Higher land price may spell unaffordable Kampung Baru property prices - PM Mahathir

Last update: 15/10/2019

KUALA LUMPUR, Oct 15 -- The government can offer a higher rate to Kampung Baru landowners for their plots but this would have implications on its development leading to higher and unaffordable property prices for many Malays, said Tun Dr Mahathir Mohamad.

In such a situation, the prime minister said he feared that the property, such as housing unit, would have to be sold at a very high price and may be out of reach for many of them.

“We can offer higher rate to the landowners, but we are worried that with the increased rate for their plots, the price of the property which to be built later, such as houses, flats and apartments, will go up too. If they agreed to sell their plots (to the government) at a lower price, then we will be able to build houses that are low-priced and affordable for the Malays.

“If we want to follow the market price, there will not be any Malay residing in Kampung Baru. If you want that, we will do that for you,” he told reporters after opening the International Medical Device Conference here today.

For this reason, he said a special price has been offered to the landowners, with an eye on preserving the only Malay enclave in the city centre area.

It was reported that the government has offered to buy land in Kampung Baru here at a rate of RM850 per square foot, as compensation to landowners, in return for re-development of the area.

Dr Mahathir said in other places that initially belonged to Malays, many poor Malays have sold their land away at a good price only to face the fact that they will never be able to buy it back having been owned by other people.

“Hence, the Malays must remain in Kampung Baru, because Kampung Baru is for the Malays,” he said.

On another matter, Dr Mahathir said the move to reduce the price threshold for foreigners to purchase property announced in the 2020 Budget, was to address property overhang in the country that if left unchecked could contribute to financial woes like what was seen in some Asian cities.

“So we have to get rid of this overhang so that the property market become healthy again,” he said.

The budget proposed to lower the price threshold from RM1 million to RM600,000 temporarily for foreign ownership. 

Dr Mahathir added the initiative is targeted to foreigners who are ‘not so rich’.

The prime minister also admitted that in the past he was quite critical on the idea of foreigners owning luxury property but stressed that the situation was different.

“The Forest City (in Gelang Patah, Johor) is quite different...I was critical because the development of the property was said to be freehold but it is a very luxurious property that only foreigners can afford to buy.

“That’s different. This move, however, the Malaysians can buy, but since not enough Malaysians are buying, there is property overhang and we have to sell them, otherwise the developers can get into trouble,” he said.