This article first appeared in City & Country, The Edge Malaysia Weekly on October 14, 2024 - October 20, 2024

Budget 2025, which will be tabled in parliament on Oct 18, will be closely monitored as the cost of living continues to rise. We asked the captains of the property industry what they hope to see in the upcoming budget, and many of them wished that the government would provide tax and housing incentives, reintroduce the home ownership scheme and implement other initiatives to reinvigorate the real estate market.

CEO 

UEM Sunrise Bhd

To address the ongoing challenges in the housing industry, the government could consider implementing policies that promote both affordability and inclusivity in the property market. Key steps include prioritising affordable housing through:

Exploring targeted rent assistance for low-income families to keep housing affordable without affecting the broader rental market.

Establishing an affordable housing fund, backed by developers’ contributions, which would help reduce development costs and lower property prices. Additionally, tax deductions and low-interest loans to developers focusing on affordable housing projects may help to boost supply.

Tax breaks for first-time homebuyers, such as mortgage interest deductions, would ease the financial burden of young families, while progressive property taxes on luxury properties could generate revenue to be reinvested in affordable housing initiatives, promoting a balanced and inclusive housing market.

Setting a percentage allocation for affordable housing targeted at senior citizens, individuals with special needs and single parents, corresponding with tax incentives to developers, to encourage inclusivity and equity in home ownership while ensuring access to affordable and quality housing for all.

These approaches would create long-term solutions for housing accessibility while encouraging economic growth.

Group managing director 

Savills Malaysia

Heading into the last leg of 2024, our wish list is for some “goodies” in the real estate sector, which needs a push to one level higher as the cost-push element is becoming more eminent. Moreover, the latest geopolitical tensions all around and in the Middle East will continue to create disruptions to global markets. Budget 2025 needs to effectively address this and re-attract foreign investments to the real estate sector.

Our wish list includes:

A blanket waiver in the real property gains tax for the entire property market to give a boost and redraw both foreign and local investors and funds. This measure proved effective in 2008/09 after the global financial crisis.

A stamp duty waiver for all transfers, which will be helpful to synergise the market again. With the current geopolitical issues, Malaysia will be a safe and good destination to re-attract foreign funds and investments, especially to the real estate sector.

On a local level, to allow tax incentives on interest loans for homeowners. This will help reduce the financial burden on the rakyat and encourage home ownership.

The real estate sector should be the main “game changer” and Budget 2025 must give it the paradigm shift needed to drive capital values.

President 

Real Estate and Housing Developers’ Association (Rehda) Malaysia

For Budget 2025, measures should be taken to stimulate the property market by assisting first-time homebuyers, such as tax deductions or personal tax relief, one-off buyers’ grants, rent-to-own schemes and banks actively implementing step-up financing schemes to bridge affordability.

The government should expedite the provision of affordable housing. Currently, the provision is imposed on developers irrespective of demand or supply in the respective locations or states.

Rehda proposes that a task force be established between authorities and Rehda to study and analyse the actual demand for affordable housing based on informed data and statistics, considering targeted buyers, locality, number of units and timing.

Next, reduce the cost of doing business, as it is vital for properties to be priced affordably. Incentives should also be provided for those who adopt the latest construction technologies. Presently, most incentives for Industrialised Building Systems (IBS) and Building Information Modelling (BIM) primarily benefit component suppliers. Rehda proposes that the incentives be extended to the entire supply chain. Additionally, more incentives (tax deductions) must be offered to accelerate the adoption of IBS and relevant technologies.

Lastly, Rehda hopes for tax incentives to be given to consumers, developers, owners and operators of green buildings and green property developments to promote the ESG agenda.

CEO, Property Development

OSK Property Holdings Bhd

The low margin of finance for M40 property buyers, based on current income, is a barrier to home ownership. To address this, Bank Negara Malaysia should mandate that all banks offering mortgage financing provide an interest-only payment option for the first five years. This would give buyers time to increase their income before starting full repayments. The loan margin should also consider the potential for income growth over the first five years, making home ownership more attainable.

