Investment Growth In Malaysia

Malaysia shows solid potential as a promising emerging property market for foreign investors. Below is an overview of some of the factors that are contributing to the growth of Malaysia as a successful investment arena.

International real estate investors looking to target a well priced, strong economy for sustainable growth and yields over the medium to long term are considering Malaysia as a highly lucrative option.

The government’s blueprint for economic growth and diversification for a four year period between 2006 and 2010, known as the “Ninth Plan”, aims at vast improvements to Malaysia’s infrastructure as well as economic developments. This progress is predicted to directly and positively effect the real estate market in Malaysia, bringing with it strong growth potential.

As a resort destination Malaysia’s affordability is a great attraction, bringing growing numbers of visitors annually to boost the economy. Tourist arrivals in Malaysia rose to 16.5 million in 2005, a rise of more than 160% in five years. This is an astonishing achievement for tourism in Malaysia and is good news to many property investors in the coastal resort hotspots, such as Port Dickson. The first low cost airline offering global services from Malaysia is planned for July 2007 and will connect Manchester and Luton as well as Hangzhou near Shanghai and Tianjin near Beijing from a later date – all good news for Malaysia and its growing tourism and investment arena.

While the country’s economy keeps flourishing, inflation remains low, overseas export opportunities continue to expand and more businesses are establishing regional centres in Malaysia. Malaysia is the Asian leader in terms of attracting interest from foreign investors, most of whom are from the Middle East. They see it as a viable and attractive emerging market with high medium term growth potential. The amount of foreign investment into the country continues to increase and international investment into the property sector in Malaysia is firmly predicted to grow at unprecedented levels.

Another particularly positive factor in favour of real estate in Malaysia today is the value of the local currency, the ringgit (MYR). Valued below the euro, dollar and British pound, foreign investors buying into Malaysia are reaping the rewards of buying so much more for their money. Meanwhile, property per square meter in all Malaysian towns, cities and resorts remains at a fraction of the cost of similar properties in the likes of London or New York.

Demand for real estate is high from an affluent expatriate market as well as an increasing Japanese, Indian and Singaporean market leaving many investment options open to shrewd investors in Malaysia.

Capital Growth Predictions

Depending upon location, off-plan residential property both in the city and within coastal resorts has seen price increases of between 14 and 15% per annum. With economic indications showing Malaysia can only continue to grow at a steady pace, many investors are purchasing now in order to achieve the highest returns on their investment.

Rental Yield Predictions

The best yields are possibly available in the commercial property sector or KLCC serviced apartments, with returns of 8% not being unusual. It is possible to invest in “tenanted” residential or commercial properties with guaranteed yields of 8%-10% available. We also suggest looking at off-plan commercial premises that will net yields well into double figures, while a number of hotels are also available with gross yields in excess of 17%.

Tourist resorts offer strong rental and capital growth potential with recorded yields in Port Dickson last year reported at 9.36%.

Malaysia Economy

Economically, the outlook in Malaysia is very positive. According to a recent study from ING Real Estate, Malaysia will be the Asian country with the biggest increase in work force from 2003 to 2013, with worker numbers increasing to 13 million, representing a 27.9% increase over the 10 year period.

Growth has been driven by a spurt of corporate investments, sustained consumption, improved external trade facilities and foreign investor friendly fiscal and monetary policies, that have boosted Malaysia’s economy to new levels.

Reasons Why Malaysia is an Intelligent Property Investment Location:

• New tax incentives and the relaxation of laws governing real estate purchase by foreigners.
• The government’s “Ninth Plan” will have a positive impact on the Malaysian real estate market through further improvements to the infrastructure and economic policies.
• Stable economy and government.
• English is widely spoken by a multi-lingual, experienced and qualified workforce.
• Local currency valued at far below the euro, dollar and pound sterling, allowing foreign investors to buy a lot more for their money in Malaysia.
• Property prices per square metre in all major Malaysian towns and cities are at a fraction of the cost of similar investments in many other worldwide destinations.
• Great demand for quality new real estate from an affluent expatriate market.
• Malaysia ranks among the top three countries among the 53 Commonwealth countries for the greatest number of tourist arrivals, according to the World Tourism Organisation.
• Malaysia attracted 20.88 million foreign visitors in 2007, representing a 19% rise on the previous year
• Location near the Equator, hence a year-round tropical climate, ideal for tourism.
• Extensive, beautiful, white sandy beaches at luxury resort areas offering an escape from hectic life just south of the bustling capital of Kuala Lumpur.
• Low buying costs currently at between 3.4 to 6.75% of the property value.

