty to care and not to corrupt…..

     
    • Penang can learn from the Australian immigration policies for immigrant professionals & businessmen which not only entice their wealth, but also create more jobs & import relevant expertise & knowledge to the country.
      Some of the foreign rich & famous home investors here don’t bring much except to warm their freezing souls during winter months and fly back leaving empty properties to breed wandering ghosts.
      Entice more investors of Steve Jobs, Li Ka-shing, Bill Gates, even Richard Bransons types. Not importers of Chinese ‘fatale GRO dragons’.

       
  11. Hi, Guys, please give your comments/suggestions to the Penang government to work out a win win soulution.

    As far as i am concerned, the move by Lim Guan Eng is much laudable. Imagine, this is only the 4th year of Pakatan in Penang compared to Gerakan’s near 2 decades !!!

    We need to remember Penang does not enjoy the luxury of Ah Kong’s money from the Federal…

     
    • This move is laudable but that alone won’t help. In fact it may encourage developers to only build houses above 2 million, which is already the case. They have no problems finding foreign buyers if locals can’t afford it. Some restrictions should be put in place to ensure that developers built a certain amount of homes below 500k. I heard there is a quota now that forces developers to build such homes and this quota should be increased. Other that that, the quality of such homes have to be monitored by the council to ensure that such homes are of a reasonable standard.

       
      • Ask them to build more affordable homes (of marginal profits to them) and these developers will get together like Mafia & twist LGE arms 360ยบ to their terms & satisfaction. Make no mistakes, they will find a way (if you have dealt with a developer as a supplier, then you will understand their mentality).
        Give them a mini planet & they don’t have to think a second about building more Towers of Babel! Give them underground development & they will build till the earthquake crust!

         
  12. Tunglang,
    Increasing income without increasing productivity and higher skill technology/niche industry will have a negative effect. Moreover with higher salary, it will also lead to higher cost which will in turn lead to a reduction in foreign direct investment and reduced purchasing power. There must be a balance all way round.

    In housing, LGE and the govt have been reduced to being under the control of the developers. They must act fast and compel the developer to build more medium and low cost project. Since 2008, it seem that the developer is holding LGE and the govt by the nose. Their lost cost unit of 72k have been disguised to become 140k.. Previously lost cost unit are either 50k or 72k and must be applied though the govt housing dept. Unit above 72k can be sold through the open market. Now the people applying for a 72k must pay for an upgraded 140k which are supposed to be sold in the open market. Where else now can you see developers building medium cost unit from 140k up to 250k. Coffee shop talk is now that LGE is kicking out poor islanders to the mainland. LGE must buck up on this matter or he will be kicked back to Malacca. Next GE he will be still safe as the sentiment is still anti BN but he must buck up on this matter by GE14.

     
    • Yang
      Not to worry about LGE as he can leave Penang to local stalwarts like Chow (present Penang DAP Chairman) later if locals dislike him; and he can charismatic ally venture out to let’s say Johor to drive out barang naik cronies there to establish and remove fixed deposits there.
      I agree with you that many penangites still lack the productivity & competitive spirits (many of my Penang friends who used to work in Spore told me that) and many still resort to 4D mentality want to earn fast bucks without strong effort to improve capability to earn $ rightful ways. Many will hate my statement but the earlier we swallow our pride, accept our weaknesses the faster we can move on to become higher earner states and not to be hook winked by that transformasi propaganda.

       
      • Gila !!!

        Why a candidate changing his ADUN/MP seat in every election ??? Because he failed to fulfill his election promises and unable to perform his ADUN/MP duties.

        After a term, the local people have tasted all the empty promises and they will never vote such cheater again. And thus the ADUN/MP never defending his seats and move to other places and giving his new empty promises again.

        Hmm, LKS and LGE love to change places. You know the reasons.

         
      • aiyah the experienced ones can tukar adun to go and break barang naik fortress at other states. Then pave way for aspiring non-corrupted comrades to establish a new bersih wakil rakyat. apa salah ? jangan Gelak macam Kerbau :)

         
    • LGE will be transferred to another safe ADUN/MP seats when SOS happens. Just like his father. LGE is very safe regardless of his CM performance. The point is will the damage done to the Penang and every poor Penangite reversible ??? Imagine low cost house in year 2016 = RM300 000 ??? Affordable house = RM1 000 000 ???

