INTERNATIONAL
MesMerising Malaysia While Latin America and the Middle East have some interesting emerging markets, perhaps the most interesting are in Asia, where economic growth continues. Andrew Hawkins, head of international at Chesterton Humberts, points out that “Asia is leading the recovery in economic growth, which underpins property market performance.” Asian countries are seeing the fastest growth in the number of high net worth individuals. In Malaysia, it’s recently grown by 33 per cent and while some of these buyers are now investing in the London market, they’re also putting their money into domestic property. Malaysia is an interesting destination
from the point of view of the property investor, as it offers a guarded welcome. On the one hand it has a government scheme – Malaysia My Second Home – supporting foreigners who want to retire or relocate, while on the other hand it bars foreigners from buying lower priced properties. The minimum price for foreigners was recently doubled to USD 145,000, or MYR 500,000. Malaysia wasn’t immune to the credit
crunch; GDP actually fell 3.6 per cent in 2009 after growing at over five per cent a year since 2002. This hit the property market, which saw prices slightly lower in 2009, together with lower levels of property transactions, but it appears to be recovering fast. The only problem area is high end condos, where over 50,000 unsold units are likely to depress prices gains (though take-up is slowly improving). On economic
grounds, Malaysia looks an interesting location for investment; the cost of living is still low compared to the west, while economic growth is fast. Once commodity-driven, Malaysia is now developing fast into a modern knowledge- based economy, and this together with a large government stimulus package should see economic growth resume this year. Property Frontiers features Malaysia as one of its preferred markets, and points out no visas are required for UK citizens, making it a good choice for holiday properties. Mortgage availability is excellent, even
for foreigners. Eighty per cent loan to value is available, with up to 30 year repayment terms, and local banks can take as little as two weeks to process applications. The one fly in the ointment for investors
46 DECEMBER 2010 PROPERTYdrum
MALAYSIA
Above: Kuala Lumpur Below: Beaches in Malaysia are beautiful.
is that the rental market is rather small; 85 per cent of Malaysians own their own homes and only six per cent of housing need is met by private rental. However yields are good, ranging from 5.5 per cent on larger flats up to eight per cent on smaller condos, and housing law is fairly pro-landlord (though the courts are slow). There are a number of hotspots. Buy to
let property in Kuala Lumpur covers mainly apartments in tower blocks. The city is still growing fast, with the population increasing at five per cent a year according to a recent Economic Transformation Programme report, and
its economic wealth increasing at double that. However tourist resorts
may be the more interesting property as far as UK agents are concerned. Sepang Gold Coast is a
massive development just over an hour’s drive from Kuala Lumpur, targeting the luxury sector. London-based Second Home Malaysia is marketing the Golden Palm resort, 399 properties on a palm-tree- shaped promontory (where have we seen that before?), as an investment; investors can expect a net eight per cent rental yield with a 15 year rental package. Sepang Gold Coast is a relatively new development, but Port Dickson has always been a weekend retreat for Kuala Lumpur residents. Borneo Property, based in West London, is now selling properties there from £134,000.
KUALA LUMPUR
Who is brave enough? Malaysia appears to be the best marketed of these markets in the UK, with a number of agents already involved. However, these appear to be mainly small agencies dealing only with Malaysia; out of the major names in overseas property I checked, only Property Frontiers is yet dealing with Malaysian real estate. That seems a pity, as these new ‘hot’
markets do appear to have long term good fundamentals driving them. Take a step back from the property markets and look at global investment flows as a whole, and it’s obvious that relatively, the developed world is losing ground. Recently, financial adviser Hargreaves Lansdown issued a guide to emerging markets which broke with the advice that investors should put only five per cent of their money into this area. Instead, they suggested 20 per cent as a minimum, and as much as 60 per cent for risk-friendly investors. The same may be true for property; it’s
the emerging markets where the growth is going to be for the next twenty years. But UK agents appear to be missing a few tricks. Most are still concentrating on the traditional favourites of France, Spain, and maybe Italy; other firms are promoting investments in agricultural land or biofuels plantations, rather than trying to sell residential property to shell-shocked customers. Perhaps agents simply despair of being able to attract property buyers who have already burnt their fingers on Bulgarian or Spanish property. But there’s money to be made in emerging markets, for those smart enough to get in now.
Add your own opinions online at:
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