Malaysian Property

At first glance Malaysia looks like it should be the natural investment choice in South-East Asia.  The archipelago nation is one of the richest countries in Asia the result is a burgeoning middle class combined with a tourist trade that brought in over 22m tourists in 2009.

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But Malaysia offers more to its potential investors.  For one thing, Malaysia is a prime target for investors from China, Singapore, Japan and South Korea, according to South-East Asian property website property-report.com.  That’s partially explained by cultural similarities and physical proximity: it’s always going to be tempting to invest in a place that’s easier to reach.

But there are other reasons too, especially for Singaporeans.  Eric Chan, who’s Deputy Manager of property developer Eastern & Oriental Berhad, explains that the MM2H’ ‘ Malaysia My Second Home ‘ program offers foreign visitors a 10-year multiple entry visa referred to as a Social Visit Pass, and this has made Malaysia particularly attractive to investors who can now be physically present at their property far more easily.  Of course, for Singaporeans this holds true doubly: Singapore City is only 196 miles from Kuala Lumpur, but the biggest buyers are from the state of Nusajaya, Johor, just across the border.

Added to this mix,’ Mr Chan continued to explain, ‘is Malaysia’s friendly lending terms’ ‘ these are extended to foreigners to and can offer finance of up to 90% ‘if certain conditions are met.’

The Singaporean Dollar has been rising consistently against the Malaysian Ringgit ‘ 3% since January alone – and now exchanges for about 2.5 Ringgit, leaving Singaporeans in an advantageous position when it comes to buying their neighbours’ houses.  Add to this the price of Malaysian property, which is about a sixth the price of equivalent Singaporean properties, and there is a significant inducement to Singaporeans to chance their arm over the border.

The mixture of generous lending terms, government incentives and physical proximity may have made some Singaporean investors overconfident, however.  The Malaysian real estate market also comes with a lack of transparency that surprises foreigners, including those from neighbouring countries.  According to the Global Transparency Index, a proprietary index compiled by Jones Lang LaSalle, Malaysia ranks 23rd ‘ ten spots below Singapore.

This can mean that developers who default on payments can be difficult to track down, and more than one investor has been left with a second Malaysian home that they can’t pay for or sell.

Additionally, the Malaysian government is considering altering the minimum price of foreign investors’ properties.  It currently stands at RM500, 000, but is set to double to RM1m.  The move will be a bid for popularity by the Malaysian government which will receive approval from young middle-class couples currently fighting richer Singaporeans for a place on the property ladder.  However it may take less wary investors by surprise.

In fact, the same rules apply as anywhere else.  ‘Most of us fail to do any sort of research prior to investing into the properties,’ points out Michael Tan, an investment coach.  Eric Chan agrees: ‘Research is essential in buying a property,’ he says.  ‘A reputable developer and good location is the mantra in property investment and it is no different in Malaysia.’

Mr Chan explains that location with Malaysia is a major factor, with investors in the Kuala Lumpur area expecting to make up to a 30% capital appreciation on completion of their investment projects.

But in other areas of Malaysia the maths works out differently and investors who fail to consider location.  Big towns on the island of Johor, like Penang and Iskandar as well as, of course, Kuala Lumpur, offer great possibilities for investment.  Unfortunately, the very market dynamics that make it relatively easy for Singaporeans to invest in Malaysian property can also make it impossible to get a return on their investment.

David Neubronner, Head of Residential Project Sales, of Jones Lang LaSalle, explains that Malacca, for instance, is a more historic town appealing more to locals ‘ who frequently can’t afford to give a Singaporean investor a good return on his investment.

Like may other analysts, Neubronner goes on to remark that a key feature of unwise investments in Malaysia is a false sense of security and buying interest ‘based on sentiment than investment.’

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The Malaysian real estate industry is debating whether or not — “speculators” — should be allowed to buy in the country. They are worried that foreign investors speculative buying will push prices up and damage the health of the real estate industry. Currently driven almost entirely by resident Malaysians, the Malaysian property market is one of the least volatile in the world.

