UEM Land; Hold; RM3.50
Price Target: RM3.35; ULHB MK

The newly sworn-in Johor Chief Minister, Datuk Seri Mohamed Khaled Nordin mentioned over the weekend that the Johor state government is mulling to impose a higher tax rates for about 130,000 foreigners who own properties in the state. The matter is still under discussion at this moment with likely implementation by year-end.

We believe that the latest remarks from the new Johor CM suggest that the state government via local councils will impose a higher assessment tax which is based on the value of the properties. In addition, the MB said that a re-evaluation exercise would be conducted statewide as the last formal evaluation was done in the 80s. The taxes for lower priced properties will be retained, as the higher taxes would only be imposed for properties above RM1m, according to the CM.

While the higher tax rates (assuming no drastic hikes) may suggest higher purchase cost for foreigners, we believe it may not be able to dampen the current strong buying interest in Johor, largely led by the robust development in Iskandar Malaysia.

Source: HwangDBS Research - 3 Jun 2013