Issues Affecting the Malaysia Property Market

Regular readers of Amberlamb will be well aware that we’ve been particularly won over by the Malaysian government’s concerted efforts to bring sustainable investment into the nation’s property market. 

In 2007 we reported on the changes the government had brought in to ownership laws, the greater transparency it had sought to promote in the property registration process in Malaysia, and we even speculated about the positive aspects likely to come to benefit the real estate market in the country’s 2008 budget.  But in spite of all the positive efforts being made by the government and indeed by the property sector locally in Malaysia, there are those in the civil service who are conspiring against the greater development and expansion, promotion and enhancement of Malaysia’s property market it seems.

In this article we’ll be taking a look at the issues affecting the Malaysia property market so that those considering entry can have a well-rounded idea of the problems and issues they may well encounter along the way.

First of all, let’s recap the positives:

As stated above, the government in Malaysia is keen to more widely promote the attractions and potential of the property market to overseas investors.  The market is affordable, relatively transparent, financing is available and there is growing domestic and international demand for everything from city based commercial premises to resort based residential and holiday property in Malaysia. 

All of this is music to the ears of investors looking for a secure yet developing market in which there is short, medium and long term potential for property price appreciation and an increase in both demand for, and rental income generated from, rental real estate.  The property market in 2007 grew in international popularity and was a strong contributing player in taking the amount of FDI received in Malaysia to a ten year high in 2006. 

However, there was a slight drop off in terms of foreign direct investment received last year, year on year, and this was in direct relation to an increase in the amount of red tape in place restricting everything from the ease of establishment of a business in Malaysia to the ease of remitting foreign funds.

Whilst Malaysia remains far more affordable than Singapore and it attracts Singaporeans and expats working in Singapore to its borders for holidays and in search of property, Malaysia ranks 24 places behind Singapore in the World Bank’s 2008 index on ease of doing business – that’s a whole 3 places down on last year – and it does not bode well for the ongoing attraction of overseas funds specifically into the property market.

At a time when Malaysia has need for investors with billions of dollars in private money to help fund several multibillion-dollar farming, energy and tourism projects in particular, it seems the nation’s civil servants in control of essential aspects of the property purchase and registration processes and in charge of international business establishment and licensing divisions is creating a crippling amount of delay and confusion which is quite simply hampering many investors and putting others off.

One private property developer in Malaysia who is seeking backers for an impressive development project he has already started in Penang state in Northern Malaysia has lost significant backers from the UAE who specifically cited problems with the civil servants the company encountered as being their main reason for remaining firmly outside the market for the time being.

Until Malaysia can sort out these frustrating hurdles which mean it takes nine steps and over a week to establish a business and it can take many weeks to get approval in place for everything from employing a foreign worker to bringing large sums of money into the country, the government and private sector’s efforts to promote the country’s property market will be increasingly in vain.

Special Reports: Property News for Malaysia

Malaysia Property Buyer’s Country Guide
Luxury real estate developments across Malaysia are attracting international interest from property buyers attracted to the scope in the market.

Malaysia Property Buying Process
The Malaysia property buying process is relatively straightforward, but raising local finance to buy Malaysian real estate is time consuming

Malaysia Property Investment Potential
Property investment opportunities in Malaysia offer strong rental yield potential and real estate investors draw confidence from Malaysia's strong economy