BREAKING NEWS

More snapping up homes in Iskandar Malaysia

More property investors are giving Singapore a miss and are snapping up homes in Iskandar Malaysia instead after the government raised the additional buyer’s stamp duty (ABSD) earlier this year.

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SINGAPORE: More property investors are giving Singapore a miss and are snapping up homes in Iskandar Malaysia instead after the government raised the additional buyer’s stamp duty (ABSD) earlier this year.

Real estate agencies PropNex and OrangeTee said they have seen an increase in sales transactions and enquiries for homes in Iskandar Malaysia in Johor Bahru, and a lot of that demand is from Singaporeans.

In the past month, property agency OrangeTee said its agents have sold close to 100 residential units in Iskandar Malaysia.

This works out to 25 transactions per week — way above the average of 10 units sold per week in 2012.

OrangeTee said a key reason for this spike is the increase in the ABSD in January 2013.

From January 12, 2013, Singaporeans who already own one residential property will have to pay an ABSD of seven per cent when they buy a second property, while foreigners have to pay a 15 per cent tax to own a home in Singapore.

The agency added that about four in five buyers of homes in Iskandar in May have been Singaporeans.

Christine Li, head of research and consultancy at OrangeTee, said: “We did an informal survey at our exhibition over the weekend — about half of the people we surveyed, about 120 buyers, mentioned that they do not want to pay ABSD in Singapore.

“Some of this demand has shifted to overseas properties, particularly Iskandar Malaysia. We received about a 50 per cent jump in enquiries over the past few weeks, especially after the Malaysia General Elections because this sort of signals the political stability in the region for at least another five years.”

Apart from avoiding the additional stamp duty, PropNex said investors are also drawn to the lower prices of homes in Iskandar, with some costing just a third of current home prices in Singapore.

Analysts said the impending tax hike for foreigners who own properties in Johor is also unlikely to deter investors. They expect the tax hike to be marginal and will probably affect high-end residential properties.

Recently, 147 units at Afiniti Residences at Medini in Iskandar were sold out in just one day, with Singaporeans accounting for a quarter of the purchases.

Mohd Ismail, CEO of PropNex, said: “The Iskandar story is exciting though because of a lot of planned activities, like the recent launch, which is a joint venture between Temasek and Khazanah. These are the things that give Singaporeans a greater confidence — that Singapore companies are playing their part, as well as the intended MRT line that is supposed to go across and so on.

“About three weeks ago, when we were part of the marketing agent for Meridin@Medini, we had about 150 sales done. The bulk of it — 95 per cent were all Singaporeans. The remaining five per cent comprised of PRs who are residing in Singapore and a small number of foreigners, like Chinese and Indonesians.”

Apart from Singaporeans, OrangeTee and PropNex said many investors from China have also snapped up units in Iskandar Malaysia, especially at the new integrated development at Danga Bay by well-known Chinese developer Country Garden.

Some analysts said properties in Iskandar may be attractive but investors need to consider the potential risks as well. For instance, whether they will be able to get a tenant or whether there will be an oversupply of new units in the future

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