Invest in Malaysia's Real Estates

Malaysia a real-estate shopping destination  

By THEAN LEE CHENG

Welcoming foreign buyers will not necessarily affect property prices

LATE last year and once again about two weeks ago, at least two courses were organised to equip property agents and developers to sell Malaysian properties abroad.

In one of them, real estate professionals paid a few thousands of ringgit to attend a Certified International Property Specialist (CIPS) course to prepare them to sell Malaysian properties overseas. In another, a tax consultant and a lawyer were invited to share their experience and expertise when selling Malaysian properties.

Tan: ‘Our properties are very affordable to Singaporeans. In the region, our real estate is attractively priced.’

 

For about a decade now, developers who have projects around the KLCC area, Penang and Johor have been taking their offerings to Singapore, Hong Kong, Japan, London and China. So far, these overtures have been limited to residential and commercial developments. On a broader scale, the Malaysian government has also been encouraging foreigners to buy into Malaysian realty and has started networking with governments and local authorities to make itself known via government agency Malaysia Property Inc.

The question is: will foreigners buying into Malaysian real estate encourage developers to focus on building high-end developments, which are way above the affordability levels of locals?

Invariably, references are made to Singapore and how foreign buying has brought in that element of volatility because at the first sign of trouble, the foreigner leaves the island state.

Malaysia Property Inc (MPI) chief executive officer Kumar Tharmalingam likes to debunk this: “The number of foreign buyers buying into Malaysian properties is very small. Sales to foreigners only make up 2% of total property sales in Malaysia compared with Singapore's 30% . Singapore's volume of properties entering into the market annually is about 20,000 units and foreigners are only allowed to buy private condominiums; which averages about 6,000 units.

“Malaysia has about 120,000 units entering the market annually and 2% of this is 2,400 units.”

Kumar also says it is not possible to compare Malaysia with Singapore and Hong Kong and the market dynamics are very different.

MPI was set up in 2008. The government-property agency has two core objectives: to create international awareness and to establish connections between foreign interests and Malaysian real estate industry players. Its scope of work is not limited to just residential and commercial properties but includes the whole gamut of property investment, from land acquisition to building of factories if this is needed by the foreign investor. MPI has been branding itself for the last 18 months. This year will see the agency implementing some of their strategies when it matches foreign companies with Malaysian projects.

“MPI and much of what we would like to do is still pretty much work-in-progress,” says Kumar who took over the reigns of the agency in Feb 2010.

“MPI is an extension of three government agencies. These are national trade promotion agency Matrade, International Trade and Industry Ministry and Malaysian Investment Development Authority,” he says.

MPI's work is very much tied up with the foreign direct investment. The foreign direct investment will first seek out one of the above three agencies. After that connection is made, and when a foreign investment is approved by the government, there will be a need for land or office space, or even accommodation for staff.

Kumar: ‘Sales to foreigners only make up 2% of total property sales in Malaysia. Of the 120,000 units entering the market annually, 2% is 2,400 units

“There is a time lag between the foreign investor applying for government approval for his investment and his need for real estate. But which ever way one looks at it, land, office building, factories or staff accommodation, real estate comes into the picture. Because these three agencies are not involved in property matters, the requirements of these investors will be eventually be be referred to MPI.

“Or it could be a foreign direct investor who is keen to enter into a joint venture with our local boys. The South Koreans, for example, are keen to contribute a certain amount of equity, but would like to negotiate' a tender as opposed to having an open tender. This was the model they used in Vietnam and China for their real estate investments.” Its role is to facilitate.

With the United States' fragile recovery and Europe going through a recession, Kumar expects interest in Malaysian properties to come mainly from Japan, South Korea, Hong Kong, South China, Singapore, Indonesia, India, Saudi Arabia and Qatar.

Whether it is a coincidence or otherwise, the same year MPI was set up, news of the Government's plans to develop several pieces of land in key strategic areas in the city began to filter out. These mega projects include what is currently known as the Kuala Lumpur International Financial District in Jalan Tun Razak, KL Metropolis in Matrade-Jalan Duta area, the 100-storey building in the Stadium Negara site, now known as Menara Warisan and the Rubber Research Institute land in Sg Buloh. The global financial crisis, which started in 2007 and whose full blown effect was felt around the world, came a year later.

While MPI plays an intermediary role to facilitate the business needs of the real estate, concerns about foreign interest pushing up prices are also pooh-poohed by Reapfield chief executive officer Gerard Kho. On the contrary, he says there are a few locations that need the support of foreign buyers.

“The high-end condominium market need the support of foreign buyers. This year, we expect to see rent and prices adjust a bit in that sector. It will also be a challenging year for the high-end condominium market.”

By contrast, domestic demand is expected to remain resilient.

“I am bullish up to the middle of this year despite the 30% downpayment requirement for the third and subsequent house and other measures by Bank Negara to curb the growth in household debts. The third and fourth quarter are difficult to predict,” he says.

