Malaysia To Bank On Relatively Low Entry Cost

The Star: Monday July 9, 2007

WHILE cities around the region are seeing a spike in their property prices, the relatively low entry cost to invest in real estate in Malaysia will be a strong magnet for foreign investors to partake in the country's buoyant market.

Coupled with the many pluses enjoyed by the country, including the transparent land laws and system, sustainable market growth, good construction management and investor-friendly incentives, Malaysia has the ingredients to become an international property hub.

Industry players are confident that the upcoming joint public-private sector initiative to promote Malaysian properties to the international community would help the industry substantially.

The regional property boom has the potential to spill over to Malaysia as investors start looking around for better bargains.

SP Setia Bhd group managing director Tan Sri Liew Kee Sin said besides the good value of its properties, the country's stable socioeconomic climate, comprehensive infrastructure, and a good balance of thriving cities and natural wonders would endear Malaysia to many foreigners.

“Kuala Lumpur is between 30% and 1,000% cheaper than other regional cities such as Beijing and Hong Kong. In Singapore, property prices are pegged at US$1,500 per sq ft while in Beijing, the price is US$188 versus Kuala Lumpur’s US$148.

“From the pricing standpoint, Malaysia still has a lot of catching up to do and offers ample upside for investors,” Liew said.

The availability of loan margins of up to 70% for foreigners also makes it easy for them to purchase property here.

According to Mah Sing Group Bhd president Datuk Leong Hoy Kum, international investors have ample opportunity to pick up reasonably priced real estate with good upside potential in the residential, commercial and tourism sectors.

“It is time to tell the world the package of goodies that Malaysia offers, which include the attractive value upside in a broad range of properties that we have,” Leong said.

Zerin Properties chief executive officer Previndran Singhe, Malaysia has most of the ingredients to become an international property hub and “what is lacking is to convey its story in a cohesive and holistic manner to the markets that need to know.” He said the commercial sector could also look forward to stronger take-up from foreign buyers. Last year, a whopping 45% of the value of office transactions involved foreigners, as compared to 19.3% the year before and 1.9% in 2004 (see chart).

“Foreign ownership in the office and retail sectors is on the rise, and the latest initiative will attract greater interest in the other commercial sub-sectors, which are also generally undervalued,” he said.

Sunrise Bhd managing director Datuk Michael Yam said foreigners could look forward to acquiring high yielding world-class quality properties at a fraction of what they had to pay abroad.

“Overall, Malaysian properties are attractive compared to those around the region, especially when it comes to luxury housing.

“Based on JP Morgan’s estimates on comparison of Asia's luxury housing affordability, Malaysia has the highest ranking as the most affordable country. As a comparison, a prime property in the KLCC area costs an average of RM900 per sq ft (psf), which compares very favourably with an equivalent property in Hong Kong island at RM10,000 psf and Singapore at RM6,000 psf.

“Only properties in Bangkok and Manila are similarly priced as those in Kuala Lumpur,” he said.