Glomac CEO urges deferment of 4% stamp duty on foreign buyers as property, construction sectors not back in 'era of stability'

• Datuk Seri Fateh Iskandar Mansor said it is not the best time for the government to implement such measures as the local property market is slowly recovering from the Covid-19 pandemic and headwinds from rising inflationary pressures.

KUALA LUMPUR (Oct 25): The government should not impose the 4% stamp duty on Memorandum of Transfer (MOT) documents on foreign property purchases yet as the property and construction sectors have not yet "returned to the era of stability", said Glomac Bhd managing director and chief executive officer (CEO) Datuk Seri Fateh Iskandar Mansor (FD Iskandar).

FD Iskandar, who was also formerly president of the Real Estate and Housing Developers Association (Rehda), told reporters after Glomac's 39th annual general meeting that it is not the best time for the government to implement such measures as the local property market is slowly recovering from the Covid-19 pandemic amid headwinds from rising inflationary pressures.

“The potential foreign buyers have overlooked Malaysia. So I think by relaxing MM2H [Malaysia My Second Home rules], on the one hand, we are trying to attract foreign buyers, but at the same time, we are creating a little bit of doubt [due to the stamp duty].

“Note that even before the Covid-19 pandemic, in 2018, foreign buyers accounted for just over 1%. When Covid-19 hit in early 2020, the number was zero. It's hard to get foreign buyers here. We are not like Singapore, where 40% to 50% of property buyers are foreigners,” Fateh Iskandar said.

“If we are trying to attract foreign buyers, I think initially we should not have this [stamp duty]. Once we are stable and the market gets too hot, you can do that. But here in Malaysia, both the property and construction sectors are just slowly recovering.  We have not yet returned to the era of stability,” he stressed.

When tabling Budget 2024, Prime Minister Datuk Seri Anwar Ibrahim said the government will ease existing conditions to apply for the MM2H programme to increase tourist and foreign investor arrivals. The move is expected to increase investment activities in the domestic financial market and property sector.

Introduced in 2002, the MM2H programme was an initiative by the government to attract and allow foreigners who fulfil certain criteria to stay in Malaysia for as long as possible on a 10-year renewable Social Visit Pass with Multiple Entry Visa. The programme was open to all countries that have diplomatic relations with Malaysia, with the applicants permitted to bring their spouses, children and parents as dependents.

In 2021, the government under Datuk Seri Ismail Sabri Yaakob’s administration announced new conditions for the MM2H programme, including having RM1.5 million worth of liquid assets, and RM40,000 monthly offshore income (up from RM10,000 previously).

Meanwhile, Anwar said the 4% stamp duty on MOT documents on foreign property purchases is intended to control property prices.

​Glomac aims 20% to 25% increase in total property sales for FY2024

The mid-sized property developer is aiming for a 20% to 25% increase in its total property sales for the financial year ending April 30, 2024 (FY2024), from RM302 million recorded in FY2023.

“Overall, we aim to push the total sales to at least RM400 million for FY2024,” said FD Iskandar.

This target, he said, seems within reach, considering that the company recorded RM101 million in sales for the first quarter ended July 31, 2023 (1QFY2024).

Glomac is gearing up to introduce new projects worth approximately RM700 million including Loop City Puchong, its latest residential development with a total estimated gross development value (GDV) of RM1.57 billion. The maiden phase will encompass SoHos and serviced apartments with an estimated GDV of RM338 million.

According to him, the group’s net gearing fell to 0.12 times in 1QFY2024 from 0.23 times in 1QFY2023, providing debt headroom for Glomac’s future landbanking exercise.

As such, the group is actively looking for land especially in the Klang Valley, which will support its earnings and sales going forward.

In 1QFY2024, Glomac posted a 21.5% year-on-year drop in net profit mainly due to the completion of several property development projects in FY2023 and no new projects were launched during the quarter under review.

Quarterly net profit decreased to RM4.06 million from RM5.18 million while revenue slipped 8.22% to RM60.1 million from RM65.49 million.

Asked if the group has plans to diversify its business, FD Iskandar said, “We are looking at renewable energy following our Memorandum of Understanding with Tenaga Nasional Bhd (TNB), which we signed five months ago. We are still in discussions with TNB and will share on that as soon as the deal materialises.”

Shares of Glomac, which have risen over 11% year to date, closed at 34.5 sen on Wednesday. At the current price, the group has a market capitalisation of RM276.03 million.

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