“Last year, 84% of our transactions were from the secondary market, a reflection of strong domestic demand despite the many predictions of 2011 being a difficult year,”

Following up on Kho's concerns about the high-end condominium sector, the National Property Information Centre's Residential Property Stock Table shows the Federal Territory having an existing stock of serviced apartments and condominiums totalling 156,251 units including about 4,000 units completed last year.

While these numbers do not separate the high-end units from the rest, it does indicate the large number of serviced apartments and condominiums in the Federal Territory and the yearly additions that enter the market.

About 5,000 units were added into the market this year and another 4,500 units are expected to stream in next year, says Kho.

On the often quoted Singapore-Malaysia example, Kho says the “Singapore and Hong Kong property markets have a high global exposure. Both these markets are very different from Malaysia in terms of land, and government-control measures.

“In Singapore, foreigners are allowed only to buy into private condominium projects. Malaysia is different. Foreigners can buy into any segment of the property market if it is beyond a certain price threshold, which dilutes the focus on any particular sub-segment of the property market,” says Kho.

Lawyer Chris Tan who acts on behalf of foreigners buying into the Malaysian market says his biggest clientele are from Singapore.

“Our properties are very affordable to them because of the exchange rate and because of the high prices in the city state. In the region, our real estate is attractively priced,” he says.

The locations his clients buy into include the KLCC area, Mont'Kiara, Damansara, Bangsar and Ampang. Johor and Penang are other popular destinations.

“Iskandar Malaysia is like Shenzhen and Hong Kong. Shenzhen is thriving today because of the Hong Kong factor,” says Tan.

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We CAN complain and gripe

Why Not By Wong Sai Wan
 

Making noise or raising a stink is fast becoming a national trait as we Malaysians gripe about everything and anything.

EVER heard the story of the Singaporean who wanted to migrate to Malaysia, causing the republic to order an immediate inquiry to find out why?

Inquiry chairman: “Tell us Mr Michael, you are migrating to Johor Baru because your Malaysian wife is unhappy living in Singapore?”

Michael: “No. She got nothing to complain about.”

Inquiry chairman: “Then, is it because you were overlooked for a double promotion in your job, and you only got a S$1,000 (RM2,400) pay rise?”

Michael: “No. I got nothing to complain about.”

Inquiry chairman: “So, Mr Michael, it must be because your son was refused entry into NUS, and only got a place at Nanyang?”

Michael: “No. He has got nothing to complain about.”

Inquiry chairman: “Then, for heaven’s sake, tell us why are you migrating to JB?”

Michael: “Because there I CAN complain.”

A Singaporean friend told me this joke five years ago, just before our last general election. This friend, who is very knowledgeable about the situation here, used this tale to take a dig at his own country, and ours as well.

His point was that while in his home country his countrymen were rather subservient and did not complain much in public, Malaysians had no such problem. Grumbling and griping seem to have become a national sport.

If we were to consciously listen to anyone standing or sitting next to us, we will see my friend is not far from wrong.

We Malaysians love to complain about anything; be it food, the Government, bosses, colleagues or even our neighbour’s choice of colour for the new coat of paint for his house.

Nothing is above criticism in Malaysia. These criticisms are not the kinds made on the quiet, but rather openly and sometimes rather loudly.

You know, the coffee shop type where you have to raise your voice because you can hardly hear yourself?

But in the case of us Malaysians, we complain at the top of our voice because we are afraid no one will hear, or we want to make sure everyone knows what we are complaining about.

A colleague said the complaining culture had gotten so bad that it had become griping, which dictionaries define as “to complain naggingly”.

“This is a sort of graduation for us Malaysians – from surat layang (poison pen letters) to publicly complaining about something,” this seasoned journalist said.

An example is griping over trivial things like lack of parking space in over-packed malls.

It beats me why a person would queue for over an hour to get into the parking area and then complain about the lack of parking, when it was obvious from the start that it was packed.

Then there are the infamous Malaysian drivers who complain about everyone else’s driving but their own.

They complain about how others drive too fast, and also about how others drive at a snail’s pace.

There are those who complain about everything and anything connected with their boss – from his choice of office furniture to his choice of ties.

When their verbal complaints do not evoke the desired results, Malaysians will turn to social media like Twitter and Facebook to express their angry thoughts to the whole world.

They do not seem to care if what they utter or write is rude, unethical or downright defamatory.

They seem to think that anything they write on the Internet is above the law.

When the gripes reach the notice of their bosses or the authorities, these people will turn around and say they have the right to express their opinion, but the bosses have no right to legal redress.

I feel that many Malaysians think their mistaken newfound political clout after 2008 gives them the right to say anything they want, without regard for the consequences.

Yes, our Federal Constitution guarantees us freedom of speech but it does not give us the right to run down another person or institution by hounding it with trivial complaints just to exact revenge over some perceived past injury.

Of course, our politicians seem to encourage this kind of behaviour because they see political gains in riding on such waves of dissatisfaction.

They do not seem to realise that their action of encouraging such a mentality only creates distrust, and eventually hatred.

I am not saying that the people have no right to voice their complaints, especially on matters affecting their lives or well-being.

