Race on to draw foreign investors

Malaysia Property News by Bernard Yong on Jul 09, 2007 By THE STAR

Malaysia has the potential to attract more foreign investors to its real estate sector and plans are already in the pipeline to do just that

MALAYSIA will be on track to become one of the favourite real estate investment destinations if further liberalisation measures and conducive conditions are in place to raise its ranking in the international market.

Faced with strong competition from other major cities around the world to attract foreign real estate investors, Malaysia has to raise its ratings in various aspects, including quality of life index and international-standard property offerings.

Globally, real estate investment markets are experiencing unprecedented growth and many countries are opening up their markets to bring in investors to their shores. From Singapore to Hanoi and Manila, the race to bring in the foreign dollars is on.

The recent relaxation of Foreign Investment Committee rulings for foreign buyers and the exemption of real property gains tax augur well for Malaysia as a destination for property investments.

Malaysia's comparative advantages include having one of the lowest property prices in the region and a relatively low cost of living, good infrastructure and its transparent land and property ownership laws.

To kick-start efforts to draw foreigners to our shores, a joint public-private sector initiative is expected to be implemented soon to make Malaysia an international property destination.

Under the plan, Malaysia's premier properties will be showcased at exhibitions overseas, with target markets in the Middle East, South Korea and Japan.

The plan to attract RM20bil worth of investment will definitely help stimulate the property industry and 140 other industries which are directly related to the industry.

Welcoming the latest public-private initiative to set up a centralised coordinating body to plan and coordinate international property promotions and road shows as timely, developers are eager to throw in their full support behind the latest initiative.

SP Setia Bhd group managing director Tan Sri Liew Kee Sin said collectively, the package of incentives had sent a strong message to the international community that the Government was "pulling out all stops" to woo them to invest in the country's properties.

"Developers should take the cue from the Government's actions to step up marketing and promotion efforts to capture a bigger share of the global real estate market which is forecast to reach US$450bil next year," Liew said.

To ensure sustained demand from the foreigners, Liew said, greater efforts were needed to create a sizeable expatriate community in the country.

"This can only be achieved through policies that welcome foreign talent to live and work here and if the country continues to attract significant foreign direct investment in various sectors of the economy.

"The Government also needs to accelerate efforts to create a more favourable business climate with investment-friendly policies in place. The corporate tax regime plays a part - at 27% (2008: 26%), our corporate tax rate is still higher than Singapore (2007: 20%, 2008: 18%) and Hong Kong (2007: 17.5%)," he said.

Sunway City Bhd senior managing director Datuk C.K. Wong said that to raise Malaysia's competitiveness, the local councils and state agencies must be prepared to change their mindsets and move towards a more efficient delivery system.

"There is also a need to overhaul the restrictive regulations, which make it difficult for foreigners to buy properties, especially at the state level.

"It takes about four to five months to register a property transaction, while countries like Singapore can have this done in seven days. The proper implementation of the public delivery system will improve our competitiveness with the more efficient countries," Wong said.

Zerin Properties chief executive officer Previndran Singhe said although a recent Real Estate Transparency Index study by JLL Research listed Malaysia as one of the most "real estate transparent" countries in the world, a lot still needed to be done to enhance its position in terms of regional attractiveness, based on the Quality of Life Index (see tables).

"We are ranked rather low in the globally accepted Quality of Life Index, which attracts private wealth. Singapore and Hong Kong, which are high in the ranking, attract huge amounts of private wealth.

"This private wealth indirectly translates into real estate investments. The future financial markets will be private wealth and private equity, and Malaysia needs to position itself to attract such funds," Previn said.

The liberalisation of the financial markets has contributed to the boom in the commercial real estate market and will be driving the market for 2007. "These institutions and funds are flushed with cash and are looking for exposure to Malaysia's commercial and residential property sectors," Previn said.