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."
No comments:
Post a Comment