KUALA LUMPUR (Reuters) - If a second home in the sun is your thing but a villa in Florida or Tuscany is out of reach, then Malaysia's property developers have something to show you.
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Sign up for: Globe Headlines e-mail | Breaking News Alerts Sun-blackened site workers cooling off under the trees at the Kiara Hills development will vouch for the warm climate. For a cool 4 million ringgit ($1.14 million), three storeys of detached splendour could be yours at this swanky new Kuala Lumpur suburb on the edge of the jungle.
Up the coast in northern Penang state, about 100 kilometers from the resort island of Langkawi, 500,000 ringgit ($140,000) will buy you a tropical seaside apartment with a pool, 24-hour security and a gymnasium.
Interest rates are low and the government has slashed red tape to welcome wealthy foreigners. Developers are making hay while the sun shines.
"Property is not an easy business, but if you get the market positioning right, it can be very lucrative," said Khor Teng Tong, Executive Chairman of builder Hunza Properties.
"Right now, the market is in high-end properties."
Bigger players than Hunza like SP Setia, Mah Sing, Bandar Raya Developments and Sunway City have been selling more homes to foreigners.
Malaysia's benchmark interest rate of 6.75 percent are lower than other southeast Asian countries, including Indonesia, Thailand, Vietnam and the Philippines.
Investors are pouring money into Asian real estate. Some $100 billion was directly invested in Asia-Pacific property last year, 40 percent up on a year earlier, according to property consultants Jones Lang LaSalle.
Malaysia wants as much as it can get of this year's inflow, and to that end, in March, capital-gains tax on property was summarily scrapped. Analysts see the plan working.
"The abolishment of Real Property Gains Tax will spur stronger demand for mid-to-high end properties of which Hunza has a niche," said Mervin Chow Yan Hoong, an analyst with OSK Securities.
This is the latest in a series of moves.
A 10-year old project to attract retirees and named the 'Silver Hair Scheme' has been retitled the "Malaysia My Second Home Program," and at the end of 2006, the government waived the requirement that foreign buyers seek approval from a foreign investment panel.
Foreigners can now also buy any number of properties.
"We think this would have a positive effect on the property market, and on the mid-to-high end property segment in particular," Deutsche Bank analyst Aun-Ling Chia said in a March note to clients. "Property prices in Malaysia are still among the cheapest in the region."
ITALIAN MARBLE
With interiors clad in polished Italian marble and floors of Burmese teak, Sunway City Bhd's Kiara Hills homes are designed as much for well-heeled overseas buyers as for the home market.
As many as a fifth of these have been snapped up by foreigners, while up to one third of Hunza's properties are foreign-bought. Buyers hail from countries including the United Kingdom, Hong Kong, China, Korea and Singapore.
Hunza, founded almost 20 years ago by Khor, expects net profit to leap 80 percent to 35.6 million ringgit ($10.16 million) for the financial year to June from a year ago. In 2008, the firm expects a further 55 percent jump to 55 million ringgit.
Malaysia's property index, is up almost a third this year, outstripping the 12 percent gain in the benchmark Kuala Lumpur Composite Index.
BAG SNATCHERS
Foreign retirees appear to have little trouble adjusting to Malaysia, its Muslim culture, and its year-round sunshine, although they are careful what they say, because they have signed a visa condition agreeing not to hurt Malaysia's image.
"Property is much cheaper here than in Singapore or Hong Kong," said a retired Scottish businessman in his 70s who lives in northern Penang state. "Quality of life is difficult to measure but in general, it's good here."
Still, Malaysia needs to fix some problems.
"To be honest, (applying) was a very painful process," said another buyer who used the "Malaysia My Second Home Program."
Seasoned expatriates also worry the country's growing social problems might spoil their golden years, as economic growth pushes ahead and the divide between the haves and have-nots widens.
They talk of bag-snatching thieves on motorbikes and a rising spate of burglaries and carjackings.
Police figures show that crime in Malaysia rose 14 percent last year to 225,836 incidents against 198,017 in 2005, and the proportion of serious crimes, such as murder, rape and armed robbery, grew by 26 percent.
"The bag snatchings and the crimes are not going down too well with the expatriate community," said the retired Scottish businessman.
"Malaysia is now a place where you need to be careful. It's not considered now to be as safe as it once was."
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