Truly Asia
 Following the changes in property law this spring, Susan Khoo* says it really is time to make your move in Malaysia
Published in Square Foot Magazine on July 1 2007
There is something in Malaysia to appeal to just about any investor, be it a holiday home, investment property or second home. The government actively encourages foreign investment and the removal of the Real Property Gains Tax, a 5 to 30 percent capital gains tax, as of April 1, is expected to spur stronger demand for mid- to high-end properties.
Foreign investor focus tends to be on Kuala Lumpur and the resort locations on the West coast, in particular Penang and Langkawi. Added to that there are now eco-friendly living options in holiday friendly Kota Kinabalu.
A buyer's market
The Kuala Lumpur market has been strong over the past few years with top-end residential properties in the cosmopolitan commercial centre edging towards $4,600 per square foot. For a well appointed, 1,500 sq-ft condo apartment in the capital, you can expect to pay $1.7 million up.
Prices in the resort locations are competitive when compared to the likes of Phuket and Bali. $1.2 milllion will buy a 1,500 sq-ft beachfront apartment in a condominium with a pool, 24-hour security and a gymnasium. In Kota Kinabalu investors can secure a beachfront villa for $1.8 million.
For those who wish to rent out their properties either permanently or while they are not in residence, the path is now hurdle free. Condo apartments rent out for $6 to $11 per square foot in Kuala Lumpur; rentals are cheaper in the resorts. While the short-term rental market is nascent, most investors currently self-manage their properties.
Low-risk investment location
The laws related to foreign investment in property are relatively transparent. Foreign ownership of property is permitted under Foreign Investment Committee (FIC) guidelines. There is a well defined buying process based on a system of property title and most properties are purchased freehold.
Furthermore, in December 2006, key policy initiatives in the property sector were announced, enhancing the attractiveness of investing in Malaysian real estate. Foreign investment approval is no longer required as long as the purchase price of the property is $500,000 and above. Moreover, there is now no limit to the number of properties a foreigner may acquire.
The government is intent on making Malaysia property more investment friendly, and these changes should limit the slowing of the market (in terms of price sustainability and yields) that some had anticipated in light of the number of high-end condominiums coming onto the market.
In December, the government also announced a range of measures that are designed to further develop the property sector and to cut bureaucracy in the industry. Specifically there is to be a streamlining of the development approval process - a shortening of project approvals to between four and six months and the issuance of strata title within 12 months. The changes should allow permit developers to execute on their projects in a more efficient manner.
That said, foreign investors should be aware that state approval for their purchases is required even though foreign ownership is approved by the FIC. Red tape can delay the completion of a purchase and the issuance of titles.
Easy come, easy go
 Importantly, property prices in Malaysia are still among the cheapest in the region; and investors can expect not just an affordable lifestyle and a high quality of life but also funding, as Malaysian banks are willing to lend to foreign investors.
The benchmark lending rate in Malaysia is 6.75 percent -lower than other southeast Asian countries, including Indonesia, Thailand, Vietnam and the Philippines.
For investors who wish to sell their property, gains may be expected in light of the strength of the market over the past few years and the recent government measures to stimulate the market.
That said, Malaysian property investment is often considered in conjunction with relocation to Malaysia. The high standard of living, available on tap, attracts retirees and those seeking a second home.
The Malaysian Government has set up a programme to make it easier for expatriates to retire in Malaysia. The Malaysia My Second Home (MM2H) programme allows foreigners to stay in the country indefinitely on a social visit pass, with a multiple entry visa.
*Susan Khoo is managing director of Destini Property Limited
BOXOUT Making Malaysia your second home
Aged below 50 years old:
Open a fixed deposit account of RM300,000.
After one year, you can withdraw up to RM240,000 for approved expenses relating to house purchase, education for children in Malaysia and medical purposes.
Aged 50 years and above
Choose to either:
Show proof of monthly off-shore income of RM10,000.
Or
Open a fixed deposit account of RM150,000
After one year, you can withdraw up to RM90,000 for approved expenses relating to house purchase, education for children in Malaysia and medical purposes |
