Investors across Asia-Pacific seeking to diversify their portfolios
with affordable, mid-range properties, are turning to Malaysia's
well-regulated market for long-term and secure investment opportunities.
Strong economic fundamentals,
freehold land title, no property tax after five years of ownership, a
healthy rental market and a legal system that gives equal treatment to
both citizens and non-citizens have seen Kuala Lumpur (KL) emerge as Asia's most attractive property investment destination.
Tim Murphy, Founder and CEO of IP Global, predicts increased demand for the KL property market from Hong Kong and China in the coming months.
"The
property market in Malaysia has remained stable during the global
financial crisis and we are expecting it to improve substantially over
the next 12 months," says Murphy. "In total, we have sold 754 units in
KL since 2006. Capital returns are impressive; assuming a 70 percent
mortgage, absolute returns over a five-year period are up to 137 percent
for USD based investor."
The Malaysian government views the real
estate sector as a key pillar of economic growth. For property
investors, KL's value and affordability make it a prime choice ahead of
other regional hub cities like Hong Kong and Singapore.
In addition, the city's emergence as a regional hub for business and
finance is being enhanced by huge government infrastructure spending,
including the opening of Terminal 2 at KL International Airport in 2013,
and expansion of the LRT metro system.
Property prices in
Malaysia's capital have risen 25 percent since 2009, compared to 44
percent in Singapore, and 45 percent in Hong Kong. Average square foot
price in Malaysia is just RM747 psf, compared to RM6,734 (S$2,800) psf
in Singapore, and RM8944.83 (HK$23,124) psf in Hong Kong.
Apartments
also tend to be larger, with average sizes ranging from 600-3,000 sq ft
in KL, compared to 500-2,500 sq ft in Singapore, and 400-2,500 sq ft in
Hong Kong.
Market access is also relatively easy. Foreign
nationals are able to own property in their own name in Malaysia, and
mortgage rates averaging between 4.3-4.4 percent are freely available. A
minimum property purchase price of HK$1,282,129 (RM500,000) for foreign
nationals is enforced, but there is no stamp duty for foreign buyers
like the cooling measures in place in Singapore and Hong Kong. Land
title in Malaysia is freehold and there is no property tax for gains
made on properties held for at least five years.
Business
confidence in Malaysia is at an all-time high. Goldman Sachs recently
called the Malaysian economy "a safe haven in an uncertain environment."
The Organization for Economic and Cooperative Development (OECD)
forecasts that Malaysia's GDP will expand by 5.3 percent annually in the
next four years. Meanwhile, a surge of Foreign Direct Investment (FDI)
activity- which rose by 43 percent, to US$8.3 billion, during the first
nine months of 2011- resulted in AT Kearney ranking Malaysia as the
world's 10th most attractive FDI destination. The Malaysian ringgit
continues to appreciate significantly against all benchmark currencies.
KL's diversifying property market is currently witnessing a "flight to value" effect, as residential and commercialdevelopers
seek comparative value in suburban districts with easy access to Kuala
Lumpur City Centre (KLCC). IP Global is now offering two investment
opportunities in Kuala Lumpur. The two residential developments are
Central Residence, in the fast-developing district of Sungai Besi; and
The Richmond, in fashionable Mont' Kiara district.
In Sungai Besi,
the Government sponsored re-development of the 162-hectare Sungai Besi
Airport into a multi-billion dollar residential and commercial zone will
anchor the area's economic transformation over the next decade. Already
a fashionable location for wealthy Malaysians and expatriates, Mont'
Kiara offers excellent shopping, nightlife, international schools and
medical facilities, and will benefit from the expansion of the LRT
network.
"The two high-quality developments of The Richmond and
Central Residence fit perfectly with KL's growing profile as a business
and finance hub in Southeast Asia, both developments were sold out as
investors' hot picks in phase 1, 50 Central Residence units have been
sold since November 2011. We are now having phase 2 sales," says Murphy.
"Mont' Kiara and Sungai Besi are very attractive areas for expatriates
and white-collar workers renting properties because they offer a quick
commute into KLCC, and price per square foot can be up to 33 percent
cheaper than in comparable KLCC properties. In total we have now sold
754 units in Kuala Lumpur since 2006, investors with average leveraged
return 48.1 percent."
