An open-armed approach to overseas buyers

An open-armed approach to overseas buyers

Among the new property markets emerging in south-east Asia, the palm-fringed white beaches, lush inland tropical forests, majestic peaks and paradise islands of Malaysia are opening up perhaps a little faster than others.

The country is benefiting from the effects of an ambitious new scheme, called Malaysia My Second Home, which launched in 2002 with generous government backing and the aim to drive up numbers of long-term foreign visitors and private property prospectors.

The scheme has steadily been pulling in applicants territories including Australia, Japan, Hong Kong, the UK, France, Canada and South America, all lured by a package of incentives designed to speed the process of setting up home, or a second home, in the former British colony.

Mohmed Razip Hasan, director of Tourism Malaysia for the UK and Ireland, explains: “We want our friends from countries overseas to come and live in Malaysia. We offer so many attractions in terms of our standard of living, our forests and beaches, weather and political stability. Our education system and rule of law are both British, and we have excellent, modern medical facilities.”

In the 12 months to August 2005, around 5,700 foreign nationals registered for the Malaysia My Second Home programme internationally, including 550 from Britain.

The qualifying criteria for the scheme, which is backed by the Malaysian Ministry of Tourism and the Immigration Department of Malaysia, are continually being revised. However, the main improvements made to welcome foreign nationals include the extension of visitor visas from five to 10 years, with the promise of relatively automatic renewal; increased flexibility over financial security (applicants must place a fixed deposit, fully refundable upon departure, of either M$100,000 (£15,000) if single or M$150,000 if a couple, with a Malaysian financial institute or they must prove they have a monthly income of at least M$7,000); and, in response to demand, the relaxation of the requirement for a full medical report (instead an applicant can just secure medical insurance once their application has been approved). The whole application process also now takes just one month to complete.

From there, househunters can explore the bustling capital Kuala Lumpur, areas near world-famous nature parks such as Taman Negara and the tropical forests and waterfalls of Pahang on the east coast, the fabulous beach communities of Penang and the numerous award-winning island resorts of Langkawi.

In all, they will find inexpensive property, available mostly on a long leasehold basis, with prices ranging from M$150,000 (less expensive homes are reserved for ethnic Malays) to about M$500,000. Foreigners can buy up to two residences and they are even eligible for a 60 per cent loan from selected financial institutions, subject to qualifications.

The Malay housing stock ranges from new luxury condos and mini-developments on the edge of golf courses to bungalows, semi-detached houses, terraced houses and traditional wooden beach-front kampung-style chalets found along the coastal areas of Langkawi, Penang and Malacca. Some of the most attractive residences are in tourism zones – on beaches, in jungles and near the country’s national parks.

“People can buy a decent home for around M$250,000, while they can get a semi-detached house or bungalow for nearer M$400,000,” says Hasan. “Pensioners tend to prefer the islands or beach areas, but some professionals like to stay in the more upmarket areas of Kuala Lumpur.”

Langkawi, the legendary archipelago consisting of clusters of sun-drenched islands in the north west corner of Malaysia, is the most popular resort location in the country. Properties there range from M$100,000 for a single-storey sea bungalow up to M$500,000 for a luxury chalet. Other top destinations include Kuala Lumpur, Penang, Malacca and Kota Kinabalu and Kuching, the two state capitals in Malaysian Borneo. Two-thirds of Malaysia is surrounded by water, so sea-view or seafront properties are plentiful.

Simon Naylor, a 46-year-old British telecoms worker, bought a detached four- bedroom house with a pool in KL three years ago after living in Asia for 16 years. “We had been renting places elsewhere, in Hong Kong and Singapore, and thought it was about time to invest in a property,” he explains. “The Malaysian government is making it easy. The Second Home scheme was one of the reasons we bought here, combined with the decent price of houses, the excellent infrastructure, the weather and the friendliness. You pay half the price here for the same property in Singapore or Spain, and Malaysia’s economy is developing so property is a good investment.”

For expat buyers who eventually want to move on, there are no restrictions on property sales and they can keep every penny, or Malaysian ringgitt, they make on the transaction with no sneaky taxation imposed before they exit the country. Hasan says, given current market conditions, gains can easily be realised within five years.

There is only one thing that foreigners can’t do under the Malaysia My Second Home scheme: get a local job. But then maybe that’s not such a bad thing.

Source: FT