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Malaysia Special: Malaysian property sector ripe for Chinese investment

Malaysia is wooing Chinese investment in its thriving realestate sector, with the government agency MalaysiaProperty Incorporated (MPI) leading the campaign.

MPI facilitates investment in Malaysian real estate andmanages relevant promotions.

The Malaysian government aims to increase foreignparticipation in the Southeast Asian nation's propertymarket from 2 to 5 percent in the coming years.

Chinese buyers could play a cornerstone role in thatprocess as the nation's largest corporations expandinternationally and wealthy individuals seek to diversifytheir property investments.

Malaysia's real estate market is uniquely affordable, openand stable in a region marked by volatile fluctuations inproperty prices and regulations, says MPI.

The Malaysian property market has grown steadily since 1999 and emerged relativelyunscathed from the 2008 global financial crisis, according to the agency's statistics.

Forecast investment returns for the moderate risk Kuala Lumpur property market rangebetween 7.6 and 10.8 percent across prime retail, office, industrial warehouse and luxuryresidential categories, according to a report published by ING Real Estate InvestmentManagement. That compares favorably with Singapore and Bangkok, where returns aresimilar but carry higher risk.

"For buyers in the region seeking a long-term investment that will steadily appreciate, Malaysiais the place," says Kumar Tharmalingam, chief executive officer of MPI.

Meanwhile, Kuala Lumpur is considerably more affordable than other comparable cities in theregion. The Malaysian capital is ranked 104th by consultancy Mercer in its 2011 Cost of Livingsurvey, while Hong Kong is 9th and Singapore 8th.

Few restrictions

Overseas buyers benefit equally from Malaysia's few restrictions on foreign ownership of realestate. Most property is freehold, meaning foreigners can purchase it without a local partner.There is no limit to the number of properties an overseas buyer can hold. Land titles areindependent and transparent.

The one major caveat is that foreigners are only permitted to buy property priced at $180,000or higher, yet this should have little effect on Chinese buyers. Homebuyers in the market areinterested in luxury residences, while corporations seek large commercial and industrialproperties, says Tharmalingam.

Huawei Technologies is a case in point. The telecom giant signed a memorandum ofunderstanding during Premier Wen Jiabao's April visit with Malaysia's Ministry of Science andTechnology and Innovation to help the Southeast Asian country train 10,000 telecomprofessionals over the next five years. That will require a sizable training center in all likelihood,said Chan Tze Wee, MPI vice-president of investment promotions, in a research note.

MPI says Malaysia has seen increasing enquiries from Chinese homebuyers since the secondquarter of this year.

"Chinese real estate agents are testing the viability of promoting prime Malaysian properties totheir local clients in first-tier cities," Chan says.

Prospective Chinese buyers are unique in their strong preference for themed properties likevillas on golf courses and beachfront condos, she explains. Their immediate areas of interestare Kuala Lumpur, Penang and Kota Kinabalu, she adds.

MPI will host a forum today and tomorrow in Shanghai to help familiarize prospective Chinesebuyers with the Malaysian residential property market. It is the first event of its kind in Chinaand is being held with the support of the Malaysian Industrial Development Authority andMalaysian External Trade Development Corporation.

Source from China Daily 09/16/2011 page7