PETALING JAYA: The Budget 2020 announcement that the threshold for foreign ownership of high rise property would be lowered from RM1mil to RM600,000 caught many by surprise.

However, there were mitigating circumstances for that decision. For one, it opens up to foreign owners, at least 3,938 units of condominiums and apartments worth a total of RM4.85bil, figures from the National Property Information Centre (Napic) show.

The move, according to an Oct 13 statement from Finance Minister Lim Guan Eng, will take effect for a period of one year from Jan 1, 2020.

However, the Napic Report also shows that the combined overhang for two other types of high-rise properties - serviced apartments and Soho (Small office home office) – amounted to 19,856 units worth a total RM15.33bil.

Contacted for clarification on whether the Budget 2020 announcement only covers condominiums and apartments, or also includes serviced apartments and Soho units as well, a Finance Ministry spokesman said everyone should stick to Lim's Oct 13 statement.

However, Real Estate and Housing Developers' Association (Rehda) president Datuk Soam Heng Choon said they believed that the Budget 2020 announcement would cover all high-rise strata residential properties.

"This means that the reduction in threshold price would cover high-rise condominiums, apartments, serviced apartments, and Soho," he said.

Soam said despite the Budget announcement, state authorities still had the power to set the threshold price for foreign buyers of properties since land was a state matter.

He noted how some state governments including Selangor had announced that they would review their threshold limits following the Budget announcement.

The current threshold in Selangor for foreigners to own property is RM2mil.

"However, we also feel that areas in the Federal Territories such as Kuala Lumpur that are under the jurisdiction of the Federal Government will likely go ahead and implement the threshold reduction to RM600,000 from RM1mil," he added.

Workers at a construction site in Jalan Yap Kwan Seng, Kuala Lumpur

Figures from Napic – a body under the Finance Ministry's Valuation and Property Services Department - shows that Kuala Lumpur leads the pack with RM2.05bil worth of unsold condominiums and apartments priced at RM600,000 and above per unit. Penang is second (RM1.27bil), followed by Johor (RM821.9mil), Selangor (RM333.4mil) and Sabah (RM197.7mil).

For serviced apartments priced RM600,000 and more, Johor leads in terms of the total value of unsold units at RM9.7bil, surpassing Kuala Lumpur where the overhang value amounted to RM2.3bil in the second quarter of this year.

For Soho, Kuala Lumpur tops in terms of the total value of unsold units with a RM142.3mil overhang for units priced at RM600,000 and above. Johor is next with RM90.7mil, while Selangor with RM34.3mil is in third spot.

High rise property in the prime area of Tanjung Tokong, Penang

While the announcement has drawn debate in the country, it is certainly good news for foreigners eyeing a spot under the Malaysian sun, as with Hong Konger Ginny So, who bought her first condominium in Penang on the third day of her first holiday to Malaysia some 10 years ago. However, it's not just the affordable property prices that is drawing So to Malaysia.

In Johor, Chinese national housewife Ng, 46, cheers the lowering of the threshold. “My husband and I bought our first property in Johor earlier last year but we do not have many options to choose from as we need to ensure that the price of the property is over RM1mil.

"With this move, I believe more foreigners will buy property here as it is more affordable and there will also be a greater selection of homes we can choose from,” she said.