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Wednesday, July 4, 2007

Malaysia Investment Property is Hot in Kuala Lumpur and Other Cities

March 3, 2007 @ 8:46 am · Filed under Malaysia Properties

kuala-lumpur.jpgCash-rich Indians, including high-profile businessmen and film stars, have found a new property market in Malaysia. Wealthy Indians are investing heavily in residential properties in Kuala Lumpur and other cities after the Malaysian government relaxed rules regarding foreign ownership of property in December 2006.

The move has breathed fresh life into the Malaysian housing property market, which has been witnessing a slump for the past two years. During the past two months, more than 700 Indians have purchased properties in various Malaysian cities, according to government officials. However, they were reluctant to divulge the names of buyers. “They include businessmen with business interests in South East Asia, high net worth individuals and film stars,” the sources said.

As per the changes in ownership rules, foreigners can purchase residential properties valued above Malaysian Ringgit (RM) 250,000 a unit (which works out to around Rs 32 lakh), without the Foreign Investment Committee’s approval from December 21, 2006 onwards.

On December 20, the Prime Minister’s department said in a statement that there would no longer be a limit to the number of residential properties that foreigners can own, or any conditions upon their usage.

“We have launched a marketing initiative called ‘Malaysia: My Second Home Programme’. The programme allows people from all over the world, who fulfil certain criteria, to stay in the country as long as possible, on a social visit pass with a multiple entry visa,” Malaysian tourism minister Datuk Seri Tengku Adnan Tengku Mansor told ET. According to government data, the total number of residential units on sale during the first half of 2006 went up to 22,185 from 15,083 units in the same period a year earlier.

The move has encouraged foreign investors to purchase high-end residential properties in the country. Owing to this, the foreign currency inflow into Malaysia shot up, and the property and construction sectors got a boost. “We have sold over 10,000 houses already, bringing around $1.5 billion to the government’s kitty,” said Malaysian government officials.

Each buyer is allowed to purchase up to two residential houses at a minimum price of RM150,000 each, except for certain states like Johor, Malacca and Penang, where the minimum price remains RM 250,000. The rules relating to foreign ownership of property have been changed drastically to make the sector more attractive.

Earlier, foreigners needed an approval from the Foreign Investment Committee (FIC) for any purchase above RM 250,000. Moreover, though they were allowed to buy properties for own use, they could not use these assets for investment purposes. The demand for high-end serviced apartments and well-located houses is also being driven by the large number of expatriates working in Kuala Lumpur. Real estate agents said that new properties in Kuala Lumpur are being sold to international property developers with guaranteed rental yields of between 6% and 10%.

Source: Economic Times

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