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Property Investment in Malaysia 2008

The residential property market in Malaysia was only opened up to overseas investment at the end of 2006, yet it is already attracting high levels of interest from shrewd speculators. With tourism and economic growth at a three year high - both backed by positive government initiatives to encourage foreign investments - it's easy to see why. Furthermore, the widespread use of English combined with the same systems of law, property ownership, and corporate governance as other Commonwealth states, simplifies the process for all concerned, making property investment in Malaysia an ideal investment opportunity.

Another significant initiative for overseas investors is the movement 'Malaysia My Second Home' (MM2H). This campaign, aimed at foreign retirees, has so far attracted almost 10,000 participants from the UK, Japan and China, among others. This not only boosts the real estate industry directly, with increased demand for second homes and retirement properties, but also has a secondary effect through increased numbers of friends and relatives who visit the country.

"Malaysia is growing in significance as a centre for world trade, with low business costs encouraging multinational companies to invest."

Foreign direct investments (FDI) account for about one-third of total private investment in Malaysia. Last year, US$9.4 billion worth of foreign investments came into the country recording a massive 54.4% increase on 2006 FDI figures of US$6.1 billion. Gross FDI for the past decade has remained steady at a level of US$4.7 billion to US$5.3 billion each year, reflecting the reassuringly stable economic conditions for foreign investors (Source: Department of Statistics Malaysia).

Malaysia is growing in significance as a centre for world trade, with low business costs encouraging multinational companies to invest. Global financial services company, UBS, named Malaysia their 'best bargain' for business travellers, with overall costs, including travel and entertainment, running at less than a quarter of those in Tokyo and other major cities. This puts the executive property market in a very strong position, with rental yields in Kuala Lumpur standing at around 7.4% to 8.7%, and new off-plan properties promising guaranteed yields of up to 10%. A large expatriate population, combined with a young, well paid, urbanizing Malaysian workforce, is fuelling demand in the capital, pushing up rents to the level of other major international business centres.