A unified national affordable housing policy is essential. The federal government should consolidate all affordable housing schemes and work closely with state governments to ensure these initiatives align with local demand. Housing projects should be focused on high-demand areas, rather than being mandated across all developments. Additionally, the policy should integrate financing schemes that facilitate easier entry for B40 buyers, such as “rent-to-own” options, making home ownership more accessible for lower-income groups.

Although the federal and state governments are collaborating to streamline approval processes, further improvements are needed. Expediting approvals is critical to reducing developers’ holding costs, which ultimately helps lower property prices for buyers. Streamlined processes will benefit both developers and purchasers, ensuring faster project delivery and cost efficiency.

Managing director 

Nawawi Tie Leung Sdn Bhd

We hope that the government will announce that it will definitely proceed with the MRT3 project complete with allocations in the budget. Despite Minister of Transport Anthony Loke reaffirming the government’s commitment to the project earlier this year, there are still concerns being raised about its viability due to the increased infrastructure costs.

MRT Corp has dubbed MRT3 as the “final piece” of connectivity in Kuala Lumpur’s public transport system. But more importantly, it is a catalytic development that has a huge multiplier effect on the construction industry and the economy.

Last year, the government extended the individual income tax relief of up to RM2,500 on expenses related to installation, rental and purchase, including hire-purchase equipment or subscription fees, of EV charging facilities to 2027. However, if you live in a strata-titled development and you want to install the EV charging ports at your own accessory-parcelled parking bay, the procedure to secure the necessary approvals from the relevant authorities is daunting for the layperson. You would need to appoint a professional architect to do the necessary submission to the planning authorities. This may discourage those intending to switch to EVs and may affect the government’s aspiration to achieve carbon neutrality by 2050. We hope the government will announce initiatives to simplify the installation of EV charging ports for existing strata-titled developments.

Lastly, we ask for the government to review and streamline the guidelines and policies for the acquisition of properties by foreign buyers and investors. No doubt land matters fall under the purview of the state governments, but it is only through clear and consistent policies throughout the country that we are able to attract foreign investments that will help to reduce the property overhang and stimulate the real estate market.

President 

Master Builders Association Malaysia (MBAM)

Referring to past trends, the total construction contracts made available to the industry for the public sector were about 30% to 40%. As the real estate industry is recovering, we hope that the government will roll out more required infrastructure works to create job opportunities. It is worth noting that foreign contractors’ participation is substantial at about 16%, hence the government should start to impose certain controls.

As at August, the total project value awarded in the industry was RM127.36 billion, of which the government only took up around RM33.5 billion, less than what was initially promised. The government must undertake the necessary actions in rolling out more projects as the multiplier effect from the construction industry is twice the amount. It would also be good for the affordable private entities to propose a workable public-private partnership (PPP) proposal.

With the recent tensions in the Middle East, there is a rising concern over the fluctuation of building material prices. Therefore, the government’s decision to include Variation of Price (VoP) in public contracts is certainly important to stabilise building material prices. We are looking forward to the provision of VoP and hope that the private sector will follow through to promote collaborative contracting and subsequently reduce disputes and project failures.

Additionally, the government should look into providing tax incentives for those investing in green machinery or equipment to encourage the industry to move towards green practices. Besides, the adoption of technology in the industry is rather low and slow simply due to high entry cost. As such, the government should step in to ensure the cost is affordable.

CEO 

Matrix Concepts Holdings Bhd

As Budget 2025 looms, we emphasise the need for strategic initiatives to strengthen the property sector. First and foremost, we call for the reintroduction of the Home Ownership Campaign (HOC) for first-time homebuyers. By allowing such buyers to benefit from this scheme, it will empower more individuals to achieve home ownership.

Additionally, we propose the tendering of affordable home construction, in which the government should issue tenders for the construction of affordable homes to qualified contractors. This will enhance efficiency and quality in delivering housing solutions.

