The Malaysian Market – Why You Should Start Investing

The Real Estate Market In Malaysia – Why You Should Start Investing

It has appears that the real estate property sector in Malaysia has flourished for the past few years, so well that the price for properties in some of the creme of the creme prime areas has sky-rocketed. Even so, what is clear, and amazing, is that the price to purchase such luxurious properties in prime location is still realistic. This article explores why and how investing in properties in Malaysia is the way to go.

Comparatively with other Asian countries, Malaysia is a developed country and is still growing through leaps and bounds in terms of its real estate sector. The property market in the country is not volatile nor unpredictable. The emergence of quality properties and the fact that some properties in prime locations are up for sale fetch good price shows that a pre-owned property in a prime location cannot change the fact that its price can only appreciate, and appreciate well in certain visible developments. Of course, it’s typical that the rest of the properties in not so prime areas does not fetch as high as the appreciation in the properties in prime locations, but still it is appreciation nonetheless. Some investors go for properties in good areas with well-developed community residential area because these properties can fetch them good yield – income derived from passive income can be quite lucrative provided you can find an agreeable and good tenant.

If you look closely, the real estate investment development in Malaysia has steadfastly and progressively maturing, and is emerging as a haven for a safe and stable investment. Compared to other real estate market in other Asian countries, Malaysia properties are very affordable yet emanate quality. In short – VALUE FOR MONEY and you get quality for alot less. So much so that Malaysia is fast becoming an investment hub for many investors from its neighbouring countries that flock to Malaysia to get a piece of good property whilst it is status quo. The government has also now slowed  down and is encouraging and promoting developements, including being supportive of foreigners purchasing properties in Malaysia. No doubt this help boost the economy of the country, better still whilst the rulings for foreigners to own a property in Malaysia is still relaxed, the time could never be better to invest in quality properties in good location, whether in Kuala Lumpur, the capital, the charming Penang, the accessible Sabah (a favourite from investors from Hong Kong) and the up and coming growing Iskandar region in Johor.

Investors are planting their bet in the Malaysian property market due to many factors. One is the affordability of these properties and the fact that the quality of homes in Malaysia has increased tremendously in recent years therefore fetching a higher re-sell price, most developments stresses on security as it has become a priority to ensure such residential areas are environmentally friendly as well as safe, the basic infrastructure is there, in fact, the facilities are often top of the range with a wide range of gym equipments and decent size swimming pool in most high-rise luxury condominiums. Not getting far behind are the landed properties – albeit more expensive due to the fact that such properties come with the land these are erected on, but property buyers are still keen to buy for their own stay, or for a good re-sell value. The growth and stability of real estate market in Malaysia has no doubt shown a tremendous spurt for the past few years. Nonetheless, because of such a steep spurt, the market at one time we becoming wary simply because the price of the properties has suddenly appreciated so much. For investors, this is good news. For home-buyers, particularly first-time buyers, not so much. Primary and secondary markets vary in terms of supply and demand. But the demand is still there. And the developers are still building.

Now, let’s go back for a bit. You would have noticed that in one of our page under the heading of The Migration Plan, we spoke extensively about Malaysia and how Malaysia came about. A little about why Malaysia is a good place for you to get a vacation home, or a second home for the matter. A place of escapade or merely to relax with plenty of space to breathe away from the hustle and bustle of hectic city living in your own country. If you are thinking of buying a property and seeing from an INVESTOR’s view, you would go for a place where you know it would become hot, where the re-sale price would be appreciating for sure, or to go for a development where all the infrastructure is in place with plenty of facilities and quality crowd. If you are buying a vacation home, or a second home to escape just for the weekend as an example, then your needs may vary accordingly to your priority. We will discuss this further in other articles where I will elaborate more on this topic.

For easy understanding, let’s talk about our closest neighbour, our sister country, Singapore, used to be part of Malaysia. Also a very developed first class nation.

Malaysian Home - Secure  And Nicely Landscaped Housing EstateThe major cities and most towns in Malaysia has well-developed system and first class infrastructure. The roads and motorways/highways are well paved and connects all the major cities which provide easy accessibility. Traveling has never been so easy and comfortable. Service coverage of rail networks and mobile communication cover the whole country. Basic amenities like water and electricity are available in throughout Malaysia save for certain areas deep within the forests.

Malaysia is a tropical country with gorgeous sunny weather all year round and boasts of tropical rainforest. In fact, the Belum Rainforest is the oldest in the world! Certain forest reserves, parks, beaches and heritage places are placed under the protection and preservation.

The average cost of living in Malaysia is low. You can have a decent meal for less than RM5.00, which is less than USD2 and about GBP1.00. The cost of the properties in Malaysia is among the lowest in the region. This is why whilst the price is still affordable and low, if you have the cash flow to invest, buying and investing in properties in Malaysia can actually accord you really good income.

