Property

Malaysia's Real Estate… An Allure

Surrounded by 5 of the top 10 economies (China, India, Indonesia, Japan and the Middle East), Malaysia has been identified as one of the preferred destinations for real estate investment. 

Malaysia’s GDP growth registered 4.5% for the last quarter of 2009 after 3 quarters of consecutive contractions. The official growth forecast for 2010 is about 5%. Some analysts are even more optimistic with projections of between 7-8% on the back of rising exports fuelled by higher commodity prices and domestic demand. The March 30th announcement of the new economic model (NEM) brought fresh hope that Malaysia would become a high-income nation by 2020. In the recent World Competitiveness Yearbook (WCY) Malaysia ranked one of the top 10 most competitive nations among 58 economies.

New launches over the last 6 months have been reported to be successful. For example, in the city of Kuala Lumpur, projects such as the St. Mary’s serviced apartments, Sky Residences and Verticas Residensi saw good responses from both the local and foreign market. The One Kiara freehold project was also very well received. In Penang, IJM’s well-conceptualized Pearl Regency and the Light Collections residential developments have received remarkable market support whilst the Quayside at Tanjong Sri Pinang have also similarly reported brisk sales.

The residential sector has picked up significantly form the depths of the recession in the first half of 2009, though some, lesser informed foreign investors are sitting on the sidelines, waiting to be convinced that Malaysia has much to offer. A resurgence of foreign demand similar to the 2006 to 2007 period is yet to be seen. In this respect, an effective national strategy to promote Malaysia as the preferred real estate destination is still the sine-qua-non. Malaysia has many obvious advantages over its immediate neighbours in the competition for foreign real estate investment. Thailand’s political situation is worrying while Singapore was rated the world’s 10th most expensive city for both locals and expatriates.

According to ING’s quarterly ING Investment Dashboard Survey, Malaysian investors’ confidence rose to 146 in Q1 2010 from 139 in Q4 2009. The overall market sentiment is more positive since both foreign and Malaysian investors’ confidence is back, thus reaffirming the country’s envious ‘optimistic” position. Prices of real estate in Penang as a whole held well in 2009. There were no “fire sales”.

With ample liquidity among investors and the negative real returns from bank deposits, property has proven to be clearly a preferred choice for investments. Investors who have benefited from the recovery of the stock markets are also now observed to partake more actively in property investments.

In Penang, the recent conferment of the UNESCO World Heritage status on George Town has also attracted many investors to consider the Island State as a location of choice.

Compared to the region, Malaysia generally remains one of the most “valuefor-money” real estate destinations.This makes Malaysia an affordable and attractive choice compared to other countries which are too expensive or lack the necessary infrastructure.

The allure of Penang’s real estate offerings has resulted in attracting more foreign investors this year. Most of them are working expatriates, Malaysia My Second Home participants, overseas students and retirees. According to FIC data, the number of properties purchased by foreigners in Malaysia formed only 2.5% of total number of properties transacted (RM2.3 billion) nationwide in 2006, making up only 12.3% of total value of transactions. Penang’s vote as the 8th most livable city in Asia, on par with KL and Bangkok by ECA International has also created further excitement and a sense of belonging for foreigners seeking a 2nd home.

Most people consider Malaysia to have an exceptional long term growth potential for real estate. Maria Hann
of Retirement Today (www.retirementtoday. co.uk), ….. could not have put it in a better way ….. “Penang is perfect for property investment”.

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This article has been edited for ExpatGomalaysia.com
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