Malaysia remains a favourite destination for real estate investment
Malaysia is home to some of the busiest trade routes and shipping lanes in the Asian region – but only Singapore is busier. Coupled with international daily flights, substantial oil reserves, business-friendly policies and a renowned Islamic banking industry, Malaysia is undoubtedly one of the best places in Asia to invest. It is also noteworthy that Malaysia is the only country in Asia to allow foreigners to own land. Although Malaysian real estate laws are governed on the national level, local property laws are also investor-friendly. Malaysia also has more viable and competitive options than most Asian countries where property markets reign supreme. Owning your own land enables you to freely develop your own property, independent of intervention by local authorities.
The Malaysian property market is dynamic, evolving and offers many exciting prospects for investors
Foreign property buyers generally prefer condominiums due to their elegant home furnishings and excellent rental yields. Although freehold properties are abundant in Malaysia, typical condo units within Kuala Lumpur are still the most common option preferred by foreign buyers. Rental yields are rather stagnant, hovering at around 3% within the KL metropolis as well as suburbs. Occupancy rates are still quite low throughout the country. Overdevelopment within major cities have led to saturated developments causing a property glut or an oversupply of properties. Malaysian population growth remains firm with the local population estimated to increase to some 40 million people by 2050 from the present 30 million. This will somehow create more demand for future properties to counteract the existing glut in the Malaysian real estate market.
Foreign-owned Malaysian property
Malaysia is by far the only nation in Southeast Asia whereby freehold property is abundant. That is, foreigners can own land without much complications or restrictions. They typically include condominium units, residential homes, town houses as well as land parcels. As of 2017, the minimum purchase requirement stands at RM1 million. However, in Selangor this is doubled to RM2 million to encourage foreign homeownership. Also, foreigners may only purchase landed properties if they reside in gated & guarded communities. In addition, foreign buyers may not own land designated as Bumiputra-only. They also cannot own properties designated as low or medium cost housing by the state authorities.
Property Investment in Malaysia
The ability of foreigners to own land in Malaysia opens up unlimited investment options and opportunities. Tourist hotspots such as Penang, Melaka, Johor Bahru and Kuching remain firm favourites among local residents, foreign expats, and global retirees alike. Malaysia’s capital Kuala Lumpur is a sprawling metropolitan city of over seven million people. The multicultural presence of residents and expatriates creates a strong sense of affinity or attraction for tourists and investors from every corner of the globe to invest in the real estate market, and also to purchase second homes for retirement. Kuala Lumpur is also the preferred destination choice among retirees worldwide compared to some other larger Asian cities.
Transactions in commercial as well as investment properties are expected to be priced between 10% to 20% below the anticipated market value. Stamp duty for properties worth more than RM1 million will be raised from 3% to 4% beginning January 1, 2018 with immediate effect. So although foreigners are able to purchase all kinds of property, they are only allowed to purchase up to two residential properties – two condo units (50% home ownership) or one condominium with either one terrace or linked house (above two storeys), but limited to 10% of the total units. This specific rule or provision also includes banglos, semi-detached houses and other formats of landed-type homes.
Property prices around Greater KL
Amid mega shopping malls, boutique-styled condos, 5-star luxury hotels and ultra-modern CBDs, Malaysia’s largest city Kuala Lumpur certainly has it all. KL metropolis reputably has some of the heftiest property prices anywhere in the country. They include luxury condominiums near Bukit Bintang such as Pavilion Residences (above Pavilion KL), The Harrods, Four Seasons, Banyan Tree and various international brand names within the vicinity of KLCC – home to the iconic Petronas Twin Towers. Currently, the most expensive residences in Malaysia can be found in KL city centre, with an average unit price of RM770k – 850k. Upcoming prime areas like Bukit Ceylon is just adjacent to the KL Tower.
Home to Kuala Lumpur’s central train station, KL Sentral is a master-planned KL transportation hub cum central business district (CBD) at the heart of the city. It is a transport-oriented development (TOD) which enables seamless connectivity and convenient accessibility within Greater KL via various rail options linking KL Sentral to the major airports (i.e. KLIA/KLIA2). Property developments sited along the KL Monorail routes are also not as expensive or exorbitantly-priced as those situated around KLCC. Prices are normally within the affordable luxury range of RM550,000 and upwards of RM1.1million. Residential areas located in premier townships as Damansara Heights, Bangsar South, and Solaris Mont Kiara are fast gaining appeal or popularity with expats owing to their affordable housing rates, urban affluence, western amenities, international schools, culinary diversity, vibrant nightlife and high rental yields.
Lagging not far behind from Kuala Lumpur are Petaling Jaya, Subang Jaya and Shah Alam – three top residential havens with exceptional prospects for property investors and home buyers alike. Some of the best restaurants, largest malls and greatest theme parks in Malaysia can be found within these three matured townships alone. Many conglomerates and major corporations are also based here, making it extremely attractive to live within these upscale neighbourhoods and dynamic communities. Whatever your options, you should always choose your property based upon location then followed by amenities, demographics, and finally it is down to pricing. Happy hunting! 😉