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kuala-lumpur-vertical-skyline-klcc-towers-amazing# Kuala Lumpur’s property developers are taking simmering projects off the backburner and readying to launch new developments as the local property market picks up.

For the past year, developers have shelved plans for new building and consolidated by selling homes that were ready-built.

As demand for residential mortgages picks up, developers are opening show homes and testing the water by inviting prospective buyers to sign registers of interest.

Most developers have a tipping point of registrations that then kicks off development.

Kuala Lumpur’s housing market is mainly focused on a young, well-paid local population moving in to the city for work in hi-tech and financial sectors.

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A unique and spacious 1270sqft  centrally located in the heart of the Golden Triangle in KLCC, the heart of the Malaysia economy, just 5 minutes walk from the world-famous Petronas Towers is for sale by owner. The apartment is luxuriously furnished with contemporary designer furniture, fitted kitchen, walk-in wardrobes, Hansgrohe fittings and broadband ready. This corner residence gives magnificent city views over the tree-lined streets of KLCC.

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Property prices in Hong Kong and Singapore are suffering the most as the ripples from the global financial crisis spread to the Far East.

Following on the heels of the US, UK and Europe, banks have shut off lending as governments strive to tackle falling output and rising unemployment.

Predictions are that the HK and Singapore property markets won’t show any signs of revival for at least a year or even longer.

Back in April we posted about the Malaysia Property Time Train. In this article we mentioned the possibilities of an economic stalemate, affected by outside forces more or less. Crude oil prices, interest rate hikes and other factors could well influence the market as it was.

Well, fast forward a little bit over two months later and the Malaysian property market looks unaffected. Hailed as one of the strongest markets in the world right now, Malaysia is still attracting an influx of developers and investors looking for the property mekka.

With an expected appreciation of around 15% over the next two years, current buyers seem to be in the right position for future growth.

Therefore we thought it a great idea to showcase a property buyers guide to Malaysia, helping you to understand what needs to be considered when buying into Malaysian real estate.

K H Sim is a property developer. Specifically, he is the Managing Director of The Malaysian arm of Sydney based, Bluestone Group and based in Kuala Lumpur.

Bluestone Malaysia are responsible for a number of recent developments all extremely successful. One in particular, the Taragon Puteri YKS in Yalan Lap Kwan Sen, was 100% sold out before completion. Another in downtown Kuala Lumpur was released this month.

But K H Sim is developing a reputation in another area of property development. Rescuing distressed building projects that have been abandoned in Kuala Lumpur.

Datuk Ab Hakim Borhan mayor of KL has a vision: Public information like building floor plans, application for business licenses, the filing of reports of accidents, bus schedules, or data on the city’s history – all at the push of a button or swipe of a barcode.

By using high-tech gadgets, all public housing officers would be able to scan a barcode installed at the building’s entrance and information such as the number of tenants, age and the duration of their tenancy will all be instantly available.

Tourists would no longer need tourist guides, as all buildings in Kuala Lumpur will have barcodes installed at the entrance whereby by just displaying a cell phones, information on the history of the building would be provided.

524px-southeast_asia.jpgSoutheast Asia consists of two geographic regions: the Asian mainland, and island arcs and archipelagoes to the east and southeast. The mainland section consists of Cambodia, Laos, Myanmar, Thailand, and Vietnam; the population of which are primarily Tai and Austroasiatic peoples. The dominant religion is Buddhism, followed by Islam. The maritime section consists of Brunei, East Timor, Indonesia, Malaysia, the Philippines, and Singapore. The dominant religion is Islam followed by Christianity.

South East Asia is making great efforts to bring the region in line with other more well developed property markets, but there are still some anomalies to take into consideration when buying a villa in the area.

Under Indonesian law, only Indonesian private citizens, not companies, are allowed to own the freehold rights to land. Indonesian companies and foreign individuals are entitled to leaseholds, rights of use, rights of exploitation and rights to build.