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Malaysia Property Market: Resilience Through Versatility
October 1, 2009Article by Ray Withers
The Malaysia property market is currently in a transitional phase, as are several other Asian nations. The situation is that these nations became the target of overseas property investors, who would buy luxury property at the top end of the real estate sector. Both the government and developers adapted their strategies to maximise the potential benefit from these new big spenders.
In Malaysia this led to things like the capital gains tax being abolished, and like the other countries, developers began to focus their operations on high profile luxury developments aimed at the foreign buyer.
Then the international downturn set in and foreign buyers got thin on the ground, at which point developers began to see the opportunity for developing low profile affordable housing developments. Demand for such properties had been growing while the developers concentrated on the luxury sector.
Now the foreign buyers are starting to return. We will have to wait and see how the face of property development in Malaysia changes to deal with this.One must note two things to try and get a clear picture of what this may mean for the Malaysia property market:
There are luxury developments left over from the last boom, that are now nearing completion and priced a lot lower than they would have been at conception.
The foreigners returning to market are predominantly lifestyle buyers, mainly families looking to relocate (see comments below).
According to investment consultancy Property Frontiers, there is a lot of activity in the Malaysia property market from families looking to relocate, mostly to Kuala Lumpur. This is because English is widely spoken in Malaysia, foreigners can easily find mortgage finance, and all contracts are in English.”The profile of those currently looking at buying property in Malaysia is young couples, some with kids some without, who want to move to Malaysia for better job opportunities and/or quality of life,” said Ben Jeffries, a sourcing manager with the firm.
This type of buyer would usually be looking for a small house or affordable apartment, but this is not possible in Malaysia, because foreign buyers are only allowed to buy luxury property costing more than 250,000 Malaysian Ringgit. Though, at the current conversion rate this is only £45,000, the developments in Malaysia at that price are luxury developments — mostly condominiums and villas.
Particularly popular with this buyer class is the Axis Residence Deluxe in Kuala Lumpur, according to Jeffries.”Axis is very popular, luxury apartments in a well equipped development with a tremendous array of facilities and amenities give it the kind of value for money that sells itself. The couples are snapping up the two beds, while the families are taking the 3 beds,” he said.