Malaysia land of expat opportunity
Malaysia's property market is slowly showing signs of revival as its economy emerges from the economic downturn, say property analysts and brokers.
Residential sales in Kuala Lumpur have picked up in recent months with developers launching more new projects for local and foreign investors.
This is in line with the upturn in other major Asian cities such as Hong Kong and Singapore this year.
The Malaysian capital seems to be getting popular once again with overseas investors looking for quality properties with growth potential, according to property consultants.
There has been a boom in the supply of high-end condominium development for expatriate buyers and tenants, particularly in the Kuala Lumpur City Centre (KLCC) area. The Malaysian government has also been active in drafting legislation to help foreign property investors.
Darien Bradshaw, regional director of international properties at Colliers International, said property prices in Kuala Lumpur had gone up significantly in 2007 and 2008, particularly after the Malaysian government abolished capital gains tax in April 2007.
He said Malaysia's favourable policy on foreign investment helped promote its property market and attract overseas buyers in the property market, especially in Kuala Lumpur.
Among the foreign buyers of Kuala Lumpur properties were expatriates from Britain, other European countries and the United States and investors from Hong Kong and Singapore.
Bradshaw said the property market in major Asian cities such as Hong Kong and Singapore had seen a strong rally this year, and investors had started to take a closer look at Kuala Lumpur again.
The Malaysian property market looked positive and would continue to improve over the next six to 12 months, he said.
Amous Lee, director of the international investment department at Knight Frank, said residential prices in Kuala Lumpur had corrected by about 20 per cent after the global crisis but there were signs of a revival in buying interest in recent months and prices in the city centre had seen a slight recovery.
Although developed economies had not yet fully recovered, economies across Asia had shown strong recovery over the past few months and Hong Kong investors were now looking into purchasing properties in Malaysia again, he said.
Lee said properties in the suburban areas of Kuala Lumpur, where prices were relatively stable, were attracting an increasing number of expatriates looking for lower-priced residences in a more tranquil living environment. Hong Kong investors tended to focus on residential properties in the city centre but there was a greater potential for price appreciation for those in the suburban areas, he said.
According to Lee, selling prices of high-end homes in the city centre now range from M$1,000 (HK$1,900) to M$1,700 per sqft, while those in the suburban areas are much lower at about M$400 to M$600 per sqft.
Lee said the Malaysian government had provided incentives to attract foreign investment and Malaysia My Second Home programme encouraged foreigners to invest in Malaysian assets and stay in the country on a long-term basis.
'Since the end of last year, developers have made various initiatives to entice buying interest such as a mortgage interest free scheme allowing homebuyers not to pay interest for mortgages before the project's completion. Price discounts and a waiver of legal fees are also on offer by some developers,' he said.
Some developers also offered to lease out the residential properties to generate rental returns for buyers, Lee said. Free inspection trips to the projects under construction are also offered to foreign investors who have put down an initial deposit.
Knight Frank recently marketed three projects by Malaysian developer SDB Properties to Hong Kong investors - Dedaun in central Kuala Lumpur, Five Stones in Petaling Jaya just outside Kuala Lumpur and 20trees, which is 15 kilometres from KLCC.
Wallace Li, director of ANB Properties, said the residential market in Kuala Lumpur's suburban areas remained relatively steady with underlying local and foreign demand despite price falls in the city centre.
'Since the middle of this year, the market has stabilised with increased transactions and a rebound in prices. Sentiment is more positive and developers are willing to launch their projects again,' he said.
'Malaysia is an emerging market for Hong Kong investors. Most of them are looking for quality properties in Kuala Lumpur and location always comes first. They like condominiums in prime locations and prefer those with good management, security and facilities,' he said.
KLCC in the heart of Kuala Lumpur remains the most popular location for Hong Kong and other foreign property investors, while Bukit Bingtang, a prime five-star hotel and shopping district, is another preferred destination, according to Li.
Mont Kiara, 10 to 20 minutes' drive from the city centre, is a prestigious residential area with a concentration of Hong Kong investors.
Li said the rental yield of properties in Kuala Lumpur stood at about 7 to 8 per cent, while that of the most expensive properties in core central areas was about 5 per cent. The standard mortgage rate for home purchase was in the region of 3.5 per cent. He said Hong Kong investors favoured the property investment market in Malaysia because of its geographical proximity but also its transparent and efficient legal system.
Buyers purchasing unfinished residential projects through pre-sales are expected to settle the payment in stages according to the property construction schedule. In addition to a sales and purchase agreement, buyers have to sign the 'state authority consent', a formal document for government approval of the purchase.