We also advocate for green initiatives by introducing incentives for housing projects that utilise sustainable and environmentally friendly technologies, supporting our commitment to environmental responsibility.

Lastly, a comprehensive study of all compliance costs imposed on developments should be conducted. These costs should not be applied uniformly across the board but instead, should be varied based on the nature of each development. Implementing thoughtful and reasonable compliance costs will surely assist in further reducing the cost of housing production and, thus, preserving housing affordability.

By implementing these initiatives, we can foster a more inclusive and sustainable housing market that benefits all Malaysians.

Founder and group managing director Mah Sing Group Bhd

The revival of the HOC with a 100% stamp duty exemption for properties priced from RM300,001 to RM1 million and a 10% discount on the property purchase price for first-time homebuyers.

Madani deposit to bridge the gap of home ownership by offering up to RM30,000 toward the deposit. This initiative aims to address one of the biggest barriers to home ownership in Malaysia: the 10% down payment requirement.

A one-off first-time homebuyers’ grant of RM30,000 for properties priced up to RM500,000 and lower fixed-rate financing.

To reintroduce tax deductions for housing loan interest, a policy introduced in 2009/10. This tax relief provided significant financial support for first-time homebuyers by allowing a deduction of up to RM10,000 per year on interest paid on housing loans for three consecutive years.

The reduction of compliance costs and streamlining the approval processes. Specific measures could include reducing development charges, lowering land conversion premiums and exempting utility contribution charges. Simplifying regulatory processes and expediting approvals would help developers reduce project timelines and costs in making housing more affordable for the masses.

Incentives for developments incorporating green features. Currently, the tax incentive is given to manufacturers of IBS and BIM components. We hope that the government will consider extending it to property developers that utilise IBS and BIM in their construction projects.

Group managing director 

Knight Frank Malaysia

To attract investments, more investor-friendly regulations and streamlined government procedures should be implemented. The HOC should also be revived as it has proved effective in encouraging home ownership, increasing property sales and addressing the issue of property overhang.

In terms of affordable housing, compliance costs should be reduced to improve project feasibility and manage housing prices more effectively. Additionally, public-private partnerships are seen as a viable solution to revive abandoned projects, and stamp duty waivers are proposed for overhang units to alleviate the issue of unsold properties further.

On the sustainability front, tax incentives for building owners to implement energy-saving measures and ESG initiatives are recommended. Property developers should also be incentivised to incorporate these elements into their projects. Furthermore, tax incentives should be extended to include SMEs, thus encouraging broader adoption of sustainable practices across different business sizes.

For infrastructure and urban development, it is suggested that planning flexibility and infrastructure development be enhanced to encourage the repurposing of older commercial buildings in areas such as the KL city centre for alternative uses such as residential.

Mandatory feasibility studies for new developments are also recommended to reduce the risks of property overhang and to ensure that projects are viable and aligned with market demand.

In terms of foreign investments, there is a suggestion to adopt more flexible property price thresholds for foreign investors and allow developers to reserve a percentage of units for foreign buyers to stimulate investment.

Lastly, the promotion of vocational training and innovation is encouraged, with an emphasis on training to boost the workforce and supporting the adoption of proptech innovations to modernise the real estate sector.

Managing director 

JLL Malaysia

We hope to see the revival of the HOC with the introduction of additional incentives for Malaysians, especially young families, to purchase high-quality new residential units.

We also hope the government will further relax the Malaysia My Second Home (MM2H) restrictions. In April this year, the government simplified and unified rules for eligible MM2H investors. Alongside this, the government significantly eased visa entry rules for many nationalities, particularly Chinese and Indians. This measure has already had a positive impact on the most expensive segment of the residential market. At the same time, the rental market has been growing, supported by increasing tourism in Malaysia. Further relaxation of these rules may help attract more capital from expatriates and increase the supply of premium units for both short-term and long-term rentals.

