Property Investment in Malaysia Amidst Decline in Local Property Market
By Richard Lim
Singapore's property market has been in decline since a series of cooling measures introduced by the government on 12 January 2013 was swiftly followed by an increase in property tax and loan restrictions. The impact of these regulations has been drastic and swift. According to Property Guru, only 769 private residential units were sold in April this year as compared to the 1556 units sold in the same month last year.
A Tale of Two Cities
Facing these obstacles, it is of no surprise that local investors have turned their attention to the young and promising property market in Malaysia. In steep contrast to the cooling property market in Singapore, the property market in Malaysia is rapidly growing against a background of strong economic growth and liberal government policies that encourage foreign real estate investment.
Local investor of Malaysia properties and developer Mah Sing Group revealed some valuable insights on property investment in Malaysia in the recent Wine Appreciation Night, organised by Mah Sing Group on 19 June.
Consistently ranked in the top ten property developers in Asia by publications The Edge and BCI Asia, Mah Sing Group is renowned for the strategic locations of its developments and iconic architecture.
Affordability and Good Investment Prospects
Malaysia promises many things that local investors seek in a young and rising property market- a steady yet rapid capital appreciation, all at low investment costs.
To these buyers, the affordability of properties and their investments prospects in relation to their locations are key factors.
This was the case for Mrs Catherine Ng, who recently purchased a unit in M City, an upcoming residential development in Kuala Lumpur by Mah Sing Group. She said, "Price-wise it is much more affordable than in Singapore. It also has a good location as the government is planning to establish an MRT nearby and a financial hub in the region."
Another buyer, Ms Michelle Lee, expected an increasing influx of immigrants and travellers into the region in the near future. "This will improve rental income and capital appreciation," she said.
An Alternative Holiday Home
These luxurious lifestyle residences in Malaysia can also be used as dainty holiday homes. This provides investors with more flexibility and an additional dimension of value.
Mr Teo, who recently purchased a residential unit in Southbay Plaza in Penang, chose to wait and see before deciding what to do with his purchase. He said that if the investment returns are not good, he can always use it as an alternative family home. Similarly, Mrs Catherine Ng visits Kuala Lumpur often and plans to use the property as a holiday home if she is not renting it out. "This makes the investment sustainable." She said.
It is no surprise that local investors have turned their attention to the young and promising property market in Malaysia.
Mr Andy Ng, who purchased a unit in Icon Residence in Mont Kiara, Kuala Lumpur, said that he plans to use the property as his retirement home if he is not selling it.
Credibility and Reputation of Developers
Many investors at the event considered the reputation of Mah Sing Group as a major factor in making their purchases. Investments in upcoming developments always carry the risk of developers abandoning their projects, or turning insolvent before the development is completed. Foreign investors are particularly vulnerable as they are often less able to monitor and to protect their investments.
Ms Angie Tan, a regular customer of Mah Sing Group, said, "Mah Sing is a very reputable developer. Overseas investors are often more comfortable with reputable investors, even if the prices are higher."
Mr Andy Ng also shared his insights, "The credibility of the developer is very important. Mah Sing is one of the top three property developers in Malaysia. They are too well established to run away,"
Transforming the Business of Property Development
The presence of successful and competent property developers is integral to a growing property market.
Mr Vincent Tan, Head of Mah Sing office, ascribed Mah Sing's success to the firm's approach towards property development.
"In many modern property transactions, buyers purchase not just a building, but also a lifestyle. We have always taken pride in being a leading lifestyle developer." Mr Tan said.
"On the whole, we emphasise a lot on a green and healthy lifestyle, but we also have specific lifestyle theme for different projects. For instance, the theme of Southville City is connectivity, and we plan to build a 13 km bicycle track connecting over 400 acres of building and greenery."
Of particular note is project M City, developed on a concept of luxurious and integrated living. "M City is a horizontal city by itself. And with features such as the five thematic hanging gardens, M City incorporates extensive greenery in its design." Mr Tan explained.
Mah Sing Group also places a particular emphasis on customer service. As Mr Tan revealed, many of these services are catered for foreign investors. For instance, the company offers panel agents to find tenants and secondary buyers for foreign investors. There is also a dedicated team specially trained to handle customer requests and after-sale inquiries.
With these initiatives, Mah Sing Group looks to transform the business of property development as it offers not just property, but also service and a lifestyle.
The Results
The hype on property investment in Malaysia is backed by concrete results. Many investors at the event were satisfied with their purchases. "In such a short time span, the price of my unit in M City has already gone up." Ms Michelle Lee said.
In this regard, Mr Ng of Mah Sing Group offered a timely warning. "Property investment can be immensely satisfying, but don't overburden yourself with debts and liabilities. Only invest if you are truly comfortable."