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While most of the headlines focused on higher fees for foreign buyers, the real story is the government’s attempt to direct capital into building new homes, rather than competing with locals for existing ones.
So, what does this mean for local investors, home buyers, and the broader property landscape?
There are a few main areas that people need to be aware of.
Foreign buyers face higher fees for established property
The most immediate change is the tripling of fees for foreigners purchasing existing residential property. This move is designed to discourage foreign competition in high-demand suburbs, giving local buyers a fairer shot.
With higher costs now acting as a barrier, overseas investors are less likely to compete for established homes, particularly in blue-chip areas. For local investors, this could mean less competition and more buying power.
Discounts for foreigners investing in new housing
In contrast, foreign investors who build or buy new dwellings, especially in build-to-rent or apartment developments, will now benefit from reduced fees. This change is intended to funnel foreign capital into boosting housing supply.
For local buyers, this creates a more crowded environment in the new-build space, as overseas funds look to take advantage of these incentives. Expect greater competition in off-the-plan developments and build-to-rent projects.
Vacant property penalties are doubling
To tackle the issue of empty properties, often referred to as “ghost homes”, the government has doubled the vacancy fee for foreign-owned residences left unoccupied for more than six months a year.
This is a clear effort to make sure homes are either tenanted or placed back on the market. It’s also designed to push foreign owners to become active contributors to the rental supply, rather than leaving properties empty.
A policy shift focused on supply
Taken together, these reforms show the government’s commitment to solving the housing crisis by growing supply. Rather than restricting foreign investment outright, they’re simply reshaping it and rewarding investors who create new stock while penalising speculation.
This approach effectively tells foreign investors that if you’re not helping solve the problem, you’ll pay a premium to play.
What this means for local investors
For investors focused on long-term capital growth, the changes present an opportunity. With foreign competition reduced in established markets, local buyers can act with more confidence and less urgency.
My focus has always been on established suburbs with strong fundamentals. These areas continue to offer the best combination of capital growth potential, value-add opportunities, and low supply risk.
Unlike newer developments, established suburbs tend to be tightly held, with limited land and fewer new dwellings entering the market. They also benefit from existing infrastructure, lifestyle appeal, and potential for gentrification or zoning upgrades.
While new developments may get a short-term boost from the policy changes, many lack the scarcity and long-term growth drivers that make for a high-quality investment-grade property.
For local investors, this is a moment to put your focus on established markets. With reduced pressure from foreign buyers and a focus on fundamentals, established markets are looking a lot more appealing both in the short and long term.
Abdullah Nouh is the founder of Mecca Property Group.