Malaysia has double taxation treaties with many countries. There is no tax on gains from the purchase and sale of properties. The rents in Malaysia are 1/4th the rent in Singapore, which is next door. The rent reduces if we move to rural areas. At Tropical Paradise, it does not matter if you are not in Malaysia, we can assist you to source for properties within your budget and help you invest -from sourcing for properties to sorting out all of your legal and financing matters, our team will ensure your transactions will be effected in a speedy and efficient manner.

It would be good to note that the Malaysian government currently actively encourages and is supportive of positive immigration policies. Most major cities enjoy a comprehensive facilities and infrastructure, with a great variety of local and international products and vibrant and healthy economy . Malaysia is also a prime shopping destination with all the best brands of the world available and most local labels also provide quality products for very reasonable prices.

Due to the fact that Malaysia is multicultural society of a melting pot of races, it is rich in culture and all races live in exemplary harmony. Therefore, regardless of which housing development or residential properties area you have invested in or bought a property in, you will have no trouble blending in and assimilate with your neighbours. Malaysians are known for their helpfulness and friendliness, in fact so much so if you have a local Malaysian friend, they would probably tell you how they used to run in and out of their neighbours’ house and roam freely and safely in their neighbourhood and have very close relationship with their neighbours growing up.

You may also want to know that since the 1970s, the Malaysian GDP has grown at a constant pace of 5% or more. The country is economically and politically stable. There have been no wars or serious turbulences to impact the economy negatively. The country has been able to spread its wealth consistently and evenly, thus contributing to the stable economic climate. There is a large workforce of local and foreign workers. The literacy rate is high and skilled workforce is easily available. Due to the fact that the costs of manufacturing and production is low in Malaysia with a high level of quality and skills, a lot of foreign companies are actually moving their manufacturing plants to Malaysia.

The property market of Malaysia has been a constant growth since the 1980s. The years 1987 and 1997 saw a correction in the markets, subsequent to surges in demand, in the previous years. Since then, the real estate market movement in Malaysia has been growing at a consistent and constant pace. Properties have appreciated at a constant rate of 20% while the multifamily homes have given much higher returns. The Malaysian real estate and property market is hopefully going to cross the RM100billion mark by the end of 2011. There have been capital gains of 20 to 60% on new development properties within 3 years.

On the legal regulations and law front, Malaysia has established statutory laws on title deeds and ownership. The Malaysian government has pledged its continuous support the construction sector by annoucing new measures to iron out a lot of irregularities plaguing the development and construction sector.

The foreigner-friendly policies mean that foreigners can and are allowed to invest in Malaysia with no maximum figure on property acquisition. This is very migration-friendly and programs such as “Malaysia My Second Home” allow foreigners the ability and opportunity to actually invest and/or purchase properties in Malaysia.  Best of all, they are not taxed from any gains received from the sale and purchase of properties, which Malaysians are subjected to.

The banking sector is also supportive of the property investments. It is possible for Malaysians to get loans up to 95%. First time owners can get up to 100% financing depending on credit and financing checks. Foreigners are eligible to apply for loans subject to their credit standing. This means that there is no stopping foreigners settling down in Malaysia holding the MM2H Visa from climbing up the property ladder!

Malaysia offers an investment opportunities to investors – whether local or cross-border transactions like no other country.

Let us explore why:-

  • Banks & Financing: The banks are approving loan applications and mortgage packages without many complications.
  • Consistent Appreciation: The properties in Malaysia have been appreciating on average and in fact in good locations, property appreciated more than 100%.
  • Currency: The currency of Malaysia, the Ringgit, has been stable against the dollar with minor variations of less than 10%. Experts believe that the currency is expected to gain up to 50% against the dollar.
  • Demand: The demand for residential homes is rising constantly. The quality of homes have improved so much that people are constantly upgrading.
  • Flexibility: Funds can be transferred in and out of the country without any restrictions.
  • Growth:Malaysia has a strong growth in the property market.
  • Stability: The property market of Malaysia has not wavered nor shown any volatility for the past 40 years, in fact the property prices can only appreciate, particularly in good locations. During several economy crisis in the world, the Malaysian property market has remained resilient.
  • Taxes: You will be happy to know that there are no taxes on gains by the sale and purchase of real estate investment Malaysia.

Malaysia is a developed country and a constant progessing economy with world class infrastructure. It’s multicultural society and rich history welcomes foreigners with open arms. With a mixture of local and international communities, young crowd and international/expat communities, Malaysia offers one of the best working and living conditions.

The GDP in Malaysia has been growing consistently and Malaysia has shown surprising resilience against economic crisis that hit the world for the past years. Indeed, Malaysia is perfect for investors to grab the opportunity to invest in real estate sector in Malaysia, while the government has not tighten the policies for foreign-investment in properties in Malaysia as this could affect the price of properties in Malaysia as a whole.

In view of the aforesaid, the Malaysian situation offers a wonderful opportunity for a smart investor.This is why you should contemplate climbing up the property ladder and start investing in Malaysia to enjoy your passive income which could potentially generate you safe and stable returns.

Author: Ms Irene E. Tan; Real Estate and Property Specialist Solicitor
Source: The Law Chambers of Lee & Chong, Advocates & Solicitors
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