We must voice out our views when it’s needed, but we must get our perspectives right.

We must know the difference between a gripe and a grievance; what’s important and what’s trivial.

If we do not, then our genuine complaints will sound exactly like gripes and the important message that we want to make will be lost, drowned out by the moans and groans.

Being a nation of complainers is not a reflection of the freedom that we enjoy but rather a reflection of ourselves as wimps who can do nothing but just gripe.

> Executive editor Wong Sai Wan doesn’t like nagging but enjoys the sound of an intelligent argument.

I 'do’ is not forever

Putik Lada By Chong Kien Mun

I Do (But I Don't) (Image via RottenTomatoes.com)

The present Generation Y has been immersed in a culture of instant gratification, escapism, and self-centred inflexibility. Couples nowadays do not hesitate to take the plunge into marriage – or out of it.

A COUPLE of years ago, when I first started practising law, I was approached by a soon-to-be-married young couple, who wanted me to prepare a prenuptial agreement for them.

Despite my explanation that prenuptial agreements arguably have no legal effect in Malaysia, they were adamant.

Obviously, some valuable assets were at stake. A sense of numbness enveloped my heart and soul. (Hey, lawyers are mortal humans with emotions, too!)

I could not recall the previous time I actually felt that way. I was filled with a sense of disappointment, of great sympathy. Not for the young couple, but for the sacred institution of marriage.

A couple of weeks ago, amid the scorching Malaysian sun and the beautiful full moon, Valentine’s Day came and went. The roses have now dried, and died.

One wonders whether the couples are still able to wake up to smell love in the air. Or, has real love and genuine affection also died? Perhaps not an overnight death, but a gradual and painful one? And is that a death that should be mourned or celebrated?

It has been said that the longest distance known to man is not the distance between birth and death. Nor is it the distance between the North and the South.

The longest distance imaginable is actually when that person is standing right in front of you, but somehow cannot muster the courage or the opportunity to say that he loves you, and so you don’t even know it.

To those who have been lucky enough to close that distance, it is usually the result of some persistence.

It may sometimes take months or even years for a man to grab that special girl’s hand, and hold it gently but tightly on their wedding day, with primary promises of being a loving husband, and a good father.

However, statistics have shown that, as the years go by, couples evolve from walking hand in hand on their wedding day to walking down the corridors of exile, hands folded or in their pockets.

Here is a riddle for you: “What starts with ‘I Do’ and also ends with ‘I Do’?” Got it? No? It is marriage, which starts with an “I Do” to marry someone, and an “I Do” to divorce that same someone.

The present generation – Generation Y – has been immersed in a culture of instant gratification, escapism, and self-centred inflexibility.

“My way or the highway” is a common statement. Surfing on concurrent waves of escapism, scepticism and pessimism, couples nowadays do not hesitate to take the plunge into marriage – and out of it.

An “I Do” to try it out, and an “I Do” when it does not work out as imagined. It ends just as it began, with the simple “I Do”, which used to be a sacred phrase but is now used flippantly.

There is a fine line between love and hate, for both are forms of interchangeable extremism. Lovers may turn into haters, and vice versa.

As the divorce decree is pronounced, the sourness of love and hate becomes a poison in the respective memories of the individuals involved, which time will seek to erase.

It is difficult to reverse the chain of events once a married couple make arguments and conflict a habit.

Sometimes, conflict becomes such a habit that the couple do not even know what they are fighting about any more.

It gets to the stage where they cannot remember why they accepted each other to begin with, when they had a love to believe in as the foundation of all things beautiful – or so they believed.

At the very least, they used to have a love that they could work on. They see divorce as the only cure.

Sometimes, taking the easy way out is a form of escapism. Form turns into habit and habit evolves into attitude.

An attitude of love is vouchable, while an attitude of escapism only breeds more problems and issues as one escapes from one black hole to a bigger one as the main issues with oneself remain unresolved, unmitigated, and ultimately aggravated.

The alarming divorce rates we see today will inevitably have a domino effect. A Pandora’s box has been opened.

The increasing numbers of single parents bringing up children of broken marriages will potentially lead to the further erosion of the fabric of love and family.

Statistics show that child abusers or molesters usually have had traumatic childhood histories as victims of the offences that they have gone on to perpetrate.

It is not much of a stretch to imagine that children of broken marriages have a higher risk of growing up to break their own marriages.

Back to the young couple that started me on this contemplation about marriage, I told them flatly: “Sorry to be so direct, but the very fact that the thought of such agreements even crossed your mind indicates disturbing elements of doubt and distrust, both essential ingredients of a lasting union. The marriage, if pursued, may not be a lasting one, and I hope to be proven wrong.”

The door was slammed close then. Fast forward a couple of years, and the door was re-opened, the same couple walked in again, asking for a divorce.

Perhaps George Orwell was right after all when he said: “Happiness can exist only in acceptance” or “Men can only be happy when they do not assume that the object of life is happiness.”

> The writer is a young lawyer. Putik Lada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, visit www.malaysianbar.org.my.