THE LAST 20 years have seen some significant changes in the Malaysian property industry. These fall into two main categories. First, the quality and designs have improved dramatically. That is not to say that all properties were badly constructed years ago or that all properties built today meet very high standards; however, there has been an increased focus on quality and the use of better materials. There are now many developers that you can be confi dent will build quality homes without the worry of properties not being completed on time or having to face a host of problems that need fi xing. There are also many modern and innovative designs. In the last couple of decades Malaysian and foreign architects have produced something of a revolution in designs. Gated communities with a strong focus on the environment and landscaping are quite new to Malaysia, but are becoming more common.
Second, the government is now actively encouraging foreigners to buy properties in Malaysia. In the past they have placed restrictions on foreign purchasers but now nearly all barriers have been removed. There is no limit in the number residential properties foreigners can buy. It is no longer necessary for foreigners to obtain approval from the Foreign Investment Committee (FIC) when they buy property. However, they still have to acquire consent from the State authorities and this can take up to six months.
The real estate capital gains tax has been removed, so if you sell your property at a profit, you will not be liable to tax on it. In Malaysia foreigners can buy freehold land. The sale and purchase agreement will be in their name and is written in English. In some areas leasehold land which is owned by the state can be obtained. The leases are usually for 99 years and can be renewed at the end of the term. Perhaps one of the most attractive aspects of Malaysian properties is the low prices. Prime real estate in central Kuala Lumpur, which has the highest prices in Malaysia, has reached RM1,200 (£170, $350) a square foot or RM12,000 (£1,695) a square metre. The prices drop by around half that amount when you get away from the immediate city centre and much lower
when you leave the capital city. Penang city prices tend to be around half central KL prices.
When you compare KL’s prime real estate with Singapore, which can reach 10 times that price, it gives some indication of the value offered. Combine that with the generally low cost of living and it’s a powerful combination for people thinking of retiring here. There are a few types of properties that foreigners are not permitted to buy. These include properties priced below RM250,000 (RM350,000 in Sarawak). This is to protect middle and lower income Malaysians from infl ationary pressures on their typical home purchases. Foreigners are also not permitted to buy Malay reserve land. Certain parts of the country have been made into Malay reserve and these can only be purchased by the country’s Bumiputra (“sons of the soil”) population.
In addition, certain developments are built on what is known as ‘orchard land’ with a minimum building density of one property per acre. Foreigners are not permitted to buy this land. Prime real estate prices in Malaysia have risen quite a lot in the last 10 years. This is the result of increasing foreign interest and strong economic performance resulting in many more Malaysians buying their own homes. It is expected this trend will continue, although the very large numbers of new developments are preventing this happening too quickly. The most noticeable increase is in central KL prices.
LOCAL TERMINOLOGY
Developers are becoming more imaginative with the names they give the types of properties in the newest developments but there are some names which are commonly used. ‘Bungalow’ is the name given to any stand alone, detached property. Unlike the UK where it refers to single-storey detached houses, in Malaysia it covers all sizes and some are indeed very large. Semi-D is the name given to semi-detached homes that are connected on only one side of the building. ‘Terraced’ houses are those connected on both sides and stand in a row. The end property with only one connecting wall is usually premium priced and has a large garden, although many older buildings are being rennovated to produce very large end units.
‘Apartments’ and ‘Condominiums’ are basically interchangeable terms in Malaysia although the latter usually means the property has quite a few facilities – pool, gym, tennis court, etc. ‘Gated Community’ means the development has a main entrance with security guards and a perimeter fence or wall. This usually means a lot better security but it is worth making enquiries into its effectiveness.
Second, the government is now actively encouraging foreigners to buy properties in Malaysia. In the past they have placed restrictions on foreign purchasers but now nearly all barriers have been removed. There is no limit in the number residential properties foreigners can buy. It is no longer necessary for foreigners to obtain approval from the Foreign Investment Committee (FIC) when they buy property. However, they still have to acquire consent from the State authorities and this can take up to six months.
The real estate capital gains tax has been removed, so if you sell your property at a profit, you will not be liable to tax on it. In Malaysia foreigners can buy freehold land. The sale and purchase agreement will be in their name and is written in English. In some areas leasehold land which is owned by the state can be obtained. The leases are usually for 99 years and can be renewed at the end of the term. Perhaps one of the most attractive aspects of Malaysian properties is the low prices. Prime real estate in central Kuala Lumpur, which has the highest prices in Malaysia, has reached RM1,200 (£170, $350) a square foot or RM12,000 (£1,695) a square metre. The prices drop by around half that amount when you get away from the immediate city centre and much lower
when you leave the capital city. Penang city prices tend to be around half central KL prices.
When you compare KL’s prime real estate with Singapore, which can reach 10 times that price, it gives some indication of the value offered. Combine that with the generally low cost of living and it’s a powerful combination for people thinking of retiring here. There are a few types of properties that foreigners are not permitted to buy. These include properties priced below RM250,000 (RM350,000 in Sarawak). This is to protect middle and lower income Malaysians from infl ationary pressures on their typical home purchases. Foreigners are also not permitted to buy Malay reserve land. Certain parts of the country have been made into Malay reserve and these can only be purchased by the country’s Bumiputra (“sons of the soil”) population.
In addition, certain developments are built on what is known as ‘orchard land’ with a minimum building density of one property per acre. Foreigners are not permitted to buy this land. Prime real estate prices in Malaysia have risen quite a lot in the last 10 years. This is the result of increasing foreign interest and strong economic performance resulting in many more Malaysians buying their own homes. It is expected this trend will continue, although the very large numbers of new developments are preventing this happening too quickly. The most noticeable increase is in central KL prices.
LOCAL TERMINOLOGY
Developers are becoming more imaginative with the names they give the types of properties in the newest developments but there are some names which are commonly used. ‘Bungalow’ is the name given to any stand alone, detached property. Unlike the UK where it refers to single-storey detached houses, in Malaysia it covers all sizes and some are indeed very large. Semi-D is the name given to semi-detached homes that are connected on only one side of the building. ‘Terraced’ houses are those connected on both sides and stand in a row. The end property with only one connecting wall is usually premium priced and has a large garden, although many older buildings are being rennovated to produce very large end units.
‘Apartments’ and ‘Condominiums’ are basically interchangeable terms in Malaysia although the latter usually means the property has quite a few facilities – pool, gym, tennis court, etc. ‘Gated Community’ means the development has a main entrance with security guards and a perimeter fence or wall. This usually means a lot better security but it is worth making enquiries into its effectiveness.
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