Foreigners can find great deals, but they need to know some of the market’s unique challenges.
There are great property deals in Malaysia, where there’s a better value than neighbouring countries because of the weak ringgit and a general economic slowdown.
Property in Malaysia is actually reasonably affordable still, compared to other countries. The final icing on the cake is the fact that the Singapore dollar, U.S. dollar, Australian dollar, Japanese yen and to some extent even the British pound and euro are either at, or close to, all-time highs against the ringgit.
Foreigners are able to get much better value as compared to neighbouring countries. Based on data obtained from
Brickz.my and iPropertyIQ, for MYR 1million, property buyers and investors are able to get a 1,190-square-foot property in prime residential areas, whereas in Singapore they are only able to get a 140-square-foot property and in Hong Kong a 150-square-foot property for the equivalent amount.
Malaysia is also known as an excellent retirement destination. It was ranked sixth in the world and first in Asia by International Living as a retirement destination in 2017, because of its islands, beaches, and rainforests, as well as low costs of living, good health care and diverse population.
Government initiative helps spur foreign-buyer interest
The Malaysian real estate market completely changed for foreigners with the advent of the Malaysian My Second Home (MM2H) government initiative in 2003, which was launched to generate more foreign buyers and investment. Foreigners can purchase any type of property, with the exception of properties on reserved land and properties that have been allocated for Bumiputera (indigenous people’s) interest.
How to do it?
Luckily for foreigners, buying in Malaysia is different from other neighbouring countries in the ASEAN region in the sense that we have clear laws which are more similar with developed countries like Europe and Australia. Malaysia operates under the Torrens Title system of land registration, which is common amongst most commonwealth nations, including Australia and Singapore. This means that land is transferred through a registration of title instead of deeds, in order to simplify transactions and ensure clear ownership.
The largest difference for foreigner buyers as opposed to Malaysians is that foreigners must obtain state approval for their purchase.
- First, a buyer makes an offer to purchase and prepares a 10% deposit. The deposit is refundable and conditional upon the approval being granted by the state.
- Then, the buyer’s lawyers construct the Sale & Purchase Agreement (SPA), which is also conditional on the buyer getting state approval for their purchase by the relevant state authority (there are 13 states and three federal territories in Malaysia).
- A standard SPA is used when the seller is a developer, but it tends to be more open to negotiation and crafted from scratch when it’s a secondary sale.
- Each state has its own rules (and timelines) but typically there will be some additional fees payable— this can range from several hundred up to 10,000 ringgit. Typically, a buyer's lawyer will help the buyer complete their application form and get all their documents together. If the approval is denied, the transaction is voided and the deposit returned.
- After that, the transaction proceeds as normal. Loans are available to foreigners, though the loan-to-value ratio is capped at 70%, and it is easy to transfer funds from abroad. Once the approval is received from the State Authority, the seller receives the balance and the property is transferred.
Malaysia is slap bang in the middle of South East Asia.
You can get to 60% of the world’s population within a five-hour radius.
Whether you are buying, selling, or just plain interested in real estate, connect with Penang Property Angel today for professional assistance.
