Malaysia invites foreigners to make themselves at home
Malaysia invites foreigners to make themselves at home
By Alex Frew McMillan International Herald Tribune
Like many
Southeast Asian nations, Malaysia has two primary property markets that are
attractive to overseas buyers: the area around the capital's central business
district and the resort properties on the coast. But unlike some of its
neighbors, Malaysia makes it fairly easy to buy property. Thailand, the
Philippines, Indonesia and even Singapore all prevent foreigners from owning
land, restricting them to buying apartments or to using leasehold arrangements.
"In Malaysia, you've got a government that is really trying to improve the
environment for people looking to invest in the country," said Darien Bradshaw,
regional director of business development for Colliers International real estate
brokerage. That was not always the case. In the 1990s, the country feared that
foreign buyers were driving prices beyond the reach of locals and, in reaction,
it set up a Foreign Investment Committee and enacted restrictions. Now, however,
the country even has a program aimed at overseas buyers, "Malaysia: My Second
Home."
Malaysia's real estate market is considered transparent in comparison with other
Southeast Asian countries. And owners can avoid a 30 percent capital gains tax
by holding their property for at least five years, after which they pay 5
percent on any gains. Brokers and buyers alike say Malaysian banks are eager to
issue mortgages to overseas citizens. Mortgages are generally issued up front.
"In terms of financing ability, compared to other countries, the banks are very
liberal," Bradshaw noted. "People can secure up to 90 percent finance." Although
recent increases have pushed interest rates to 6.75 percent from about 6 percent
at the start of the year, Kuala Lumpur has seen a boom in the kind of high-end
condominium development that expatriate buyers and renters demand. Construction
standards have improved, as have living conditions in the city. A light rail
system opened in 1998, and a thriving business hub is developing around Kuala
Lumpur's city center and the KLCC Park at the foot of the Petronas Twin Towers.
The buzzing local economy, fueled by the global boom in oil and commodities, has
drawn an increasingly discriminating breed of renter who works for one of the
multinational natural resources companies. According to a recent study from ING
Real Estate, Malaysia will be the Asian country with the biggest increase in its
work force from 2003 through 2013, with the number of workers expected to rise
to 13 million, a 27.9 percent increase in the 10-year period. With strong demand
for apartments at the market's top end, developers are in various stages of
construction on a series of projects around KLCC Park. The catalyst was The
Binjai, a condominium development by KLCC Holdings, the property development arm
of the oil company Petronas and the developer of the Twin Towers. The Binjai,
which was started in 2003 and is expected to be ready by the end of the year,
will have 171 apartments divided between two towers. They are expected to set
records. The company has not issued a final price list, but it says apartments
will sell for more than 1,000 ringgit, or almost $260, per square foot. The
smallest units, starting at 2,300 square feet, or 214 square meters, are likely
to sell for more than 2.5 million ringgit. There also are 14 penthouses of as
much as 10,000 square feet. "The Binjai has created a new market essentially,
with the view of the park and the view of the towers," said Rohan Padmanathan,
who works in the investment department of Jones Lang Wootton brokerage house.
Upscale condos in the city's central area had been selling at 450 to 500 ringgit
per square foot, but the developer expects the average sale price of The Binjai
to be double. "One thousand ringgit per square foot started at Binjai,"
Padmanathan said. "At the time, that was unheard of. Now it's becoming quite
common." The Troika, a three-tower project designed by the company of the
British architect Norman Foster and developed by Bandar Raya Developments, has
similar pricing, with apartments also topping the 1,000 ringgit per square foot
mark. Its sales have been split roughly evenly between people who intend to live
there and those buying apartments as investments. Nearby, and also with views of
the Twin Towers, KL Landmark is developing K Residence, a 50-floor luxury
residential complex. The two- and three-bedroom apartments, most of them around
2,500 square feet, are due for completion in the first quarter of 2008. The
asking prices are 816 to 942 ringgit per square foot. The developers tout
touches like a contemporary design partly by Christian Liaigre, who created the
interiors for Valentino Couture in Paris and private residences for Calvin
Klein, Karl Lagerfeld and Kenzo, among other projects. Some of the new
construction is not so costly. The 100 serviced apartments being built at the
32-floor Binjai Residency are selling for just half what those at The Binjai are
expected to fetch. (The projects have similar names but are not associated.)
David Neubronner, residential department director for Savills real estate in
Singapore, said his office sees 50 to 100 buyers a year in Malaysia, most from
Singapore but also from Hong Kong, Europe and Australia. Only the Singaporeans
have been interested in Malaysian property in places like Penang or Johor Bahru,
he said. "Generally, Malaysian resort properties have not been very well
received," he said. That may be changing, however, as resort construction
standards are improving and new projects are springing up along the coast. Over
all, Malaysia is still an emerging market, so despite all the positives, buying
property is not without risk. For example, brokers warn of annoyances like
developers' trying to avoid receiving the final payment on properties so they
can hold on to the titles. ING rates the Malaysian property market as a medium
risk, the only developing nation in Asia not rated a high risk. Like many
Southeast Asian nations, Malaysia has two primary property markets that are
attractive to overseas buyers: the area around the capital's central business
district and the resort properties on the coast. But unlike some of its
neighbors, Malaysia makes it fairly easy to buy property. Thailand, the
Philippines, Indonesia and even Singapore all prevent foreigners from owning
land, restricting them to buying apartments or to using leasehold arrangements.
