Relaxed rules for MM2H set to put Malaysia back on the radar of property investors [BTTV]

KUALA LUMPUR: The more relaxed set of rules under the Malaysia My Second Home (MM2H) programme is expected to put Malaysia back on the radar as a long-term stay destination for foreigners, with high-end property players in Johor Bahru, Penang, Kuala Lumpur, Malacca as major beneficiaries.

On Dec 15, the government announced the relaxed conditions for the MM2H programme in an effort to simplify the application process which were previously deemed as burdensome.

The new conditions will be on a year-long trial period with the criteria and conditions possibly streamlined later in accordance with current needs.

However, there is no mention of the effective date of the new requirements.

Tradeview Capital fund manager Neoh Jia Man said developers that stand to gain from the revised programme are those that have projects at high-end areas.

"The key sectors that would benefit from the revised MM2H program are undeniably the property sector, followed by healthcare sectors and industries relating to tourism.

"This is primarily attributed to the program's fixed deposit requirements, which allow withdrawals exclusively for property acquisitions, healthcare expenditures, and domestic travel.

Listed developers that could potentially benefit include those with a focus on higher-end projects in areas with higher foreigners population including Kuala Lumpur, Johor, Penang, and Malacca such as SP Setia Bhd, Sime Darby Property Bhd, UEM Sunrise Bhd, and Eastern & Oriental Bhd (E&O).

Although there would be a positive impact on the sales of high end residential properties, Neoh said the firm however does not anticipate an immediate surge in launches within this segment.

"Healthcare plays with significant foreign patient exposure, including KPJ Healthcare Bhd, Cengild GI Medical Centre, and TMC Life Sciences could also stand to benefit," Neoh told Business Times.

RHB Research is of the view that Iskandar Malaysia is poised to benefit the most from the revision of the MM2H programme.

It noted that Iskandar Malaysia is currently seeing a boost in demand, driven by an influx of investments as well as the upcoming completion of the Johor Bahru-Singapore Rapid Transit System (RTS), slated for end-2026.

"The friendlier policy will help to encourage the potential relocation of skilled workers, which has been the government's objective to spur growth in Johor.

"This, in turn, should lift demand for properties especially for those located near to the RTS terminal, and the Tuas link," it said in a note.

The firm added that Kuala Lumpur City Centre (KLCC) and Mont Kiara as well as Penang would also benefit from the revised programme as they are preferred locations among foreigners

It viewed UEM Sunrise Bhd, Sunway Group and E&O Bhd as key beneficiaries under the new MM2H programme.

Neoh also added Iskandar Malaysia may see substantial relief on the property overhang issue following the revised programme given that it is in an area with high proportion of foreign buyers. 

Meanwhile Hong Leong Investment Bank (HLIB) Research stated that under the latest MM2H, there was no mention of the requirements on offshore income and liquid assets, both of which were also important factors that led to the decline in MM2H applications previously.

"Thus, it is unclear at this juncture whether there are no more requirements on these conditions or the conditions are yet to be announced," stated HLIB.

It added the programme is consequential to the property sector as MM2H holders are likely to purchase a property in Malaysia for living and retirement purposes.

The programme may also attract digital nomads with the rise of work-from anywhere trend following the pandemic.. "To get a sense of the potential market from MM2H, in 2018 (pre  suspension in Nov 2019), there were 5,610 MM2H applications approved. "During the same year, there were 197,385 transactions in the residential market according to the National Property Information Centre. "Thus, the MM2H approval represents 2.8 per cent of the residential transaction volume, which is a rough gauge of the potential addressable market from MM2H holders," it stated.

Besides Sunway, SP Setia and E&O, HLIB  said among other stocks that would benefit from this programme included Mah Sing Group Bhd, OSK Holdings Bhd and IOI Properties Group.

Under the new MM2H programme, the age requirement was lowered to 30 and above (versus 35 and above previously) and the programme has been extended to dependents aged between 21 and 34 who are not working or married in Malaysia.

Parents or parents-in-law are also eligible as dependents.

Previously, dependents only included spouses, children under 21 and any children with disabilities.

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