Foreign investors keen on Malaysia industrial properties

Kuala Lumpur

FOREIGN investors' interest in Malaysian residential property is not expected to return in 2022, though foreign firms are eyeing industrial space, said the Real Estate and Housing Developers' Association Malaysia (Rehda).

Rehda's property market survey for the second half of 2021 found that just 1 per cent of residential buyers were foreigners.

Nor were they investors. "The 1 per cent of foreign buyers are those who worked and stayed in Malaysia for the long term and decided to buy a property for their own stay," said Rehda acting president N K Tong at a Mar 15 media briefing on the survey.

The number of overseas buyers of residential properties was not significant last year, mainly due to stricter Malaysia My Second Home (MM2H) conditions and borders having been closed since March 2020, said Tong.

The MM2H government initiative lets eligible foreigners stay in Malaysia on a 10-year renewable social visit pass with a multiple entry visa. Suspended in August 2020 for a review, it resumed in October 2021 with stiffer terms and conditions, such as an offshore income of at least RM40,000 (S$12,986) a month and fixed savings account of RM1 million.

Rehda surveyed 124 developers in February this year.

The respondents had launched 10,665 units in the second half of 2021, down 8 per cent from the 11,601 figure for the first half of 2021. Almost all units - 10,631 of them - were residential properties, priced between RM250,001 and RM700,000.

Despite fewer units launched, sales performance improved to 50 per cent or 5,303 units, up from 39 per cent or 4,540 units in the first half of 2021.

Some 51 per cent of respondents plan to launch projects in the first half of 2022, for a total of 24,557 units: 17,969 strata residential units; 5,997 landed residential units; and 591 commercial units.

Developers across most states of Malaysia aim to launch residential units priced between RM250,001 and RM500,000, targeting local buyers.

Yet they are not too optimistic. Of those with planned launches, 77 per cent expect to achieve a sales performance of 50 per cent and below for the first half of 2022.

But things could look up in the second half of the year. Said Tong: "With the international borders reopening on April 1, we believe the market sentiment will improve. Most of the respondents of our survey said they are more optimistic about the country's property market in the second half of the year."

The border reopening could also boost foreign interest in industrial real estate, as overseas companies look at entering Malaysia.

Many developers said they have received increasing enquiries for industrial properties, said Redha vice-president Ho Hon Sang, adding that the most sought-after properties have a larger land size, or are big plots in prime locations with good accessibility and proximity to business hubs or ports.

"Some real estate agents are suggesting to (developers that they should) embark on industrial property development as they have clients from semiconductor and manufacturing sectors who are looking for factories, warehouses or manufacturing plants to expand their businesses," said Ho.

One of the key reasons why international companies are looking to relocate or expand is the global supply disruption due to the Covid-19 pandemic, he added.

Knight Frank Malaysia capital markets executive director Allan Sim said: "The global supply chain has experienced disruptions due to the coronavirus pandemic and with the current Russia-Ukraine conflict, multinational companies are now looking for a new location in the South-east Asia region. Malaysia and Vietnam have become some of their choices."

So far this year, Sim himself has received 7 enquiries from overseas firms - including some from Europe and the United States - looking for industrial properties or land for expansion in Malaysia.

The potential investors are from the manufacturing sector and looking for plots of 2 hectares to 4 hectares in size, he said. They see Malaysia as attractive not because of the prices of properties or land, but for the availability of raw materials and labour, he added.