The Southeast Asian nations are currently attracting a worldwide attention from property investments companies and individuals alike. Apart from the traditional real estate property buyers from the United States and Asia, there has been an increased influx of European real estate property investors into the Asian property market. Choosing an appropriate property investment destination from among China, Hong Kong, India, Indonesia, Kuala Lumpur, Philippines, Singapore and Thailand has never been an easy experience. It is an exercise that requires a lot of research and consultations.
The good news is that, amongst these major Asian cities, investment property in Kuala Lumpur, Malaysia is what seems to be the most competitive of them all. Property investment in Kuala Lumpur, Malaysia is currently in early stages of a promising growth spurt. Due to a strong economic climate and new government laws to encourage foreign investment in real estate property in Kuala Lumpur Malaysia, many worldwide property investors are looking to Malaysia as a lucrative investment property market.
Just like the rest of the Asian and pacific nations, Malaysia has two primary investment property markets that are attractive to overseas property investors: The areas around the capital's central business district and the resort properties along the coastline. However, unlike her Asian counterparts, investment property in Kuala Lumpur, Malaysia is fairly easy to buy. In a bid to attract foreign investment property buyers, the Malaysian government relaxed its rules governing property ownership by foreigners. The new investment property rules are spelled out as follows:
- Foreigners can now purchase all types of properties without having to set up a company with local equity partners.
- They can also buy into projects on which construction has not started.
- Foreigners can take out loans from local banks to fund their property purchases.
- The rule that any property purchased by non-Malaysians must be priced at a minimum of 250,000 ringgit remains in place.
- Foreigners who sell properties worth less than 20 million ringgit must still report the sale to the Foreign Investment Committee (FIC), but do not need its approval.
- Foreign manufacturing companies can own industrial lots or factories, but not for rental purposes.
- To encourage companies to set up regional headquarters in Malaysia, foreign firms can own offices costing 250,000 ringgit and above without local equity partners.
These rules have largely contributed to the increased profile of Kuala Lumpur as a formidable emerging property market and destination. Unlike Malaysia where the government is spearheading campaigns for encouraging foreign property investment in the country, Thailand's government is doing the opposite by launching a crackdown on foreign owned investment property companies. Philippine's government on its part has failed to rush through Congress the proposed amendments to the country's property laws. Thailand, Indonesia, Philippines and Singapore have laws that prohibit foreigners from owning land and only restrict them to buying apartments or using leasehold arrangements.
Under Indonesian law, only Indonesian private citizens, not companies, are allowed to own the freehold rights to land. Indonesian companies and foreign individuals are entitled to leaseholds, rights of use, rights of exploitation and rights to build. There are alternatives, which include forming a foreign investment company, buying a "right of use" title and buying the leasehold. Lease holding is common for investment property transactions, less so for individual long term investments. Thailand has similar restrictions, and the most common methods of securing property in Thailand are to become a majority shareholder in a domestic company and have the company purchase the property or to sign a 30-year lease with a Thai individual, with an automatic option to renew for another 30 years.
In Japan, laws that govern investment property market are not better either. Real estate development in Japan has been stymied by the limited availability of land, biased laws that favor tenants, and failed urban planning. The Japanese government has however enacted several political and legal changes aimed at facilitating increased participation of both local and foreign property investors in Japan's real estate property market.
In Singapore, The Residential Property Act 1973 prohibits foreign ownership of certain categories of private residential properties such as landed properties unless a foreigner has obtained the approval from the Land Dealings Approval Unit. For enquiries, they may write to the Comptroller of Residential Property Land Dealings Approval Unit. A foreigner is defined under the Act to mean a non-Singapore citizen and includes a permanent resident of Singapore. In China, the Property Right Law that was promulgated and approved by the National People's Congress on March 16, 2007, became effective from October 1, 2007. The Property Law expands existing provisions regarding property rights and is a major milestone in the development of a more systematic regime for protection of property rights in China. Earlier on April 27, 2007, the Shanghai Housing, Land & Resources Administration Bureau published the No. 1 State-owned Land Use Right Bidding. The announcement further relaxes the restrictions imposed on a foreign property investor's ability to bid for land use rights in Shanghai. However, it is worth noting that the announcement is limited in its scope to Shanghai, and in particular, to the land parcels listed in the 2007 No. 1 Announcement.
From the above comparisons, it is obviously clear that Malaysia is the only country whose government has formulated the most friendly property investment laws and regulations for the real estate property sector. Malaysia's investment property laws are also Sharia Law compliant. Therefore for those investment property investors from Islamic countries who would wish to buy investment property in Kuala Lumpur under the Sharia Law requirements can seek investment advice from Global Investments Ltd. Global Investments Ltd is a company that provides property buyers from all over the world with investment advice and can be contacted through www.myglobalinvestments.com.
Table 1: Property Registration in Asia
COUNTRY DAYS PROCEDURES COST(% OF VALUE)
Malaysia 144 5 2.4
China 32 3 3.1
Hong Kong 54 5 5.0
India 62 6 7.8
Indonesia 42 7 10.5
Japan 14 6 4.1
Philippines 33 8 5.7
Singapore 9 3 2.8
South Korea 11 7 6.3
Taiwan 5 3 6.2
Thailand 2 2 6.3
East Asia & Pacific 85.8 4.2 4.0
Source: Doing Business in Global Property Guide
REFERENCES
RFP Magazine - Real Estate Section (n.d). Economic Outlook of the Asian office Market Retrieved on October 15, 2007 from www.rfpmagazine.com/rfp_pages/realestate_8.html
How you can profit from Asia property boom (n.d). Retrieved on October 15, 2007 from http://www.moneyweek.com/file/28094/how-you-can-profit-from-asias-property-boom.html
Asia Pacific News (n.d). Retrieved on October 15, 2007 from http://www.develicaasiapacific.com/news/070801riseinvalue.html
Bright Spots in the Asia Pacific Property Markets amidst Uncertainties (n.d). Retrieved on October 15, 2007 from http://www.JonesLangLaSalle.com\Asia Pacific.htm
Global Property Guide. Retrieved on October 15, 2007 from http://www.globalpropertyguide.com/articleread.php?article_id=93&cid
Construction, Property & Real Estate (n.d). Asia and Pacific. Retrieved on October 15, 2007 from http://www.mandaq.com\
Hines, M. (2001). Japan Real Estate Investment. Westport, CT: Quorum Books.
