Standard Procedure of Purchasing / Renting a Property In Malaysia

Selling & Purchasing a Property In Malaysia

Pay 4% of purchase price as earnest deposit (Sign letter or offer).
Pay 6% or purchase price 14 days later (Sign Sale & Purchase Agreement).
Pay 90% of purchase price 3+1 month later.

Professional Fee:
Schedule 7(C)(1) uner Rule 48 (a) of the VALUERS, APPRAISERS AND ESTATE AGENT RULES 1986, provide: The scale of Fees to be charged by registered agents for their professional services for the Sale & Purchase of Land and Buildings shall be:
a) Land and Buildings – Fee of 3%
b) Fees for other services such as joint venture, sale of company, property swaps, etc. – Fee of 3%
c) Chattels including Plant and Machinery – 10% of the proceeds

plus 6% Government Service Tax, payable by the Landlord.

Renting a Property
Residential
-One (1) month rental (Advance Rental) as Earnest Deposit (sign letter of offer).
During handover keys/vacant possession & sign tenancy agreement by paying:
-Two (2) months rental Refundable Security Deposit
-Half (1/2) month rental Refundable Utility Deposit (Electricity, Water, Sewerage)
-Stamp Duty and disbursement

Commercial
-One (1) month rental (Advance Rental) as Earnest Deposit (sign letter of offer)
During handover keys/vacant possession & sign tenancy agreement by paying:
-Two to Three (2-3)months rental Refundable Security Deposit
-One (1) month rental Refundable Utility Deposit (Electricity, Water, Sewerage)
-Stamp Duty and disbursement

Professional Fee charged by registered agents equivalent to One (1) month’s rental plus 6% Government Service Tax, payable by the Landlord.

BMI underlines risks, opportunities for M'sia property sector

Despite a generally upbeat forecast, the real estate sector is still set to face several risks, according to the Real Estate Report of Business Monitor International (BMI).

A moderation of growth in the country's economy may dampen investments and businesses could put on hold their expansion plans and wait for better growth. Aside from this, some local property developers are also eyeing overseas prospects, following increasing domestic land cost which spoils their interest towards new development opportunities in the country.

Moreover, experts are warning over a possible office supply glut this year, which could greatly affect rental prices which have remained healthy, read the report of BMI.

Despite the risks, BMI still sees many opportunities in Malaysia's real estate sector. For instance, overseas investors are expected to reach Malaysia's shores in the coming months. Middle Eastern businesses that are avoiding the Eurozone and the US due to debt fears will likely select Malaysia as an alternative.

Likewise, infrastructure plans under the Economic Transformation Programme (ETP) will boost the image and reputation of several local companies involved in their development, and these would improve investor perception of Kuala Lumpur, especially its surrounding areas, noted the report.

Furthermore, BMI stated the Malaysia's property sector is reasonably upbeat as the country weathers the downturn in the Eurozone and the US. Based on interviews in December 2011, the market is perceived as not yet being saturated, and investment could continue to climb as players seek more stable markets than the Eurozone and US.

Professional real estate degree course

KL is Asia's most attractive property investment market

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."

Mah Sing opens office in Shang Hai

Mah Sing Group Bhd seeks to capitalise on the growing interests of Chinese investors in Malaysian properties by opening a representative office in Shanghai, which features the group'scommercial and residential properties.

The Shanghai office functions as Mah Sing's business liaison with localcompanies and regulators in China, as the group explores the potential of the property sector in the country.

It will also conduct product and market research, brand promotion, marketing and coordination of Mah Sing's activities in China.

"In terms of accessibility, climate, culture, livability, and political stability, Malaysia is an attractive avenue for Chinese property investors," said Tan Sri Sri Leong Hoy Kum, Managing Director and CEO of the group.

He noted that the Shanghai representative office serves as another milestone for Mah Sing to firmly establish itself as Malaysia's leading property developer of choice by Chinese investors.

