More People Investing Overseas Properties

The Star: Monday July 9, 2007

PROPERTY buyers are becoming more discerning and sophisticated nowadays, with the more affluent ones broadening their investments to include overseas properties.

A real estate agent said a growing number of Malaysians was investing in properties overseas as one way to hedge their investments and for better capital appreciation.

“Australia is among the favourite countries – especially in Melbourne, Sydney, Perth and the Gold Coast – for Malaysians to buy properties, as many of them have children who are studying there,” he said.

He added that Malaysians were buying studio apartments, condominiums and landed properties for their children who studied in Australia and to live in occasionally.

An analyst with a back-backed brokerage said he did not see these investments having a major impact on the local property market.

“We are also attracting foreign buyers into our market, especially after the relaxation of foreign home ownership rules as well as the abolition of the real property gains tax,” he said, adding that cross-border property investments were good for the country.

“Malaysians are very interested in investing overseas, especially in developed countries which are politically stable and have transparent policies. They do it to preserve their wealth and to diversify their investments.

“Australia and New Zealand properties are more affordable compared with Singapore, Britain and Hong Kong,” the analyst said.

An industry player said one of the hottest sectors in the property market in the Asean region was the high-end luxurious condominium in Singapore.

“That market has been hot for the past one year and has always been in demand. International buyers including Malaysians are going for higher yield and rental income,” he said. “People are looking for security and good returns on their investments.”

According to Singapore's Urban Redevelopment Authority (URA), private residential prices in the three months to June 30, 2007, were up 7.9% quarter-on-quarter, after rising 4.8% in the first quarter.

In the quarter to June, prices of non-landed properties in the core central region grew 7.6% quarter-on-quarter and prices in the rest of the central region were up 7.9%. Prices of properties outside the central region were up 6.5%, URA said.

“The increase in private housing prices in recent quarters was in line with greater economic growth and rising confidence. The Government will continue to monitor the market and ensure sufficient supply to meet demand,” it added.

The price of a condominium unit in Singapore has reached a record high of the S$5,000 per sq ft (psf). Luxury property developer SC Global's latest project The Marq on Paterson Hill set the all-time record. Its 6,195 sq ft unit was selling for S$5,100 psf.

A Singapore-based analyst expects property prices in Singapore to continue its uptrend. He said even The Marq's record of S$5,100 psf might not last for long.

Despite the soaring market, average prices of Singapore's most luxurious condominiums were still below those in major cities, the analyst said.

“In Tokyo and Hong Kong, for instance, the average price of most prime apartments is more than S$3,000 psf while in New York it is about S$4,000 psf. In London, it can go up to S$9,000 psf,” he said, adding that the average price of luxury condominiums in Singapore is S$2,000 psf.

Given the rapid price movements of property in Hong Kong and Singapore, there is a belief that Malaysia may be the next market to move.

No doubt real estate in Malaysia is cheaper than that in some regional neighbours such as Indonesia, Singapore and Hong Kong, which means that Malaysia can offer investors a lower entry level into the region's property market.

OSK Investment Bank research analyst Mervin Chow said that on a regional basis, Malaysia was fairly easy for foreigners to buy property, whether condominiums or landed housing.

Malaysia allows foreigners to own or invest in residential units costing at least RM250,000 each without having to seek the Foreign Investment Committee's consent.

He said Thailand, the Philippines, Indonesia and Singapore prevented foreigners from owning land as well as restricted them in buying apartments or using leasehold arrangements.

“The luxury residential market in Malaysia is still relatively affordable compared with other Asian countries such as Singapore, Thailand and Indonesia.

“The property price gap between Singapore and Malaysia has widened further, especially in the luxury condominium sector, which makes Malaysia's luxury condominiums an attractive proposition to Singaporeans,” Chow said.

He added that locations like Mont' Kiara, the Kuala Lumpur City Centre and Ampang Hilir would remain the prime choice locations among foreigners.

Although Jakarta seems to offer a better yield and cheaper luxurious residential properties, the socio-economic instability in the country may continue to hold most foreign investors at bay, he said.