Hong Kong Looking In

Frankie Wong

homefinder speaks to Frankie Wong, Chairman of Association of Asia Investors, established since 2006 and based in Hong Kong, about how the people of Hong Kong look at Malaysia.

What is Malaysia known for in Hong Kong?

Malaysia is best known for its relaxing tourist resort by Hong Kong people. Places like Sabah, Penang, Langkawi etc, and the more recent hot spot, the Legoland, will pop up in the minds of the Hong Kong people when thinking of Malaysia. While it is a perfect result arising from the Malaysian Government’s great effort to promote its country as a Tourist Resort to foreign countries, it is a pity that its attractiveness in property investment market has not been properly made known.

Besides, as a Muslim country, Malaysia gives us a mysterious impression to a certain extent.

How do the Hong Kong investors view Malaysia as an investment destination?

Malaysia is not on the top of the list in terms of the securities market and property market for the Hong Kong investors in general.

With regard to securities market, Malaysia lacks diversity in investment tools e.g. derivative products like third party issued Warrant, Callable Bull/Bear Contracts and Options. The market is relatively inactive as well.

Regarding property market, the attraction of Malaysia has not been well discovered by Hong Kong investors in general.

Chinese in general have a special DNA for owning property. Hong Kong residents are mainly Chinese. In the past, investors in Hong Kong have mainly focused on the local property market due to the more attractive rising trend. They have been very keen on buying property in their homeland. Therefore, the local property market has been very active and attractive. This similar to the property market in PRC (People’s Republic of China).

However, with the tightening measures imposed by the government in the local property market in recent years, the market demand has been suppressed. Both Hong Kong and PRC investors have started to look for overseas opportunities elsewhere.

We saw a few giant Listed Companies in Hong Kong (PRC based Property Companies) already started to invest in Malaysia heavily. This has awakened investors to look at the Malaysian market.

In my view, the Malaysia property market is attractive due to the following factors:

  • Legal system – Malaysia, same as Hong Kong, has been a British Colony and so adopts the UK legal system as Hong Kong does. Therefore, Hong Kong investors are familiar with the Malaysia legal system and have more confidence in the level of legal protection.
  • Financing – Availability of local mortgage finance is critical to overseas investors. In Malaysia, mortgage loan is accessible from most local and foreign banks by foreigners.
  • Property title – Unlike some countries where foreigners are forbidden to own or have majority holding interest in the property, Malaysia adopts a more favorable policy to allow foreigners to hold full title to the Malaysian property.
  • Market potential – Thanks to the relatively laid back culture in Malaysia, Malaysian property market is still lagging behind in terms of the stage in the market development cycle. The more developed countries have all gone through the rapid uprising market stage. Therefore, there is still attractive market potential in Malaysia.

Where in particular are they looking at specifically and why?

Hong Kong people are looking at property market in more developed countries e.g. UK, US, Australia. These are the countries where their kids are sent for education. Thus, they are more familiar there. Besides, the official language used in these countries is English. There is no issue of language barrier. Further, they are more confident of their well-established legal systems.

Having said that, Malaysia has been getting more attention recently by Hong Kong investors as one of their choices for property investment. Besides, most Chinese in Malaysia speak English, Putonghua and Cantonese. This helps to remove the communication barrier. Investors feel more comfortable investing in this country.