THE attractiveness of property as an investment tool has the potential to be further harnessed if the right incentives are offered to property buyers and investors, said industry players.

The advent of real estate investment trusts (REIT) has added another dimension to promoting real estate investments and is a push for the commercial property sector.

For the local REIT market to become more competitive, industry players have urged the Government to grant tax exemption on dividends received by REIT unitholders, and lower withholding tax on dividends received by foreign investors.

Real Estate and Housing Developers Association president Datuk Jeffrey Ng said buying property for investment purposes was driven by annual investment yield and future capital appreciation.

“Tax incentives will be the most effective method to encourage more buying activities, especially among first home buyers,” he told StarBiz.

Datuk Jeffrey Ng.

Ng also urged the Government to abolish or reduce real property gains tax (RPGT) to promote property investments.

“These guidelines have remained unchanged for many years, despite the absence of property speculation,” he said.

His views were echoed by developers who concurred that abolishing or lowering the RPGT would promote greater buying for investment purposes.

Mah Sing Group Bhd president Datuk Leong Hoy Kum said the granting of incentives to buyers would be a solution for the emerging property overhang in the market.

“More incentives should be granted for a certain period to promote home ownership of all categories of properties up to RM500,000.

“These incentives could be in the form of reduction of RPGT to stimulate property transactions in this lacklustre market or waiver of stamp duty, both of which had proven very successful during the last exemption,” Leong said.

He said the stimulus package should also grant personal relief on interest on housing loan for properties costing up to RM500,000. It is also important to maintain the favourable financing conditions and stable interest rates to keep home ownership affordable.

“Restrictions on withdrawal from the Employees’ Provident Fund for purchase of the second property should be relaxed to encourage more buying activities,” Leong added.

SP Setia group managing director Datuk Seri Liew Kee Sin said, given its huge multiplier effect on the economy, the introduction of these incentives would give the property sector a shot in the arm.

He said while the overall outlook was still good, the general consumer sentiment had turned somewhat cautious due to the frequent rounds of fuel price hike and lacklustre stock market performance.

“The incentives can be in the form of the re-introduction of stamp duty waiver and reducing the RPGT to stimulate property buying activities.”

Ng said the introduction of a new business migration programme where 10-year stay visas were granted to eligible foreign businessmen who had invested a minimum of RM4mil in a business venture, or any form of property ownership, would promote more buying interest among foreigners.

Liew also urged the Government to reduce the ceiling for foreign purchasers of residential properties from RM250,000 to RM150,000 in Johor Baru in tandem with other states.

“Buyers from across the Causeway are showing renewed interest in the Johor property market with the improving economy in the republic. Lowering the ceiling could encourage more Singaporeans to opt for Johor properties,” he added.