Pulling in China’s property investors

Property investments by the Chinese are insignificant here compared to their investments elsewhere spurring the private sector here to step up efforts to draw them in

The mainland Chinese have been actively sourcing for investment beyond their shores for the past decade and have made significant inroads into the US and European markets. Many countries, including Malaysia, have begun actively wooing these cash-rich investors to help promote growth and sustain their local markets.

The recently concluded Asean Investment Seminar is one such private sector initiative to promote Malaysia as an investment destination to China investors. The one-day seminar was part of a six-day Guang-Xi Nanning Property Study Tour organised by SwhengTee International Sdn Bhd.

Key points of the lectures include discussion of the Asean-China invest- ment environment as it relates to the real estate market, procedures for investing in Malaysia, detailed infor- mation about the laws and financing, recommended real estate programmes in Malaysia, as well as the Malaysia My Second Home (MM2H) programme.

The turnout was encouraging as the event was attended by many VIP customers of banks, leading figures and high-ranking officials from the financial and investment institutions, as well as property developers and agents.

SwhengTee International founder Gavin Tee hopes that the seminar will expose more China investors to investment opportunities in Malaysia as well as promote bilateral investments between China and Malaysia. As it stands now, many Malaysian industry players have ventured into the Chinese property markets, but the same cannot be said for China‘s investments in Malaysia.

“There are encouraging signs that investment from China has improved, but it is still insignificant relative to the total amount they have invested around the world,” Tee revealed.

Friendly policies: The relatively low level of investment runs contrary to the extremely friendly policies and regulations prevailing in the property industry in Malaysia, and can best be attributed to the lack of awareness and miscon- ception of investment in Malaysia for foreigners. Many China investors are unaware that Malaysia is actually one of the most open markets for property investment this side of the world.

Unlike other countries in the region with tightly regulated property markets, the Malaysian government has imposed only minimum restrictions on foreign buyers. In fact, the government has issued a series of policies over the past couple of years to woo foreign buyers into the high-end residential market with tax reduction and income tax incentives.

There are no quotas for the number of properties foreigners may buy and the only restriction is that the properties must cost more than RM 500,000 although it is prudent to note that the RM500,000 is the Federal policy and some states have different rules with regards to the minimum price. (Recently, there was a proposal to raise the minimum price to RM1 million. To date, no state has implemented it yet).

Foreign investors also get to enjoy financing from local banks to increase their margin for investment, and this should provide a strong pull factor for investors. Malaysia‘s robust and well grounded legal framework is also a huge potential draw factor but is once again let down by insufficient promotion.

Both internal and external macroeconomic factors also favour Malaysia as a viable investment destination.

China‘s slower economic growth, high inflation, a strong dependence on exports and FDI (Foreign Direct Investments) have made it imperative for the country to transform its economy towards a more sustainable deve- lopment model. A series of macroeco- nomic policies designed to cool down the over-heated property market has in turn encouraged investors to look for other markets to hedge their invest- ments. Moreover, the appreciation of the RMB also helped fuel the buying powers of the Chinese investors.

In contrast, Malaysia‘s strong eco- nomy has proven to be highly robust in the wake of the global financial crisis and this level of stability can be attractive to China investors trying to spread their risks from the volatile US and European markets.

Malaysia‘s increasing push for glo- balisation and long standing policies to promote foreign direct investments will also play huge roles in making the properties more attractive to foreign investors. Special economic regions such as Iskandar in Johor will have high positive impact on the overall investment sentiments, including those of the property market.

The MM2H programme also provi- des many incentives for foreigners to settle in Malaysia. Incentives such as unlimited entry pass and tax exempt vehicles are just some of the benefits on top of staying in a beautiful coun- try. The Malaysian government is also actively promoting Malaysia as regional education hub and this can create a healthy feedback cycle for foreign investments.

Last year, Iskandar Investment Bhd and Beijing-based property developer Zhuoda Real Estate Group have entered into an agreement to develop integra- ted residential projects in Iskandar in a strong showing of China‘s interest in Malaysia.

“I urge the government and major players to explore the MM2H opportunities in China as there are huge poten- tial waiting to be tapped in this area,” reckoned Tee. He added that the private sector has already gone all out to pro- mote Malaysia as a viable investment location and the government‘s push would help the cause further.

As mentioned, China investors are ready to invest in overseas markets as can be seen from the outflow of property investment RMB from China. These are investors with funds to invest and our not actively going after them means a huge loss in potential foreign fund injections.

 

 

 

 

 

 

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