Malaysian Property Market Not Immune to Global Situation

Despite the continued strength of the Malaysian economy which is predicted to enjoy growth in the region of 5.8% this year, and the popularity of the nation as a business hub in the still affluent Asian region, the recent ‘United Nations Economic and Social Survey of Asia and the Pacific’ report highlights the fact that the Malaysian property market is not immune to the global financial situation.

Whilst Malaysia is relatively well positioned to survive any pending global economic slowdown in many sectors of its economy thanks to the fact that it is an oil exporter and has managed to diversify its export base to include emerging markets, real estate is one area of the economy that could well be hit hard.

According to commentators discussing the ‘United Nations Economic and Social Survey of Asia and the Pacific’ report, property and equity markets are most likely to be negatively impacted as and when the global financial situation deteriorates.

Backing up this theory is the fact that at the recent Invest Malaysia conference, investors were in a very subdued and negative mood, expecting little in the way of investment incentives from the Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi where last year they received the fabulous news that there would be a lifting of the real property gains tax. 

And apart from announcing that there would be a streamlining of the stock exchange which may boost capital markets, little else of note emerged to make property investors or indeed constructors in Malaysia feel very confident about the Malaysian real estate landscape for the short-term.

However, there remain long-term reasons to commit to Malaysia.  It’s an incredibly strong stand alone market with excellent levels of local demand and affordability.  There is also the fact that Malaysia is an attractive tourism destination backing up an investment commitment.  Additional factors that constantly fall in Malaysia’s favour relate to the government’s treatment of foreign investors – i.e., they positively and actively encourage foreign investment – and the fact that legally and taxation wise, foreign investors have exceptional rights and benefits in Malaysia.

So, for the short term the prospects for the real estate economy in Malaysia may be a little bleak, but that’s not to say you should give up on the nation as a property investment hotspot just yet!

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