How to Avoid Making Costly Property Investment Blunders

Real estate investments enable you to accumulate wealth and to you attain your financial goals within a desired timeframe. Unfortunately, many novice investors who lack an understanding of the common real estate investment pitfalls can easily lose instead of make money.

Before jumping in, it’s extremely important to understand and avoid the main causes of failure. These are:

1. Lack of Right Education

The major cause of most real estate investment failures is probably careless investing. Many beginners start off by listening to friends and family members. They get free advice on what works and how to succeed. What they may not realize is that free advice can be very expensive. It may be the case of the blind leading the blind. Learning to invest from people who have only bought one or two properties in their lifetime via the trial and error method is time-consuming, frustrating and expensive. You pay with mistakes – costly mistakes! One wrong property purchased can cost you thousands of dollars and may take a few years of your life to undo the damage done!

With a small investment of time and money, you can easily avoid costly mistakes and reap profits from day one. Take the time and trouble first to read all the relevant property investment books and attend educational courses on this subject. After all, the best real estate you can ever invest is in the real estate between your two ears! You should also look for the right mentors who started at the same financial position as you - and who has achieved success with several properties. Learn from their experiences, avoid their mistakes and replicate their successes.

2. Inadequate Research

Another major cause of real estate investment failure is inadequate research. While it’s not that difficult to find investment properties, finding the one that is profitable is another story. Many become so excited about owning a property that they get blind-sighted. They may buy a property that looks good on the surface rather than investing time and effort doing research.

A savvy investor would usually watch the market for a few months before diving in. He would select a few specific locations and get to know it well. He would get to know all the negotiators specializing in that area and details of all properties available for sale and those that have been transacted in the last few months.

By doing these, you will acquire a solid foundation needed to determine which properties and locations make investment sense. When the right property in the right location comes up at the right price, you would be able to confidently purchase it without any hesitation.

3. Emotion-Based Decisions

The third major cause of real estate investment failure is emotion-based decision making. Successful investing is purely a numbers game and it’s done without any emotions.

One of the biggest challenges a real estate investor has is in studying the numbers on each and every potential property. It takes discipline and experience to pass on properties that may look good initially, but don’t stack up number-wise. Buying based on emotions or impulse can cost thousands of dollars, hours and headaches. Before investing in real estate, ensure purchase decisions are based not on emotional reasons, but on sound facts and figures. Whenever in doubt, it’s advisable to get appropriate impartial advice from other like-minded property investors.

4. Paying Too Much

Another major cause of real estate investment blunder is paying too much for a property. Once the papers are signed, few things are worse than discovering you paid more than you should have. Paying in excess of a property’s worth requires time to recoup the extra expenses and lowers your return on investment.

While individuals who buy property to live in are prepared to pay more for emotional reasons, investors should always aim to pay the fair or lower-than-market price. It’s all about the numbers. Conduct thorough research on the area and compare prices to ensure you can get a decent return on investment. Also, get a valuation report before confirming your purchase price. In property investments, profits are made at the point of purchase, and not at the point of sale. Buying is entirely within your control, whereas selling a few months or even a few years down the road may not be entirely within your control.

5. Lack of Direction and Commitment

One more cause of real estate investment failure is lack of direction and commitment. Treat your real estate investments as a serious business and not a hobby. Hobbies don’t make much money, businesses do!

If you treat real estate investing as a hobby that you indulge in whenever you feel like it, you’ll get hobby results. If you set aside the time and treat is as a business, you’ll be able to earn a profitable outcome. For example, one of my seminar graduates made over RM1 million in profits by flipping over 10 properties in the last 5 years. He treats his property investments as a serious business sideline and his goal is to flip a minimum of 2 properties each year.

6. Neglecting Inspections

The sixth major cause of real estate investment failure is neglecting inspections. Buying old properties are riskier, compared to buying brand new from a reputable developer. Obviously, the older the property, the greater the risks. But the risk factor can be reduced when you take all the necessary precautions and budget additional expenses for repairs.