Some of the developments which could attract Chinese investors include residential suit and boutique shops MCity Jalan Ampang, resort-style living Icon Residence Mont' Kiara and mixed commercial development Icon City Petaling Jaya.

Property market expected to see slower growth this year

Malaysia's property market will likely experience slower growth of around 10 percent this year compared with 11 percent growth last year, according to CH Williams Talhar & Wong in a report by Bernama.

"We will see further growth but at a very much lower pace," said Foo Gee Jen, Managing Director at CH Williams Talhar & Wong.

He noted that home price increases was primarily attributed to cost rather than demand, fuelled by higher prices of construction material and labour shortage.

On the other hand, high-end condominiums and offices will likely witness an oversupply, with supply condo units expected to see an increase of up to 50 percent, as 13,716 units would be coming in the pipeline over the next five years.

Meanwhile, condominium rentals and occupancy rates could see a downtrend this year but good demand for condominium properties will likely see an increase in areas such as Mont' Kiara and KLCC.

In a report by StarBiz, president of the Malaysian Institute of Estate Agents (MIEA) Nixon Paul said it is better to invest in the high-rise market now as per this forecast.

"We are one of the cheapest in the region and if you are looking to invest over the long term, say 10 years, now is a good time to get into the condominium market. Over the next decade, prices will appreciate."

He noted that increasing property prices in the country had forced many home buyers to acquire property away from the city.

"I do feel sorry for the average guy, but if you look anywhere else in the world, it's a natural progression. Those who can't afford it live further away from the city."

MIEA predicts a slowdown in the high-end residential property sub-sector this year, as many property hunters likely to maintain their wait-and-see attitude due to global economic uncertainties.

"There is a lot of caution now due to the uncertainty in Europe and the United States. With fear of a potential spillover effect, most buyers are adopting a wait-and-see' approach," he said.

'Home & Abroad' themed MAPEX 2012 to showcase foreign developments

Congruent to the success of its previous instalments, this year's first Malaysia Property Exposition (MAPEX) 2012 on 2-4 March 2012 will feature top property developments from other parts of the world.

With the theme 'Home and Abroad', international property players from Thailand and the Philippines are set to showcase overseas projects alongside Malaysian developers throughout the three-day expo, which is organised by the Real Estate and Housing Development Association (REHDA) Malaysia.

Speaking at a press conference yesterday, MAPEX organising chairman Datuk Ng Seing Liong stated, "About four to five companies from foreign countries have confirmed participation and the list is expanding as we are awaiting confirmation from Australian and UK participants."

He added, "We are expecting at least 50,000 visitors to this upcoming MAPEX, which is currently seeing 85 percent of its 250 booths having been taken up."

Also at the press conference was NK Tong, chairman of REHDA Federal Territory of Kuala Lumpur, who informed: "At least 20 exhibitors at this MAPEX 2012 have committed to four booths each. I think this will be very interesting for the consumers and visitors, compared to last year when it was a relatively quieter time for the Malaysian property market."

Currently about 85 companies have confirmed their participation for this MAPEX 2012, among which are top developers that will be showcasing properties throughout the Klang Valley, Johor, Malacca, Negeri Sembilan, Pahang and Perak at MAPEX 2012 including the likes of Berjaya Land Bhd, IJM Properties Sdn Bhd, PPC Glomac Sdn Bhd, Sunway Integrated Property Sdn Bhd and UEM Land Bhd.

Major banks and financial institutions will be offering attractive and competitive financing packages for buyers while government agencies will also be at hand to answer any relevant queries that visitors might have.

Going into the 13th year since its first expo, the national-level MAPEX is held twice annually, with the second instalment for 2012 to be held on 19-21 October.

Admission to MAPEX 2012 is free and operating hours on all three days are from 10AM to 9PM. More information can be found at www.mapex.com.my.

SPNB's move over abandoned projects gets mixed response

Syarikat Perumahan Negara Bhd’s (SPNB) announcement that it will no longer revive abandoned housing projects due to a policy change has generated a mixed response from the public.

