The REAL deal: Is Singapore property tax hike a boon for Malaysia?

Despite the Singapore government’s announcement of the latest round of property cooling measures, with the doubling of Additional Buyer’s Stamp Duty (ABSD) for foreign buyers to 60%, it is not all bad news for Malaysia.The ABSD rate is computed based on the buyer’s profile as at the date of the property acquisition. For purchases made jointly by two or more buyers of different profiles, the highest applicable ABSD rate will apply on the entire value of the property purchased.With the increased ABSD rate, a foreigner purchasing a Singapore condo unit at a market value of S$2 million (RM6.7 million) will now have to cough up another S$1.2 million for ABSD alone, without factoring in other Singapore dollar-denominated costs. On its own, the S$1.2 million in ABSD would fund a luxurious real estate buy in Johor or other parts of Malaysia.Although increased interest has been detected from investors shopping around, this high differential cost between owning a home in Singapore and that of nearby Malaysia alone will not see a great deal of buying from those across the Causeway.Cost-wise, it makes good sense for Singaporeans and foreigners who call Singapore home to invest in Johor because of the close proximity and positive currency exchange. Nevertheless, there is more than location when investing in a property.Safety, connectivity, accessibility, amenities, general liveability and investability are all factors considered by discerning investors.

Despite the Singapore government’s announcement of the latest round of property cooling measures, with the doubling of Additional Buyer’s Stamp Duty (ABSD) for foreign buyers to 60%, it is not all bad news for Malaysia.

The ABSD rate is computed based on the buyer’s profile as at the date of the property acquisition. For purchases made jointly by two or more buyers of different profiles, the highest applicable ABSD rate will apply on the entire value of the property purchased.

A foreigner purchasing a Singapore condo unit at a market value of S$2 million (RM6.7 million) will now have to cough up another S$1.2 million for ABSD alone, without factoring in other Singapore dollar-denominated costs. On its own, the S$1.2 million in ABSD would fund a luxurious real estate buy in Johor or other parts of Malaysia.

Although increased interest has been detected from investors shopping around, this high differential cost between owning a home in Singapore and that of nearby Malaysia alone will not see a great deal of buying from those across the Causeway.

So, are buyers trooping in from across the Causeway? Hardly, sadly. Cost-wise, it makes good sense for Singaporeans and foreigners who call Singapore home to invest in Johor because of the close proximity and positive currency exchange. Safety, connectivity, accessibility, amenities, general liveability and investability are definite boxes discerning investors would tick off.

Singapore citizens and permanent residents (PRs) have not been spared but the rate hike for them is less severe. For Singapore citizens buying their second residential property, the ABSD has been increased by 3% to 20%, and for those buying their third and subsequent property, the tax is now 30%, from 25% previously. Meanwhile, Singapore PRs buying their second residential property are taxed 30% (from 25% previously) and 35% (from 30% previously) for third and subsequent properties.

The Myst Bukit Timah promises a luxurious lifestyle, boasting a vast array of amenities, including swimming pools, tennis courts and a fitness room. This development is only a short journey away from the Bukit Timah Nature Reserve and is surrounded by lush greenery and tranquil surroundings. Homeowners will enjoy a wide range of exclusive facilities and country living lifestyle.

The ABSD rate is computed based on the buyer’s profile as at the date of the property acquisition. Other considerations include whether the buyer is an individual or an entity, the number of residential properties owned already (including those beneficially owned and held in trust) and whether the property is to be held in a living trust.

It is time to stop talking and start working to attract foreigners to invest and live in Malaysia. Enhanced connectivity between the two countries, reduced red tape and improved safety are necessary steps to be taken. Quality property management services must be made available to all foreign investors who do not occupy the units on a permanent basis. Johor must also come up with a new and strong narrative to attract investors.

Despite the increased costs of owning a residential property in Singapore, Malaysia is well-positioned to be a beneficiary of the Singapore government’s cooling measures. Malaysia must work hard and move fast to attract foreign investors. The ball is now in our court, so let’s get working.