Malaysia gave real estate developers greater access to the bond market on Monday, lifting restrictions that had been designed to tackle a property glut. Developers will no longer be banned from using bond sales to fund developments like houses worth more than 250,000 ringgit ($65,789) each and commercial properties including hotels, golf courses and shopping malls, Malaysia's markets watchdog said.
"The lifting of restrictions on utilisation of proceeds from bond issues will encourage more issuance of bonds to finance various property development projects," the Securities Commission said in a statement.
The restrictions stemmed from the late 1990s when Asia's financial crisis turned a local property boom into a painful glut, forcing highly geared developers to quit half-finished projects and leaving new buildings struggling to find tenants.
Now, the property market is in much better shape and the government has been encouraging property investment vehicles such as real estate investment trusts.
The move made little impact on the market.
"It's a positive statement," said a dealer with a local bank.
"It doesn't serve any purpose for the market at this point. It will be good for the long term, in the sense that it could create more issuances," he added.
The latest move is in line with the central bank's recent relaxation of rules on bridging finance, the commission said.
Bank Negara lifted the restriction on bridging financing for the development of commercial properties in September last year, almost six years after implementing it to address excess supply.
Restrictions relating to foreign exchange requirements remain, the commission said, in line with residual capital controls under Malaysia's fixed-rate currency regime.
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