Rising Foreign Interest in Malaysia Real Estate

The latest property research released by Credit Suisse has indeed given a great dose of positive injection and reinforces my view that Malaysia property market is on the rise. According to Credit Suisse Research, Malaysia property will experience property asset inflation due to the wealth effect of the stock market, government pump-priming and foreigners snapping up high-end property as a result of perception that it is relatively undervalued compared with other major regional countries such as Hong Kong and Singapore, coupled with an undervalued currency. Credit Suisse also noted that the rise in the stock market would have generated tremendous wealth and should act as a stimulus for domestic consumption. Credit Suisse predicted that Kuala Lumpur could be the next property play after Hong Kong and Singapore. They also observed that visiting fund managers have been deviating from the normal routine of company visits to view property developments in Kuala Lumpur, Penang and Johor.

The rise in property interest is attributed to the Malaysian Government's recent relaxation of policies and plan to speed up public sector service delivery and reduce red tape. These new policies include:
- Foreigners are allowed to buy residential properties priced above RM250,000 (USD71,429) per unit without the approval from the Foreign Investment Committee, and no limits on the number of units;
- Foreigners are entitled up to 70% financing based on the property valuation (freehold property);
- waiver of Property Gains Tax

However, the research also pointed out that Malaysians have yet to become positive on the Malaysian property market. Not surprising, given the typical scepticisms of local community. The trend in Singapore is reminiscent of this as it also took a major move before the average Singaporeans became convinced.

On the other hand, there has been rising interest in properties in Pulau Langkawi (a popular resort island located at the north of Peninsular Malaysia). It was reported that purchasers from Hong Kong and Singapore made up the largest number of foreigners taking up residential properties here in Langkawi.

There is also strong interest in the commercial segment. According to Regroup Associates executive chairman, Christopher Boyd, the freeze on office buildings in Kuala Lumpur since the Asian financial crisis had led to pent-up demand in the downtown area and growth of more decentralised business precincts in the outer areas of the city as well as the suburbs where good accessibility and public transportation could be found. This is evident judging by the strong growth of office and retail market in the following Klang Valley areas such as Damansara Heights, Mutiara Damansara, Bandar Utama and Damansara Perdana.