Malaysia is amongst the most appealing countries for foreign investment as its multicultural community with its diversified society adds charm and attracts a huge number of foreigners to Malaysia. While Malaysia is well-known globally for its uniqueness in terms of its food, language and culture, there are also other factors which encourage foreigners to invest in Malaysia.
Among the main reasons to boost foreign investment in Malaysia is the depreciating Ringgit, followed by Malaysia’s minimal restrictions on foreign investment.
Even though the depreciating Ringgit can be bad news for Malaysians, yet things can be vice versa for foreigners who get to enjoy a better exchange rate. But this can be applied only for the countries which hold a stronger currency against the Ringgit and not otherwise.
In terms of restrictions, Malaysia is named to be amongst the countries which have minimal restrictions in foreign real estate investment, as compared to other countries.
But, how can the developers in Malaysia further attract these potential foreign buyers to invest in Malaysia?
1. Understanding the buyers
One way to attract potential foreign buyers is to offer the right product for them. Conduct an adequate survey of the type of properties, mostly preferred by the foreign investors or expats in Malaysia. Determine if high-rise or landed properties are the favourite type of investment properties.
For example, expats like to invest in high-rises scattered around the Kuala Lumpur City Centre. The condominiums that come with a nice KLCC view which is within walking distance to a myriad of amenities.
Moreover, the project should also come with many convenient facilities within, such as swimming pools, gymnasiums and other beneficial state-of-the-art facilities. Most of the foreign investors, even the locals, prefer selecting projects which provide better facilities.
2. Following the price cap
Meantime, it is also important for the developer to ensure the project fits the requirements of the foreign purchase rules set by the Malaysian government. For example, foreign investors are not allowed to purchase low-end or affordable homes in Malaysia, as well as any homes here that cost less than RM250,000.
In addition to that, there are also price caps set by the state authorities in their respective states for foreign buyers, as to protect the interests of local homebuyers. Hence, foreigners are only allowed to purchase high-end homes, which cost over RM1 million in Kuala Lumpur, as well as RM2 million in Selangor. The price cap differs among the states in Malaysia.
The developer has to ensure that the product fits the price cap of foreign buyers, given the project is targeted at them. However, the price should be reasonable according to the product that is offered and simply increasing the price for a lower quality product will not encourage foreign investment.
3. Must be spot-on
Vast importance should also be given to the location of the project as the location plays a vital role in attracting foreign buyers. A project which is located on the outskirts or in a less developed area will be less appealing for a foreigner.
Moreover, some foreigners also tend to pick their favourite location when looking to invest. The developer should identify such things and construct their project on a spot-on location.
For example, most Singaporean investors prefer acquiring properties in Johor due to Johor’s strategic location close to Singapore. Meanwhile, most Malaysia My Second Home (MM2H) applicants prefer buying properties in Penang, as the place was voted as the best place for retirement.
Besides these states, Kuala Lumpur and Klang Valley (Selangor) also sees a high number of foreign investments.
Hence, a developer should offer developments in such preferred locations instead of focusing on the outskirts which are less preferable.
4. Effective marketing strategy
Even if a development has all the important features coupled with a good location, yet lacks a proper marketing strategy, may suffer poor sales. Hence, a good marketing strategy should be undertaken by the developer to provide sufficient exposure for their projects.
Technology-based marketing is the latest trend right now and will be more suitable in attracting foreign buyers. Such marketing includes Virtual Reality tours, a high-tech approach which allows a person to view the sales gallery even without visiting one.
This will help buyers consider the project from their own country, allowing them to reduce the number visits to Malaysia before acquiring the property.
Meanwhile, if the developer is launching the project overseas, it is important to localise the launch, promos and the marketing tools as to fit the target market.
For example, if a developer is launching a project in Indonesia, it is better to use Bahasa Indonesia during the launch and for the promotional materials. This will provide better understanding for the target buyers, thus, encouraging them to consider buying the property.
5. Good promos
Offering rebates and freebies mostly help to boost sales, however, it is important for the developer to be cautious over the price cap set by the local government. The developer must ensure that the price after rebate still remains over the price limitations, as to avoid complications during the home purchase.
Meantime, offering a semi-furnished or fully furnished abode, or with certain fittings and fixtures can also trigger the interest of the potential foreign buyers.
6. Adequate financing
A foreign buyer can acquire bank loans of up to 75% in Malaysia. Even when most foreigners take loans from their own countries, having an adequate number of local banks to back-up the project will boost their confidence on the project.
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
