Perhaps I should really think about buying in Malaysia instead of Singapore. Prices there sound dirt-cheap compared to Singapore. Plus freehold…
Of course if I’m going to buy in Malaysia, I might as well explore what Philippines and other countries around the region have to offer.
From Straits Times, September 23, 2007:
“Buying into booming Malaysia
Foreigners grab residential properties in KL and other hot sites, forcing prices to double in prime districts
By Jessica Cheam
SWANKY PROJECTS IN THE KLCC such as The Troika (above) are fetching as much as RM2,000 (S$874) psf. The boom has spread to surrounding districts, including U-Thant, near where the 9 Madge freehold condominium is located.
JUST a few months ago, the notion that sale prices for residential properties in Malaysia would reach the RM2,000 (S$874) per sq ft (psf) mark would have seemed preposterous.
Today, however, swanky and luxurious high-end projects such as The Troika – designed by world-famous architect Norman Foster – in the Kuala Lumpur City Centre (KLCC) have done just that. Only six months ago, homes at The Troika were available at half that price (RM1,000 psf).
Singapore’s property market is not the only one that has surged forward in recent months. Across the Causeway, KLCC is enjoying its own property boom – spurred by various factors, including the relaxation of foreign ownership rules and the elimination of a property gains tax in April.
As a result, Malaysian properties are increasingly catching the investor’s eye – and are now ‘back on the international radar’, said Mr Tim Murphy, the managing director of Hong-Kong based property investment firm Intellectual Property.
Mr Murphy was speaking to 200 investors here in Singapore as part of a series of educational seminars on emerging markets for property investments that the firm is holding this week.
Malaysia and Vietnam were singled out as good ‘buy to let’ investment markets, as property prices in these two countries, although rising, are still lower than those in mature markets such as Singapore and Hong Kong. Prices of high-end homes in prime locations in Singapore, for example, have now exceeded $5,000 psf.
Mr Rohan Cavaliero, one of the seminar speakers, said ‘foreign investors are flocking in droves’ to Malaysia now. Until recently, he was the group general manager of Malaysian developer Bandar Raya Developments, which is behind prime freehold projects such as The Troika and The Capsquare Residences.
‘There has been a general capital appreciation across the board for KLCC properties, even for suburban markets in the vicinity,’ said Mr Cavaliero, who has lived in Kuala Lumpur for 14 years.
Prices in areas around KLCC – Bangsar and Mont Kiara, for example – recently reached RM1,000 psf, up from RM400 to RM600 psf in the first half of this year, he said. ‘Those who bought a year ago are really laughing all the way to the bank now,’ he said.
Investors who buy to rent out can achieve high rental yields of 5 per cent to 7 per cent, although at current prices, yields are starting to fall for high-end homes, he added.
Mr K.K. Yap, who manages the prestige homes division of Rahim & Co, a sales associate of property consultancy Savills in Malaysia, said foreign investors are the main driver behind the boom in high-profile properties; local residents buy mainly suburban projects. ‘In the first half, locals were driving the boom. Now, more foreigners are driving it because the market is still very cheap,’ he said.
He said local residents will continue to invest in good-quality projects in KLCC’s suburbs priced at RM600 to RM900 psf as ‘most are undervalued and have big potential upside’.
Knight Frank Malaysia said in a recent report that it expects an exciting second half for KLCC, with more than 10 launches likely, including Hampshire Place, Icon Kuala Lumpur and Seni Mont’Kiara.
Singapore investor Chan Ye-Pan, a 40-year-old sales manager who was at the seminar, said his interest in Malaysian properties had been revived. But he said he would tread cautiously as he was wary of the nation’s ‘changing laws’.
However, Mr Murphy pointed to Malaysia’s commitment to deregulating the property market. Also, it is pushing its Malaysia, My Second Home programme to entice foreigners.
Mr Murphy said Penang, Langkawi and the Iskandar Development Region in Johor Baru are also potential sites for good investment properties.
Mr Cavaliero is already investing in Langkawi. He is a founding director of 99 East Langkawi, a property developer currently constructing a low-density, high-end residential oceanfront project on Bukit Malut, where the Langkawi Golf Club is located.
Property investments in such areas, however, can take three to five years or more to mature, said Mr Murphy. ‘These are not suitable for short-term gains. But ultimately, if you do your due diligence and are patient, the potential is enormous.’
Some tips for property investors
It may sound simple, but be sure to do your research. Take time to understand the dynamics of the market and don’t be a ‘sheep investor’, buying impetuously without first checking out the financial viability of the investment.
Six words to remember when researching a market: Legals, borrowing, liquidity, yields, tax and currency.
Look for properties built by established developers with good track records, especially if you’re investing in a developing market.
Choose properties that can be supported by the local market – homes that will attract locals to rent.
Always engage a lawyer to read all the legal documents, for example, the sales purchase agreement and deed of mutual covenant, which contains terms that are binding on all flat owners of a multi-unit building.”