Malaysia wants wealthy Hong Kong, mainland China investors to absorb US$8.9 billion residential property market oversupply

Malaysia is seeking to avert a housing market crisis by luring foreign buyers to its rising stock of unsold homes, targeting wealthy mainland Chinese and Hong Kong residents with fast-track residency visas.

The Southeast Asian country this month lowered the threshold for overseas buyers of residential property to 600,000 ringgit (US$143,453.5) and above, from 1 million ringgit previously. The easing, which takes effect for 12 months from January 2020, is likely to whet an appetite among Hong Kong investors seeking safe havens after months of anti-government protests.

The move is likely to spur demand from Hong Kong and mainland Chinese investors who already view Malaysia as a top investment destination, as currency depreciation has cheapened its assets. Ethnic Chinese make up almost a quarter of Malaysia’s population and investors from mainland China and Hong Kong are already the biggest buyers of Malaysian homes. And analysts said the momentum is likely to be sustained.

“The new threshold brings some 4,000 condominiums that were previously ruled out into the realm of possibility, so buyers have much more choice,” said Kashif Ansari, chief executive officer at IQI Global, which has more than 2,000 agents in Malaysia. Given the limited window in 2020, “buyers should have a sense of urgency about taking advantage of it”, he added.

A branded residence like Yoo and Kempinski’s 8 Conlay, a US$1.3 billion complex of three towers in Kuala Lumpur that has retail, serviced residences and a five-star hotel, is priced at US$792 per square foot, a fraction of the US$2,061 for Wireless in Bangkok, US$2,511 for Ritz-Carlton Residences in Singapore and US$4,376 for Yoo Residence in Hong Kong.

Foreigners account for 75 per cent of the development’s total buyers, and of that, half are from Hong Kong and first-tier cities in mainland China.