When it comes to real estate investment, Malaysia has always been one of the more popular destinations for Singaporean investors due to the geographical proximity and favourable exchange rates.
In recent years, Kuala Lumpur has gained popularity among investors due to its established infrastructure and a series of mega development plans to boost the city’s economy. Billions of ringgits have been poured into infrastructure development, including the construction of a High-Speed Rail (HSR) connecting KL to Singapore in just 90 minutes and a new dedicated financial district, Tun Razak Exchange.
Now, before you jump on the bandwagon, here are 5 things that you should look out for when investing.
- It’s Foreigner-friendly
Foreigners are allowed to purchase property in Malaysia although it is important to note that there is a minimum purchase requirement for Foreign Buyers. The minimum purchase requirement is MYR1mn but in the state of Penang and Selangor, it is MYR2mn. Also, foreigners are allowed to purchase landed properties but only if they are in gated communities.
That means, as a foreigner, you will be looking at the mid to high end residential market.
- Location, location, location
Every seasoned investor would say that location is probably one of the most important factors when it comes to purchasing a property.
As a foreigner, if you are looking to invest in the mid to high end residential market, consider these 3 questions: 1) What’s fundamentally driving demand in the area, is it redevelopment? 2) Is the location well connected to transportation and infrastructure? and 3) Does the location have a positive future outlook?
We recommend looking at areas where there are mega development plans and improved transport infrastructure (LRT, KTM or MRT) as this appeals to both investors and tenants. Relook at central areas such as Kuala Lumpur City Centre (KLCC) where prices have stabilized and where you can expect transformation from the development of TRX, Bandar Malaysia and the upcoming KL-Singapore High Speed Rail.
In general, properties in the KLCC area have become the first pick for most foreign investors and domestic buyers in recent years.
- Choose a reputable developer
Malaysian developers tend to favour the “sell and build” concept, where the developer begins selling before construction work begins. There have been cases where less reputable developers have abandoned the project due to lack of financing. It is therefore important to buy from reputable developers with positive reviews in terms of quality and track record. Here are some of the more reputable developers in Malaysia (ranked in no specific order)
- Tropicana Corporation
- Bandar Raya Developments Berhad
- Sime Darby Property Berhad
- IOI Properties Group Berhad
- Mah Sing Group Berhad
- IGM Land Berhad
- UEM Sunrise
- IGB Corporation
- S P Setia Berhad
- Sunway Property
- Gamuda Land
- Dealing with real estate agents
It can be confusing when searching for a real estate agent in Malaysia. Unlike Singapore where all real estate salespersons are CEA-licensed and termed “Agents”, you may find different titles when trying to find a real estate agent in Malaysia. Amongst the many titles, “real estate negotiators (REN)” and “real estate agents (REA)” are the most frequently confused.
First things first, real estate negotiators are slightly different from real estate agents
Although both REN and REA are legal estate salespersons, there is a slight difference between the two. In Malaysia, real estate agents must possess a certain level of experience, knowledge and education before being granted a license by the Board of Valuers, Appraisers and Estate Agents (BOVAEA), which is the Singapore Council for Estate Agencies (CEA) equivalent in Malaysia. A real estate negotiator on the other hand, is not required to. Instead, real estate negotiators seek employment either on a “Contract of Service” or “Contract for Service” with a licenced Real Estate firm to sell a project marketed by the firm.
Therefore, before you engage a REN in Malaysia do confirm that he/she is legally hired by a real estate firm or a REA.
If you are worried about finding the right agent, try engaging a local Singaporean agent who is familiar with the Malaysia market. You will be well safeguarded by CEA rules and regulations and he / she would be easily accessible.
- Consider service apartments especially if you are looking to buy in the central area.
Service apartments mirror what you’ll find in a condominium but are in fact commercial units, that are fully-furnished and typically comes with services such as housekeeping, room service, fitness centres and even concierge services . It may also consist of adjoining retail outlets. On the other hand, condos are private properties meant to be occupied by homeowners or long-term tenants.
However, do note that Service apartments in Malaysia are built on commercial-titled land and owners need to expect higher maintenance fees and utility charges .
So, is it worth it? It depends on the facilities, configuration and location of the service apartment. Those in good locations such as KLCC and Bukit Bingtang areas tend to be more popular among tenants, expats, tourists and business travelers, especially if it’s near the train station as tenants prefer to enjoy the hospitality and service of a hybrid combination of a hotel and condo.
For buy-to-rent investors, service apartments these prime location are extremely desirable simply because of their facilities and close proximity to city, lifestyle spots and major public transportation hubs, making them easier to rent out and therefore less affected by economic fluctuations.