property investments malaysia

Malaysia is a multi-religious and multi-ethnic country regarded as among the wealthiest and developed countries, outranked by Singapore and Brunei in GNP. in the past years, the country has shown strong domestic demand. More recently, Malaysia’s export industry outperformed most Asian countries amid global trade uncertainties, as reflected by the Institute of Chartered Accountants in England and Wales (ICAEW) survey. 

The country’s economy helped support Malaysia’s infrastructure, particularly noticeable in the capital city of Kuala Lumpur. The city boasts of a modern light rail transit system, upscale shopping centre, and luxurious residential development projects. 

Unlike other neighbouring countries, Malaysia is not dependent on tourism. Still, the country is a hotspot for tourists thanks to the country’s well-maintained tourist attractions. While prices of rental properties rose in the past few years, they are still much more affordable than its neighbouring countries. 

Malaysia Economic Status

In its 50 years of independence, Malaysia has successfully emerged as one of Southeast Asia’s wealthiest countries. Based on the Heritage Foundation’s Index of Economic Freedom, Malaysia ranks 22nd, with an economic freedom score of 74.0, decreasing by 0.5 points. The decline in the score is due to fiscal health, government spending, and judicial effectiveness. In the 43 countries in the Asia-Pacific region, Malaysia ranks 6th.

Many international businesses choose to do business in Malaysia because of its open trade regime. The country does not mandate minimum wages, and they have lax labour regulations. However, it is also a disadvantage for some, mainly because the judicial system is vulnerable to politics. In the World Bank’s Doing Business report, Malaysia occupies the 15th spot for the world’s most pro-business regime. Moreover, Transparency International ranked the country as 61st of the least corrupt nation out of 180 countries – one drawback that pushes away investors. 

According to the International Monetary Fund (IMF), Malaysia’s economic status posted higher than expected growth at 5.8% for 2017 and 5.3% for 2018. These figures, IMF pointed out, will bring the country to high-income status. To achieve this, they have to boost productivity and raise living standards for its population. 

Based on the World Bank’s Human Capital Index, Malaysia takes the 55th spot out of 157 countries. This ranking means that to realise its human potential of being a high-income status, Malaysia must take a proactive role in introducing educational, health and nutrition, and social protection advancements. 

Liveability in Malaysia

Malaysia is among the most liveable countries in Asia. According to the ECA International’s location rating survey, Kuala Lumpur ranked 98th out of 100 most liveable cities for Asian expats. George Town ranked higher than Kuala Lumpur in the 97th spot. 

Lee Quane, ECE International regional director for Asia, said that Malaysia ranked higher in the last survey because the country continues to improve its infrastructure. Advancements in the road and transport infrastructure resulted in ease of access that was once remote. 

Malaysia is a relatively safe country. Crimes against foreigners are often petty thefts like snatching and pickpocketing. In terms of cost of living, Malaysia has a low cost of living and high quality of life. The government is encouraging foreigners to retire in the country since having a fixed income is well enough to sustain a comfortable lifestyle. The country has tons of expat communities that are successfully thriving. 

Property Investments in Malaysia

Since 2009, the property market of Malaysia has consistently posted high numbers. However, most of this growth plateaued towards the end of 2016. However, most prices increased by the last quarter of 2016 with a 5.36% year-on-year. 

House prices in Malaysia depend on the location, with the priciest properties seen in the capital city of Kuala Lumpur. Average house prices in Kuala Lumpur can take you back at $173,900, double the national level. 

It is pretty standard for foreigners to buy a home in Kuala Lumpur rather than rent. Since the country has low property purchase fees and the government offers low-cost loans to encourage young people to buy. 

Foreigners who wish to make property investments in Malaysia must make sure they are buying a property with a price higher than the state threshold. Note that some states also implemented regulations on the types of properties foreigners can buy. There are places where foreigners can only buy homes located in gated communities. 

Property Market Trends in Malaysia

Residential transactions in Malaysia seemed to have bottomed out, according to the data provided by the JLL. In the past year, the number of transactions and total transacted value only posted a marginal increase of 1.4% and 0.4% year-on-year, respectively. 

Since 2001, house price index growth is slowing down due to weaker demand for higher-priced properties. This weaker demand has led to the government and developers working on to provide more affordable properties that would sell out fast.

Terraced homes and semi-detached homes posted an increase of 4.6% and 0.2%, respectively. 

CHG Recommendation: Consider Buying a High Rise Property in Sabah

CHG recommends overseas property buyers to consider investing in high rise properties in Sabah. Property developers are now doubling their efforts to provide residential projects for foreigners under the MM2H. Sabah, in recent years, has had one of the highest growth rates in tourism. It would be best to invest here as the demand for holiday property will rise in the coming years. The state capital city of Kota Kinabalu is an ideal place to make property investments in Malaysia. Investors can also make profitable gains by investing in Karambunai Peninsula and Bandar Sierra. 

Property investors who want to invest in newly built high-end properties will have to wait until the local government lifts the ban on high-end property development approvals. Government restriction covers properties that cost more than 1 million Malaysian Ringgits. 

Perak, the second-largest state of Peninsular Malaysia, has high-end developments that do not cost as much as those that can be found in more urban areas like Kuala Lumpur or Penang. Ipoh is slowly becoming one of the top property investment areas in Malaysia.

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