Investment Growth In Malaysia

International real estate investors looking to target a well priced, strong economy for sustainable growth and yields over the medium to long term are considering Malaysia as a highly lucrative option.

The government’s blueprint for economic growth and diversification for a four year period between 2006 and 2010, known as the “Ninth Plan”, aims at vast improvements to Malaysia’s infrastructure as well as economic developments. This progress is predicted to directly and positively effect the real estate market in Malaysia, bringing with it strong growth potential.

As a resort destination Malaysia’s affordability is a great attraction, bringing growing numbers of visitors annually to boost the economy. Tourist arrivals in Malaysia rose to 16.5 million in 2005, a rise of more than 160% in five years. This is an astonishing achievement for tourism in Malaysia and is good news to many property investors in the coastal resort hotspots, such as Port Dickson. The first low cost airline offering global services from Malaysia is planned for July 2007 and will connect Manchester and Luton as well as Hangzhou near Shanghai and Tianjin near Beijing from a later date – all good news for Malaysia and its growing tourism and investment arena.

While the country’s economy keeps flourishing, inflation remains low, overseas export opportunities continue to expand and more businesses are establishing regional centres in Malaysia. Malaysia is the Asian leader in terms of attracting interest from foreign investors, most of whom are from the Middle East. They see it as a viable and attractive emerging market with high medium term growth potential. The amount of foreign investment into the country continues to increase and international investment into the property sector in Malaysia is firmly predicted to grow at unprecedented levels.

Another particularly positive factor in favour of real estate in Malaysia today is the value of the local currency, the ringgit (MYR). Valued below the euro, dollar and British pound, foreign investors buying into Malaysia are reaping the rewards of buying so much more for their money. Meanwhile, property per square meter in all Malaysian towns, cities and resorts remains at a fraction of the cost of similar properties in the likes of London or New York.

Demand for real estate is high from an affluent expatriate market as well as an increasing Japanese, Indian and Singaporean market leaving many investment options open to shrewd investors in Malaysia.

Capital Growth Predictions

Depending upon location, off-plan residential property both in the city and within coastal resorts has seen price increases of between 14 and 15% per annum. With economic indications showing Malaysia can only continue to grow at a steady pace, many investors are purchasing now in order to achieve the highest returns on their investment.

Rental Yield Predictions

The best yields are possibly available in the commercial property sector or KLCC serviced apartments, with returns of 8% not being unusual. It is possible to invest in “tenanted” residential or commercial properties with guaranteed yields of 8%-10% available. We also suggest looking at off-plan commercial premises that will net yields well into double figures, while a number of hotels are also available with gross yields in excess of 17%.

Tourist resorts offer strong rental and capital growth potential with recorded yields in Port Dickson last year reported at 9.36%.

Malaysia Economy

Economically, the outlook in Malaysia is very positive. According to a recent study from ING Real Estate, Malaysia will be the Asian country with the biggest increase in work force from 2003 to 2013, with worker numbers increasing to 13 million, representing a 27.9% increase over the 10 year period.

Growth has been driven by a spurt of corporate investments, sustained consumption, improved external trade facilities and foreign investor friendly fiscal and monetary policies, that have boosted Malaysia’s economy to new levels.

Reasons Why Malaysia is an Intelligent Property Investment Location:

• New tax incentives and the relaxation of laws governing real estate purchase by foreigners.
• The government’s “Ninth Plan” will have a positive impact on the Malaysian real estate market through further improvements to the infrastructure and economic policies.
• Stable economy and government.
• English is widely spoken by a multi-lingual, experienced and qualified workforce.
• Local currency valued at far below the euro, dollar and pound sterling, allowing foreign investors to buy a lot more for their money in Malaysia.
• Property prices per square metre in all major Malaysian towns and cities are at a fraction of the cost of similar investments in many other worldwide destinations.
• Great demand for quality new real estate from an affluent expatriate market.
• Malaysia ranks among the top three countries among the 53 Commonwealth countries for the greatest number of tourist arrivals, according to the World Tourism Organisation.
• Malaysia attracted 20.88 million foreign visitors in 2007, representing a 19% rise on the previous year
• Location near the Equator, hence a year-round tropical climate, ideal for tourism.
• Extensive, beautiful, white sandy beaches at luxury resort areas offering an escape from hectic life just south of the bustling capital of Kuala Lumpur.
• Low buying costs currently at between 3.4 to 6.75% of the property value.

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