"In Malaysia, you've got a government that is really trying to improve the
environment for people looking to invest in the country," said Darien Bradshaw,
regional director of business development for Colliers International real estate
brokerage. That was not always the case. In the 1990s, the country feared that
foreign buyers were driving prices beyond the reach of locals and, in reaction,
it set up a Foreign Investment Committee and enacted restrictions. Now, however,
the country even has a program aimed at overseas buyers, "Malaysia: My Second
Home."
Malaysia's real estate market is considered transparent in comparison with other
Southeast Asian countries. And owners can avoid a 30 percent capital gains tax
by holding their property for at least five years, after which they pay 5
percent on any gains. Brokers and buyers alike say Malaysian banks are eager to
issue mortgages to overseas citizens. Mortgages are generally issued up front.
"In terms of financing ability, compared to other countries, the banks are very
liberal," Bradshaw noted. "People can secure up to 90 percent finance." Although
recent increases have pushed interest rates to 6.75 percent from about 6 percent
at the start of the year, Kuala Lumpur has seen a boom in the kind of high-end
condominium development that expatriate buyers and renters demand. Construction
standards have improved, as have living conditions in the city. A light rail
system opened in 1998, and a thriving business hub is developing around Kuala
Lumpur's city center and the KLCC Park at the foot of the Petronas Twin Towers.
The buzzing local economy, fueled by the global boom in oil and commodities, has
drawn an increasingly discriminating breed of renter who works for one of the
multinational natural resources companies. According to a recent study from ING
Real Estate, Malaysia will be the Asian country with the biggest increase in its
work force from 2003 through 2013, with the number of workers expected to rise
to 13 million, a 27.9 percent increase in the 10-year period. With strong demand
for apartments at the market's top end, developers are in various stages of
construction on a series of projects around KLCC Park. The catalyst was The
Binjai, a condominium development by KLCC Holdings, the property development arm
of the oil company Petronas and the developer of the Twin Towers. The Binjai,
which was started in 2003 and is expected to be ready by the end of the year,
will have 171 apartments divided between two towers. They are expected to set
records. The company has not issued a final price list, but it says apartments
will sell for more than 1,000 ringgit, or almost $260, per square foot. The
smallest units, starting at 2,300 square feet, or 214 square meters, are likely
to sell for more than 2.5 million ringgit. There also are 14 penthouses of as
much as 10,000 square feet. "The Binjai has created a new market essentially,
with the view of the park and the view of the towers," said Rohan Padmanathan,
who works in the investment department of Jones Lang Wootton brokerage house.
Upscale condos in the city's central area had been selling at 450 to 500 ringgit
per square foot, but the developer expects the average sale price of The Binjai
to be double. "One thousand ringgit per square foot started at Binjai,"
Padmanathan said. "At the time, that was unheard of. Now it's becoming quite
common." The Troika, a three-tower project designed by the company of the
British architect Norman Foster and developed by Bandar Raya Developments, has
similar pricing, with apartments also topping the 1,000 ringgit per square foot
mark. Its sales have been split roughly evenly between people who intend to live
there and those buying apartments as investments. Nearby, and also with views of
the Twin Towers, KL Landmark is developing K Residence, a 50-floor luxury
residential complex. The two- and three-bedroom apartments, most of them around
2,500 square feet, are due for completion in the first quarter of 2008. The
asking prices are 816 to 942 ringgit per square foot. The developers tout
touches like a contemporary design partly by Christian Liaigre, who created the
interiors for Valentino Couture in Paris and private residences for Calvin
Klein, Karl Lagerfeld and Kenzo, among other projects. Some of the new
construction is not so costly. The 100 serviced apartments being built at the
32-floor Binjai Residency are selling for just half what those at The Binjai are
expected to fetch. (The projects have similar names but are not associated.)
David Neubronner, residential department director for Savills real estate in
Singapore, said his office sees 50 to 100 buyers a year in Malaysia, most from
Singapore but also from Hong Kong, Europe and Australia. Only the Singaporeans
have been interested in Malaysian property in places like Penang or Johor Bahru,
he said. "Generally, Malaysian resort properties have not been very well
received," he said. That may be changing, however, as resort construction
standards are improving and new projects are springing up along the coast. Over
all, Malaysia is still an emerging market, so despite all the positives, buying
property is not without risk. For example, brokers warn of annoyances like
developers' trying to avoid receiving the final payment on properties so they
can hold on to the titles. ING rates the Malaysian property market as a medium
risk, the only developing nation in Asia not rated a high risk.
We want your story or article on Living & Investing in Malaysia -
Please submit it!