(AFP) Malaysia's move to ease restrictions on property purchases by foreigners are insufficient to boost a sector that has largely fallen out of favour among investors, analysts said today.

They said persistent concerns over the local currency's possible devaluation would in any case limit property purchases.

One senior analyst with a local brokerage said the changes gave little support to property stocks today as the sector was not a favourite among investors due to expectations of slowing consumer spending.

"Stocks that are in favour are those that build (lower priced) residential properties. These guidelines affect mainly high-end developers," he told AFX-Asia , an AFP-owned financial news wire.

The new regulations, announced by Prime Minister Dr Mahathir Mohamad in a statement yesterday, aimed to attract more foreign investment and spur economic activity amid the global economic slowdown.

The announcement came a day after authorities lifted a 10 percent tax on repatriated profits from share trading by foreign investors.

The analyst said the new property guidelines were skewed towards easing the glut of office space and was aimed at foreigners doing business in Malaysia.

Oversupply

Under new rules effective April 25, foreigners can buy all types of residential and commercial properties worth more than RM250,000 ringgit.

Previously, foreigners were only allowed to acquire finished or 50 percent completed projects.

Foreigners no longer need to set up a company with local shareholders and can now borrow the purchase cost from local banks.

To encourage foreign firms to set up regional offices here, they are now allowed to buy offices costing over RM250,000 for each unit without any equity conditions and no limit on the number of units.

An analyst with another local brokerage said office space constituted some 29 percent of the country's total oversupply, residential properties 23 percent and shopping complexes 36 percent at the end of last year.

She said the easing of the property guidelines was positive for the sector, especially in the southern state of Johor bordering Singapore, as Singaporeans might be encouraged to purchase unsold residential properties.

But the analyst said continued concerns over the ringgit peg, fixed at RM3.80 to the dollar since September 1998, could restrain any potential immediate purchases.

"The impact of these developments on the property sector will be minimal," she said.