Initiative lures investors
'Malaysia My Second Home' campaign opens eyes of many foreigners, writes Peta Tomlinson
It was the "Malaysia My Second Home" campaign which really put the country on the map for overseas property investors.
The government programme, launched a decade ago, not only invited foreigners to live in Malaysia, it also opened their eyes to the lifestyle possibilities of cheaper housing, a pleasant climate, welcoming locals and affordable living costs.
It was just the fillip the nation needed. Property sales were fuelled by generous lending laws, whereby participants can borrow up to 80 per cent of a home's value - unlike many countries, which require a cash purchase. Knight Frank says that Malaysia has the most liberal policies in the region as far as foreign ownership of property is concerned - foreigners are allowed to buy landed properties and second-hand properties, and in any quantity.
Prices have shot up by 60 per cent since 2008, according to the International Monetary Fund, but Sarkunan Subramaniam, managing director of Knight Frank Malaysia, says this is in line with global property trends.
While the market has cooled as of late, the period of hot demand raised the bar in terms of national infrastructure and, in particular, residential construction. As Sarkunan points out, the latter-day developments are considered world standard, with many winning globally-recognised FIABCI Prix de Excellence awards. "The formation of the Construction Industry Development Board in 1994 has truly uplifted the capacity and capability of the construction industry, with training and improving skilled labour," he says.
Many high-end residential projects in the country incorporate innovative design concepts and offer quality in terms of finishing and fittings, as well as lifestyle amenities, says Herbert Leong, associate director, project marketing, at Knight Frank Malaysia, citing completed or upcoming projects such as The Troika designed by Foster + Partners, and 8 Conlay, master planned by RSP Architects with interiors by YOO.
"The country - particularly the capital, Kuala Lumpur - is also witnessing the entry of branded residences," Leong adds. The first - The Residences at St Regis Kuala Lumpur - is slated for completion this year. Other notable brands making inroads in the city include Pavilion Banyan Tree Signatures, Four Seasons Place, The Ritz-Carlton and Kempinski.
Some of the dominant Malaysian developers have made a name for themselves overseas, especially in London, Australia and Canada, Leong says. Notable overseas projects include the Battersea project in London, and Fulton Lane and Aurora in Melbourne.
In March this year, developer Tropicana Corporation unveiled The Residences, its most ambitious project to date - a Skidmore, Owings & Merrill-designed 55-storey tower in the "golden triangle" of Kuala Lumpur's central business district. The architect has an impressive portfolio, including the Burj Khalifa Tower in Dubai, and One World Trade Center in New York.
The Residences will offer "every conceivable luxury and amenity, including concierge and housekeeping services, and an innovative home-care programme - ideal for those constantly on the move", says Ung Lay Ting, Tropicana's head of marketing and sales. She expects that, in addition to becoming an iconic landmark, the property will be a serious contender for expatriates wanting to invest in Malaysia.
"With an increasing appreciation of capital in the area, analysts have predicted that The Residences will fetch steady traffic of those wanting to rent space close to the neighbouring office areas which house global companies."
Developer Wangsa Tegap, a wholly-owned subsidiary of Berjaya Corporation, is raising the luxury stakes in Malaysia with its landmark development, The Ritz-Carlton Residences Kuala Lumpur, Jalan Sultan Ismail, a freehold 48-storey tower neighbouring the iconic KLCC Petronas Twin Towers, heart of the city's financial district. Residents will enjoy all the business, shopping and entertainment facilities of the affluent "golden triangle", in apartments crafted by renowned interior design firm Peter Silling & Associates, the name behind luxury international hotels such as The Ritz-Carlton Berlin, The Ritz-Carlton Moscow and JW Marriott Hanoi.
Most analysts had predicted a slowdown in the Malaysian property market in 2015 - including Siva Shana, part of the management council of the Malaysian Institute of Real Estate Agents, who says the year to date is panning out as expected. "The key term would be status quo," he says.
"The market is quite lacklustre, and we expect the rest of this year to remain flat. In my opinion, it will show signs of recovery in 2016." Oxford Business Group views the present slowdown as a "welcome respite" given the surging debt levels of Malaysian households.
Following various government cooling measures, the recent (April) implementation of a general sales tax should "slow appetites further", the report found, noting, however, that "many think this could be a temporary slowdown, with momentum expected to build again in 2016".
But according to Moody's Investors Service, both Malaysian banks and property developers are resilient to possible shifts in sentiment and falling property prices. Stephen Schwartz, a Moody's senior vice-president, anticipates a soft landing for property prices, supported by robust, albeit decelerating GDP growth, and stable housing demand from middle-income households. "Malaysian developers and banks should be resilient to downward property price pressures," he said in a research note issued in March.