Professional inspections are a must when investing in real estate. You may find properties that seem like bargains to the untrained eye, but an expert inspector could discover thousands of dollars in repairs that are necessary to keep the property running. While inspections do add one more cost to the investment equation, they’re necessary to the successful real estate investor.

Property Investment

• As a foreigner, you are allowed to invest in any residential property as long as the price is above MYR 250,000 for other states in Malaysia (or above MYR 350,000 for certain parts of Sarawak and above MYR 500,000 for the state of Selangor)

• Foreigner can invest in raw land zoned for residential purpose, landed bungalow, semi detached villa, terranced house, townhouse, apartment unit of any size and condominium. The property can be bought off the plan from the developer or as a completed property. The property can be either leasehold or freehold.

• The only restriction is that any property that is restricted to bumiputra (native) ownership cannot be bought.

• Currently all property transactions in Malaysia are exempted from real property gain tax. Thus the seller does not need to pay any tax on the profit on disposal of property. However, as part of the condition of ownership imposed by individual states of Malaysia, foreigner will need to apply for an approval to sell the property if the ownership period of the property is less than 3 years.

• Aubella can assist you in organizing an exploratory trip in the following states of Malaysia to understand the property market of the particular area:
  

  • Kuala Lumpur & Selangor

  • Penang

• Aubella could also specially designed a trip for you if the pre-arranged exploratory trips are not up to your satisfaction. Please click here for more information.

• Once you have decided on the investment, the standard property purchase procedures is as followed:

1. Buyer sign the sales form of the property, a deposit of between 2% to 5% is placed, depending on the terms and conditions of the property sales.

2. Aubella will then introduce a qualified lawyer to execute the sales and purchase agreement for the buyer (if need be) and arrange for bank loan (if need be).

3. Once the prevailing conditions on the sales form are fulfilled, Buyer will need to sign the sales and purchase agreement. At this stage, the remaining of the 1st 10% of the selling price of the property will need to be paid by the buyer.

4. The rest of the payment schedule, delivery of the title etc will be spelt out in the sales and purchase agreement. For completed property usually the remaining 90% of the selling price is paid within 90 days from the date of the agreement. For property currently under construction the developer will collect up to the progress billing.

• Once you have taken full ownership of the property, Aubella can then assist you in getting tenants who are currently participating in Malaysia My Second Home, or long-stayer who intend to join this program.

Benefits for Malaysia My Second Home Program

• As a participant under Malaysia My Second Home program, you will be entitled to withdraw MYR 50,000 if you join Malaysia My Second Home as an over 50 years old participant; or MYR 150,000 if you join as a below 50 years old participant, after owning a residential property in your personal name or jointly with your spouse.

• Alternatively, if you haven't join Malaysia My Second Home yet, and your total investment in residential properties in Malaysia under yourself or jointly with your spouse exceeds MYR 1 Million, then you are eligible to join Malaysia My Second Home by just placing MYR 100,000 if you are above 50 years old; or MYR 150,000 if you are below 50 years old.

10 Reasons Why Malaysia is Your Preferred Property Investment Destination

Make Malaysia A Choice Property Destinations

PRIME Minister Datuk Seri Najib TunRazak has urged property players to give more emphasis to the identity, function and sustainability of their projects to make Malaysia a preferred destination for real estate. He said the reputation of local properties for quality should be reinforced through promoting a Malaysian identity. "We should not have a skyline which is indistinguishable from any other city in the world," he said at the official launch of the Malaysia Property Incorporated (MPI) in Kuala Lumpur today. "We are proud that our iconic buildings like the Petronas Twin Towers and Menara Dayabumi have Malaysian and Asian aesthetics," he said in his speech which was read by Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop. Najib said Malaysian properties should be truly functional to meet the needs of its users while understanding and taking into account, local factors such as weather and the culture. "A focus on function means that a property should not be just a physical structure of brick and mortar but one which truly supports the activities and lifestyle of its users. "At the same time, it must be well integrated into the surrounding community," he added. When it comes to sustainability, he said the government was focused on promoting the use of green technology, which also includes encouraging the development of energy efficient buildings.