Chang Kim Loong, Secretary-General of National Housebuyers Association (HBA), praised the decision to transfer the duty to the Housing and Local Government Ministry via the Commissioner of Buildings.

Under the new policy, the ministry will collaborate with private developers in reviving abandoned housing projects.

“This move will encourage the ministry to be more vigilant in issuing licences to developers, as the ministry will also be responsible for the projects should it be abandoned,” he said.

Chang noted that the move could improve the accountability and transparency of the parties involved and make the process faster and smoother.

However, Datuk FD Iskandar, Deputy President at Real Estate and Housing Developers Association (REHDA) disagreed, saying it will be difficult for private developers to take over housing projects from the previous parties.

“The original developers and bankers are often reluctant to hand over their projects to a white knight, thinking that they can still make profits from the project,” he said.

Also, the process of reviving abandoned projects must be a modified to encourage private developers to complete the said projects, he added.

Upmarket estate agencies widen global network

High-end residential estate agencies across the world are persistently looking to expand their global networks, amid the generally gloomy outlook in the economy, according to The Financial Times.

One of these agencies, Knight Frank, is eyeing to increase its existing offices across 78 cities globally and plans to crawl into 100 cities by 2016.

"Significant developments in the last year have included the growth of the India team to a national force of over 800 staff, an increase in staffing across Asia Pacific and new offices opened in Austria, Switzerland, Romania, Abu Dhabi, Chennai, Hyderabad and the UK," said Nick Thomlinson, a senior partner at Knight Frank.

"Indians are looking to buy in Singapore, Malaysian buyers are looking within their region, Hong Kong Chinese buyers are looking in Phuket and Abu Dhabi buyers buy in Malaysia," he noted.

This is why they are planning new branches to serve local demand for local property aside from providing referrals to other offices inside the network.

"It is not just the movement of money out of an area," said Thomlinson. "You must also be able to sustain business within the market."

Meanwhile, Sotheby's International Realty has recently added its UK representation to serve more buyers. In the next two years, the agency plans to launch eight more branches within the country.

"Some of the places we are thinking of moving to will have international appeal," said Charles Smith, managing director of Sotheby's International Realty UK, adding that the company is moving into areas beyond London, as overseas buyers are starting to venture outside the capital.

International property adviser Savills has also expanded in London and in South-east Asia.

"Expansion of the residential business is a long-term game, and while there is going to be more short-term pain, as the eurozone crisis is going to take time to reach terra firma, we are convinced that the trend of buyers exporting wealth abroad will continue," stressed Rupert Sebag-Montefiore, Head of Global Residential Real Estate Business at Savills.

"In turbulent times, high net worth individuals are reassured by property as an asset."

In the case of Christie's International Real Estate, it has opened an office in Hong Kong with 20 more affiliates' offices coming across the Asia-Pacific region, Middle East and Moscow in three years' time.

Iskandar minimally impacted by bleak global economy

Despite the bleak global economy, Iskandar Malaysia will continuously receive investments and undergo prolific development, said Datuk Nur Jazlan Mohamed, Chairman at UDA Holdings Berhad.
Its rapid growth would be supported by the political decision of Singapore to build the South Johor economic corridor together with Malaysia.

Nur Jazlan, the MP for Pulai, said the republic is supportive of Iskandar Malaysia's success which entails an ensured economic security for Singapore.

Launched at the end of 2006, Iskandar Malaysia has earned RM82 billion in foreign and local investments, and is now considered the most successful economic corridor, among all economic corridors in other states.
Nur Jazlan believes businesses in the republic should transfer to Iskandar Malaysia considering the high cost of doing business in Singapore.

"Job opportunities here will increase and Malaysians need not go to Singapore to work if they relocate here," he noted, citing the 40,000 Malaysians who commute daily to work in Singapore.
The corridor's success, however, should discard negative impressions on Singapore's involvement in Iskandar and Malaysia, he noted.