Malaysian property sector ripe for Chinese investment
Updated: 2011-09-16 08:00
By Matthew Fulco (China Daily)
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Malaysia is wooing Chinese investment in its thriving real estate sector, with the government agency Malaysia Property Incorporated (MPI) leading the campaign.
MPI facilitates investment in Malaysian real estate and manages relevant promotions.
The Malaysian government aims to increase foreign participation in the Southeast Asian nation's property market from 2 to 5 percent in the coming years.
Chinese buyers could play a cornerstone role in that process as the nation's largest corporations expand internationally and wealthy individuals seek to diversify their property investments.
Malaysia's real estate market is uniquely affordable, open and stable in a region marked by volatile fluctuations in property prices and regulations, says MPI.
The Malaysian property market has grown steadily since 1999 and emerged relatively unscathed from the 2008 global financial crisis, according to the agency's statistics.
Forecast investment returns for the moderate risk Kuala Lumpur property market range between 7.6 and 10.8 percent across prime retail, office, industrial warehouse and luxury residential categories, according to a report published by ING Real Estate Investment Management. That compares favorably with Singapore and Bangkok, where returns are similar but carry higher risk.
"For buyers in the region seeking a long-term investment that will steadily appreciate, Malaysia is the place," says Kumar Tharmalingam, chief executive officer of MPI.
Meanwhile, Kuala Lumpur is considerably more affordable than other comparable cities in the region. The Malaysian capital is ranked 104th by consultancy Mercer in its 2011 Cost of Living survey, while Hong Kong is 9th and Singapore 8th.
Few restrictions
Overseas buyers benefit equally from Malaysia's few restrictions on foreign ownership of real estate. Most property is freehold, meaning foreigners can purchase it without a local partner. There is no limit to the number of properties an overseas buyer can hold. Land titles are independent and transparent.
The one major caveat is that foreigners are only permitted to buy property priced at $180,000 or higher, yet this should have little effect on Chinese buyers. Homebuyers in the market are interested in luxury residences, while corporations seek large commercial and industrial properties, says Tharmalingam.
Huawei Technologies is a case in point. The telecom giant signed a memorandum of understanding during Premier Wen Jiabao's April visit with Malaysia's Ministry of Science and Technology and Innovation to help the Southeast Asian country train 10,000 telecom professionals over the next five years. That will require a sizable training center in all likelihood, said Chan Tze Wee, MPI vice-president of investment promotions, in a research note.
MPI says Malaysia has seen increasing enquiries from Chinese homebuyers since the second quarter of this year.
"Chinese real estate agents are testing the viability of promoting prime Malaysian properties to their local clients in first-tier cities," Chan says.
Prospective Chinese buyers are unique in their strong preference for themed properties like villas on golf courses and beachfront condos, she explains. Their immediate areas of interest are Kuala Lumpur, Penang and Kota Kinabalu, she adds.
MPI will host a forum today and tomorrow in Shanghai to help familiarize prospective Chinese buyers with the Malaysian residential property market. It is the first event of its kind in China and is being held with the support of the Malaysian Industrial Development Authority and Malaysian External Trade Development Corporation.
(China Daily 09/16/2011 page7)