Property Report Survey
Background
The Expat Group conducts regular surveys of the resident expat community to gain a better understanding of the lives they lead and their views about various aspects of living in Malaysia. As the leading company reaching the international community, we have the largest database of resident English-speaking expats.
In October 2010, we conducted a survey among some 200 expat families covering their views on Malaysian property and their experiences. The survey included information on the type of property they currently occupy, their rent or purchase price, their experiences buying or renting and their views on the property market.
The survey included working expats and people who have chosen to retire here, most of the latter group living here under the Malaysia My Second Home (MM2H) programme. In many cases, their responses were the same but in a few areas they were different.
As can be seen from the charts on this page, the majority of respondents were Western expats and it is possible if more Asian expats were included the results would have been somewhat different.For example, we know, from other research, that although some Japanese expats have bought property in Malaysia, most choose not to do so.
It should also be noted that this survey was sent out by e-mail so only included those expats who have submitted their e-mail addresses to us - around 3500 or 60% of the total subscription base.
Finally, since participation was voluntary it is less statistically valid than a survey where we randomly picked expats living here. However, it is not clear that this would have produced very different responses.
Key Findings
Probably the most significant findingis the large number of expats who choose to buy property or are thinking about buying property. Despite recent price increases, Malaysia still offers much cheaper property prices than surrounding countries. Prohibitive prices in popular expat cities like Singapore, Hong Kong and Tokyo mean the vast majority of expats living in those cities choose to rent.
Most expats choose to rent or buy apartments. This is true all over Asia often because there is a limited supply of houses in major cities. Malaysia is somewhat different because it is relatively easy to rent or buy a house here. Apartments are also popular because they often provide better security, there is less maintenance involved, and more modern developments usually offer a widerange of facilities.
The respondents' views on property as an investment varied although among those who have chosen to buy houses there is clearly a lot of interest.
Where do Expats Live?
Most expats and retirees choose to live in apartments with three quarters of Malaysia My Second Homers (MM2Hers) living in apartments and almost two thirds of working expats. Many MM2Hers tell us they prefer apartments because they like to travel and it's easier to lock them up and leave.
Working expats also prefer apartments. Some companies tell their expat staff not to rent houses because of the higher risk of burglaries and it is true that house break-ins are quite common in Malaysia, particularly in the large cities.
Expats who choose to live in houses often choose gated communities or install modern security systems.
The average rent paid by expats overall was RM5,000 with the majority of expats paying under RM4,000 a month. However, those retirees who chose to rent paid nearly 30% less on average.
One reason is that working expats are more likely to have children living with them and often need larger places. Another reason is that there are still a large number of working expats who have their rents fully paid or at least subsidised by their companies.
By Malaysian standards, RM8,000 is quite a high rent but if you compare it to rentals paid in Singapore or Hong Kong, it would be considered on the low side.
We also asked expats who rented what they thought of their landlords. We often hear stories about expats having problems with getting landlords to attend to things or recovering deposits at the end of their lease.
Generally, the survey showed expats were happy with their landlords with 70% being quite satisfied and another 20% giving an average rating. Only 10% said they were not happy with their property owner.
Expats and Real Estate Agents
Most expats (nine out of ten) used real estate agents to find a place to rent or buy.Overall,it showed that more expats were satisfied with the service they received than were not. However, there were some respondents who expressed dissatisfaction with the service and took the time to write comments detailing their frustrations. It's probably true to say that this is a profession which comes under a fair amount of criticism whichever country you happen to be in.
The most frequent criticism was that agents showed places which did not meet the specification given by the expets.One expat wrote, "I had 13 agents and none of them were able to listen and to show me the types of property I requested." Another complained that, "he wasted a lot of time going to places of no interestat all". Others felt the agents did not do a good job of representing their interests. Clearly since most agents earn their commission from the property owner they will primarily focus on their interests. It's important for people using real estate agents to recognise this.
Expats Who Have Purchased Property
Just under half of the respondents said they owned the property they lived in. Not surprisingly, it was the longer term expats who decided to purchase. Around one third of the expats who have been here less than 5 years said they owned their property, where as for those over 5 years, 69% said they owned their property.
The vast majority purchased their homes in the last ten years. The average price paid was just under RM1,100,000. As can be seen in the chart, around one third purchased property under RM500,000 which is almost impossible today since the government raised the minimum price for foreigners to buy to RM500,000. In fact, to the best of our knowledge, only Selangor lets foreigners buy property above RM250,000 while Penang allows MM2H visa holders to buy above this price.
We asked if there was any difficulty finding a property, obtaining financing or finalising the purchace.The vast majority of expats found the whole experiencerelatively straight forward.Most expats found obtaining finance to be the easiest of the three and this certainly reflects the significant change in attitude towards foreignbuyers, especially by Malaysian banks.
Expats Planning to Buy
Just over one third of the respondents said they were planning to buy a property. The majority were looking for a home to live in but a third were looking for investment property and the remainder a holiday home.
When asked what type of property they were planning to buy, most had decided on buying an apartment, but there was also interest in houses and terraced homes. A few people were looking to buy land so they could build their own place.
The expats planning to buy were fairly equally divided between buying an existing property or investing in a new development. Just over a quarter of them were undecided.
We then asked what features were considered important to the buyers. We suggested various facilities and asked respondents to rate their importance or suggest other features which we had omitted.
The next chart shows how they ranked the various features but the clear winner was pleasant views. This is one area where a buyer has to beware. The Malaysian property boom has meant the construction of many new high rise buildings and a number of buyers have been shocked when a piece of land they were advised would not be developed suddenly becomes the site of a new high rise completely blocking their beautiful view.
Both landscaping and balconies were not on the list of "must haves" for most developers although that is now changing. Large balconies are very rare as Malaysians generally don't look for them when buying apartments.
When we first started telling developers this was an important feature to attract foreigners, particularly Westerners, who enjoy sitting outside, many of them looked sceptical and some clearly doubted our opinion. Most upmarket high rises now include a reasonably sized balcony and the developers of apartments and landed homes usually complete the landscaping before handing over the properties. Swimming pools are very popular, particularly with Western expats.
The proximity of international schools ranks high for expats with kids but since many respondents do not have children in Malaysia, it received a lower overall ranking.
In addition to the ones we listed, expats said they were concerned about security and maintenance. Both of these can vary dramatically from apartment building to apartment building and prospective buyers should always check this out.
Is Property A Good Investment?
The general view among the respondents was that property is a good investment with only 19% of respondents feeling it was not. However, there was a sizeable number who were not sure. The biggest concern was the oversupply of property in Malaysia particularly when it comes to apartments. Several expats felt that landed property was a better investment and much more likely to appreciate in the future.
A number of expats felt that buying new property from an established developer was probably good value particularly in some of the gated communities. Most felt that careful selesction of the specific property and location was important if you were looking for a reasonable return.
Others were concerned about the quality of some property companies. V. Page, who lives in Penang, felt there is "gross oversupply and poor quality workmanship" in many places in Penang and was not keen to buy.
Linda Robinson, who lives in Sabah, said she bought from a bad developer and is now unable to sell. She has also suffered because of the increase in the minimum price at which foreigners can buy.
Gudrun Neinaber felt property was a good investment "because of thelow prices and the ease of getting a mortgage".
The fact that so many expats have decided to buy property makes it clear that those that are planning to stay here longer term feel it makes sense to purchase rather than rent.
