Industrial demand to ease SST impact on property sector: RHB
KUALA LUMPUR: The overall impact of the revised sales and service tax (SST) on the property sector can be cushioned by the "healthy" demand for industrial properties, said RHB Investment Bank Bhd.
In a research note, the investment bank said that the protracted United States (US)-China trade war and shifting tariff policies are expected to drive more companies in the region to relocate their operations to Southeast Asia.
"Sales of industrial properties as well as projects in Iskandar Malaysia remain strong year-to-date.
"Hence, although property companies will likely record a slight margin compression, the demand for industrial and commercial properties should stay healthy over the medium term," it said.
The Finance Ministry recently announced that the revised and expanded SST outlined in Budget 2025 will take effect on July 1, 2025.
A sales tax rate of five to 10 per cent will be imposed on selected non-essential goods, while the service tax will be broadened to include sectors such as construction services, with a 6.0 per cent tax applicable to providers earning over RM1.5 million annually.
Meanwhile, the bank said the imposition of SST on construction contracts and leasing income will likely have a slight impact on developers' profit margins.
Given the higher construction costs, it said the industrial and commercial property prices may also be priced higher – the magnitude will depend on whether developers can fully pass on the cost increases.
"In our view, demand for industrial properties should stay healthy, given the prolonged US-China trade tensions – especially with infrastructure catalysts and incentives in Iskandar Malaysia," it said.
RHB Investment Bank said developers with more exposure to industrial and commercial segments will likely book higher construction costs, as contractors are expected to bake in the six per cent SST when bidding for new projects.
It said industrial and commercial properties currently under construction will also see higher costs for the remaining billings for costs to be incurred.
"Eventually, we expect developers to pass on the incremental costs to buyers, so new industrial and commercial property prices will likely be more expensive and market forces (demand and supply) will continue to play their role," it said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Barnama
5 hours ago
- Barnama
Ties Within BRICS Strengthening, Mutual Trade Growing
ST. PETERSBURG, June 20 (Bernama-RIA Novosti) -- Russian President Vladimir Putin said on Friday that ties within BRICS are strengthening and mutual trade is growing, with the trade turnover of the participating countries already exceeding US$1 trillion. "Special attention is being paid to strengthening ties within BRICS. The mutual trade turnover between our countries has already exceeded US$1 trillion and continues to grow. All of these are elements of a global growth platform. 'And they are based on the key principles of BRICS. And this is consensus, parity, and consideration of interests towards each other," Putin said at a plenary session of the 2025 St. Petersburg International Economic Forum (SPIEF), Sputnik/RIA Novosti reported.
The Sun
7 hours ago
- The Sun
MSM welcomes Finance Ministry's clarity on SST exemption mechanism for raw sugar
KUALA LUMPUR: MSM Malaysia Holdings Bhd (MSM), the producer of the national refined sugar brand 'Gula Prai', welcomes the timely clarification issued today by the Ministry of Finance regarding the Sales and Service Tax (SST) treatment of raw sugar imports. The ministry's statement today confirmed that while a five per cent sales tax will apply to raw sugar, a key input for refined sugar production, refiners may apply for tax exemptions under prescribed conditions. In a statement today, MSM said that this clarification follows MSM highlighting the potential significant cost pressures arising from the expanded SST regime during its annual general meeting on June 19, 2025. 'The group emphasised that these input cost increases could impact refined sugar pricing, which could in turn push up prices of refined sugar for industrial buyers. 'We appreciate the ministry's prompt attention to this matter and its reaffirmation of a clear pathway for eligible refiners to seek relief,' it said. MSM added that this is particularly crucial given the challenging operating environment, where retail sugar prices have been capped at RM2.85 per kilogramme since 2011 despite substantial rises in global raw sugar costs in recent years.
The Sun
7 hours ago
- The Sun
MSM welcomes MOF clarification on raw sugar SST rules
KUALA LUMPUR: MSM Malaysia Holdings Bhd (MSM), the producer of the national refined sugar brand 'Gula Prai', welcomes the timely clarification issued today by the Ministry of Finance regarding the Sales and Service Tax (SST) treatment of raw sugar imports. The ministry's statement today confirmed that while a five per cent sales tax will apply to raw sugar, a key input for refined sugar production, refiners may apply for tax exemptions under prescribed conditions. In a statement today, MSM said that this clarification follows MSM highlighting the potential significant cost pressures arising from the expanded SST regime during its annual general meeting on June 19, 2025. 'The group emphasised that these input cost increases could impact refined sugar pricing, which could in turn push up prices of refined sugar for industrial buyers. 'We appreciate the ministry's prompt attention to this matter and its reaffirmation of a clear pathway for eligible refiners to seek relief,' it said. MSM added that this is particularly crucial given the challenging operating environment, where retail sugar prices have been capped at RM2.85 per kilogramme since 2011 despite substantial rises in global raw sugar costs in recent years.