       
    • Of course increase of income/salary must come after high productivity & excellent performance. That’s for the salaried employees.

      For entrepreneurs, they are looking at more opportunities, access to cheaper financial means & business friendly environment – so take away the race-based preferential treatment of business licenses & procurement of state projects. Why create own barriers?
      Or encourage cross-racial business ownership as a start towards unity & shared-risk entrepreneurship which can help instill positive Chinese ethics @ work among Penangites (of all races) and redistribute wealth creation. If Baba Nyonya culture can evolve, why can’t cross-racial business ownership (not Ali-Baba type).

      The journey of wealth creation is this: work with excellence, gain expertise/experience & competitive edge, earn more & earn rightly, be own entrepreneur, win customers & markets, create wealth for self & for the nation. And don’t kowtow to every foreign multinational corporations (if you can).

      One good example of no-kowtow is the birdnest industry. Up till now, the American businessmen cannot breed swiftlets in USA as they are not ‘destined’ to (the swiftlets don’t migrate to or love USA). So their Kwei Loh scientists continue to issue negative thesis of birdnest consumption. Just be’cos they can’t lay a single controlling finger on birdnest industry.
      And the exporting countries including Malaysia continue to reap super-profits mostly from HK & China’s consumers. And will continue to do so for many decades with more upcoming middle-class Chinese who love birdnest.

      Penang has strategic edge in street food industry. So get out the woks. Some Ori-Maestros are doing so well like CEO, Mr.Chong of Teochew Chendol, a street food buisness, they easily hold potential for profitable franchises to create more wealth.
      And no need to kowtow to anyone.

       
  13. “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.”

    Raising the income levels of Penangites should be priority comes first.
    Without adequate purchasing power of disposable income, all talks of home ownership of all types is meaningless. By this, I mean not only the rich getting richer. The average Penang lang should be able/enabled to increase his take home pay and not still getting stagnant income as it is for the last 15 ostrich years. This is already made pressing with the influx of cheapo foreign labors much to the delights of local employers. Just walk thro’ New Lane and witness this phenomena evident even in the street hawker industry. Some Ori-Maestros are already doing it despite having a roaring business!
    To be an international city, the locals should be on par with international standards of living with deep pockets. Otherwise, some (more) of the majority of the 99% will be relegated to the ghettos hidden by scaffoldings of ubiquitous high rise buildings (build & reserved in advance only) for the rich & famous.

     
    • tunglang : the locals should be on par with international standards of living with deep pockets.

      as high majority of penangites work for MNC at Bayan Lepas/Perai FTZ, the authority like PDC must now kow-tow to MNC’s threat that lse they can continue to pay relatively “peanuts” salary (eg compared to their Spore counterparts) otherwise they divest and move out. Of course Penangites must also buck up in terms of productivity in many aspects.

       
      • In order for Penang to thrive we must ensure that MNCs and whatever other companies are here because Penang offers qualified workforce and talented individuals who are the best at what they do be it in manufacturing or R&D. Not keep them here using cheap labour and workers they can exploit and rob. They can get that by the tons in Indonesia, Thailand etc. Why come here? Ask yourself why MNCs, esp service based ones won’t threaten to divest and pull out of singapore or hong kong despite their high cost of living and high salaries. It is because having a base at these two locations are critical to their operations in Asia. In manufacturing, swiss companies still produce in switzerland despite the very high salaries there because of the skill and professionalism of the craftsmen and women. They take pride in what they do. Why can’t Malaysia, in particular Penang engineer ourselves to such a position? Are Penangites useless? Is our education useless? If PDC has to kow-tow to MNCs for them to stay it implies two things. Either the workforce/talent base of Malaysia is useless or that PDC is plain dumb. I think a combination of both.

         
  14. Putting a minimum limit of 1 million will not have any effect at all as most of the high end and landed properties are way above 1 million. As for the Singaporean they only need slightly over Singapore 400K to buy a 1 million condo. More important is the govt must make the developer build more low, low medium and MEDIUM cost houses. The problem now is the developer are not interested in building these type of houses and apartment which have contributed to the shortage of these type of housing.

     
    • Yes, exactly, good point.

      Also, the higher prices of high-end properties have the effect of dragging up the prices of even the low-end properties.

      The ability to build high-end property prices raise the value of the land, and this has the effect of raising the prices of low, low-medium cost, and medium cost properties.

       

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