Great Potential for Property Related Profit in Malaysia

Great Potential for Property Related Profit in Malaysia


Well, we’re not the only ones hot on Malaysian property at the moment it seems – Deutsche Bank are right there with us and their chief Asian strategist in Hong Kong Mark Jolley recently went as far as saying that he ‘likes pretty much anything that’s a property play in Malaysia’ at the moment.

In this article we explain exactly why there is great potential for property related profit in Malaysia at the moment and what the longer term prospects are for the market.


Malaysia offers a far lower cost entry point into the regional market compared to other favourites such as Hong Kong and Singapore and this point alone means that it immediately stands out and demands closer inspection.

Upon closer inspection buyers and investors will realise that recently the Malaysian government have made good on their promise to promote foreign direct investment enhancement in the real estate sector by making it far easier and more attractive for foreign buyers to purchase property in Malaysia.

This is expected to push up international demand for property in Malaysia, and the predicted demand increase is expected to result in a firming up and increase of real estate prices in the most popular and affluent parts of the country.

On paper at least it is now considerably simpler for an overseas buyer to purchase multiple properties and profit from them by letting them out for example. (We say ‘on paper’ because some of the legislative changes are slow to seep into the practical, every day bureaucratic system.)

The changes that have been made mean that a foreign buyer can now purchase multiple property units, each costing in excess of MYR 250,000 (1 MYR = approx 0.286 USD) without requiring permission to do so from the Foreign Investment Committee and that there are no restrictions on usage of property units – i.e., they can be rented out and an income can be derived from them for example.

This has certainly resulted in an intensification of foreign interest in the property market in Malaysia.

Note - two local issues that remain obstacles to investment commitment and which need to be addressed are the fact that real estate loan approvals take too much time to reach completion and that at state level, property transfer permissions can take up to five months to go through.

Other factors that are positively in Malaysia’s favour when an investor is looking at the appeal of a given nation before making a financial commitment to it are the facts that the nation is considered to be politically stable and socially secure; furthermore Malaysia may be ‘truly Asia’ and a location of stunning contrasts of experience and scenery but it is also a nation with Western standards and one in which international expatriates adapt and settle easily. This has always raised its appeal greatly with foreign companies looking for a regional presence by the way…

Returning to Deutsche Bank’s position on Malaysia at the moment, Mark Jolley believes that there is a boom impending and that stocks related to the property industry in Malaysia will be among the best performing assets in Asia this year.

His outlook is based in part on the pattern that interest rates are taking in Malaysia at the moment with the central bank recently keeping levels at 3.5% for a sixth consecutive update. This confirms that inflation has eased sufficiently to allow for more borrowing activity and in fact, the government is potentially at the point where they will be actively seeking an increase in domestic activity.

Finally – while we’re hot on property in Malaysia it’s not really a market for a quick turn around for profitability purposes – i.e., anyone contemplating Malaysia should see it as a medium to long term bet in our humble opinion.