Continuously increasing investment in infrastructure projects, including transport and digital infrastructure, is key to enhancing national connectivity and boosting economic productivity.

For Budget 2025, we hope to see a significant increase in funding for education, with a particular focus on programmes that support emerging industries and develop future-ready skills. Additionally, the implementation of targeted industry-specific tax incentives and grants to stimulate key sectors is also important. It will help improve our country’s competitiveness against regional rivals such as Thailand.

CEO

IJM Land Bhd

As we look ahead, it is crucial for the government to stay responsive to the evolving needs of the property market, particularly for first-time buyers and developers.

We would like the government to provide more incentives, such as reducing development charges, land conversion premiums and utility contribution charges, to encourage property developers to build more affordable homes, benefiting generations of Malaysians. Currently, land conversion premiums for affordable housing and normal housing development are being charged at the same rate. Similarly, contributions to utilities such as Tenaga Nasional Bhd and Air Selangor are at the same rate.

High compliance costs, rising land costs, compounding low-end financing, rising costs of building materials and diesel price hikes all have a direct impact on costs and prices. These have negatively impacted housing affordability for purchasers and profitability for developers. Hence, it is crucial to prioritise lowering the cost of doing business to improve housing affordability and keep property prices under control. 

To support green initiatives, Budget 2025 should include initiatives that encourage the property sector to adopt more sustainable practices, including green building designs and technologies that enhance energy efficiency and minimise environmental impact.

To reduce the initial financial burden and create more opportunities for homebuyers, we call for the introduction of new measures and financing initiatives that ease upfront costs, along with refinements to existing policies to better align with evolving needs and circumstances.

CEO 

Gamuda Land

As Malaysia’s construction sector transitions to technology-driven advancements, we advocate for a forward-looking governmental approach aimed at future-proofing the industry.

Recognising the evolving demands of the construction industry, we urge the government to prioritise initiatives that foster the upskilling of our workforce in artificial intelligence, robotics and advanced construction technologies like the digital Industrialised Building System. This will ensure Malaysia’s competitiveness on the global stage.

As Malaysia is gradually becoming an ageing nation, we call upon the government to integrate incentives for property developers to design and build senior-friendly and multigenerational properties. These initiatives will promote inclusive communities by incorporating accessible features and facilities tailored to the needs of older adults, which will lower renovation costs for homebuyers in the future.

To support sustainable urban development, we advocate for increased government spending on public infrastructure projects. Specifically, investments in transport networks and utilities in emerging townships and suburban areas will enhance connectivity, accessibility and last-mile connectivity. By improving infrastructure in the fringes of cities, we make these areas more accessible and attractive for development. Enhanced public transport will encourage residents to rely less on private vehicles, promoting a greener and more sustainable living environment.

Group managing director 

CBRE | WTW

We hope the government will expand the first-time homebuyer incentive to the M40 segment. This will help reduce the overhang of properties priced between RM400,000 and RM700,000, providing better housing options for this group. We also hope it will extend the 75% stamp duty exemption for homes priced from RM500,000 to RM1 million.

A few other initiatives we hope to see are the extension of incentives for energy efficiency and expand them to joint management bodies of stratified units, as implementing energy efficiency in these buildings can lower operational costs, and streamline and expedite the release of overhang bumiputera units to the open market and consider mechanisms like allowing developers to swap these units into future projects with greater bumiputera demand. This approach will more effectively reduce the overhang in the bumiputera segment.

For the commercial sector, we hope incentives for installing EV charging stations in commercial properties and additional incentives for buildings upgrading or expanding charging facilities will continue.

Despite the new incentives introduced to attract investors for the industrial sector, we should reconsider renewing incentives of existing investors, particularly those who have reached a significant level of investment and are looking to expand their business or bring new ventures or technologies into the country.

Meanwhile, we hope for a quick implementation of the proposed Urban Redevelopment Act to revitalise underutilised urban areas and create affordable housing opportunities.

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