Malaysia property investment has been booming. Malaysia has seen a constant growth in the property development market. The growth has been in the apartment, or condominium, space as well as the landed properties, like terrace houses. The latest figures, released by the Malaysian Government, show that the properties have appreciated. This is a significant improvement over the years before. Let us find out more about Malaysia property investment.
Still an excellent time for Malaysia property investment?
The world economy at present is defined as volatile, at best. If you would ask 10 economists about the outlook, you would be left with 10 different opinions. The mood of the investors, in general, is to hold on to cash reserves. Western economies are in volatile. China is throttling its growth to keep it sustainable. These factors are influencing emerging economies like Malaysia.
Let us say you do not invest in properties. Where would you invest? Would you invest in gold? The gold prices charts resemble the volatile charts of stock markets. Gold saw a rise and fall from US$1,800 to US$1,600 from August to October 2011. Oil is dropping in price on account of lower consumption. The currency markets are giving little encouragement. Lately, the Swiss government has asked the banks to charge people if they want to save in Swiss Francs, instead of giving interest on deposits.
Global situation affect Malaysia property investment
Let us look at the US housing market. As per the figures published for September 2012, the housing market rose a mere 1.7 percent. So what is the excitement about? In the same period, the multifamily homes market rose by a whopping 51 percent. Multifamily homes are condominiums, apartments and similar housing constructions. So the turmoil in the economy is not threatening the property market. It is just shifting the focus. If we think about it, it makes sense. People have less money to spend, so they opt for cheaper alternatives.
In China, the residential property market has been artificially influenced by the government to slow down. There the property investment has shifted to commercial real estate.
In Australia, the property developers are not reporting any slowdown in demand. The only thing that exists is fear from all the negative news in other sectors of the economy.
Malaysian property investment market
In Malaysia, the trend is similar. Property markets have not been hit negatively. Malaysian Government does not plan to influence the property markets. Left to the market forces, the property market is thriving, resisting the impacts of the world turmoil.
Past years have seen apartments rise at a rate of 40-60% and houses rise with a stable 20%. These figures show a clear trend. The Malaysian economy is not seeing any serious contraction. More and more people are opting for new apartments or new houses. This trend is likely to continue in the near future. Property investors typically roll their assets once or twice a year. This market seems to be intact for the returns that the investors expect.
The growth of condominium is naturally higher in the cities. In order from highest to lowest, Kuala Lumpur, Penang, Selangor and Johor topped the residential market figures. The growth is seen in the residential market rather than in the commercial sector.
Some facts and figures
As per the Malaysian Government report released October 2011, the transactions of property are expected to cross the RM100 billion mark. This is happening for the first time in Malaysia history. The 11-month transaction volume increased 12.2% year-on-year. These are encouraging indicators for the bulls of Malaysia property investment.
The banking sector reported that 58.8% bank loans were given for the residential property. The non-residential property loans were only 22.1% in comparison. The construction sector loans increased to 19%, showing no signs of slow down.
The credit expansion was approximately RM50 billion in from September 2009 to September 2010. The residential property market was clearly the prime market mover.
There are development plans that were announced by the Malaysian Prime Minister. For 2012, a series of strategies is planned to protect the contractors and suppliers, from payment irregularities in the construction sector. The Malaysian government is keen to fuel the growth in this sector and iron out irregularities.
Time to invest
The statistics and trends show that Malaysia property investment area remains strong. It is time to invest. Consider investing in multifamily homes. The average budget of the people is shrinking. They are opting for smaller housing options like apartments for rent or apartments for sale.
If you are invested in landed properties, now may be an opportune time to liquidate your assets. Make a lateral move to the condominium space. Most experts agree that the property sector will remain a preferred choice for investors even if things get worst.
Malaysia a strong market
The following reasons make the Malaysian property investment market strong:
- There is constant growth in the property market
- The supply of land available to build is limited.
- There are financial liquidity constraints by banks
- The Loan-to-Value remains strong at 70%. This means that you can get maximum 70% loan against the property. It protects the financial sector from having bad debts and encourages healthier financial stability.
- A stable government, social and economic environment fuels stable growth and demand for the property market
- New home buyers are increasing in numbers. New housing projects are attracting buyers with newer facilities like gated and guarded areas, fiber-optic Internet connectivity etc.
- The demand is increasing in large cities. Kuala Lumpur has around 6 million people living in it. By 2020, this figure is expected to reach 10 million.
We would assume that the situations in the global economies have forced us to think about Malaysia property investments. The facts and figures point to healthy returns in Malaysia property investment sector. There is some weakening in branches of Malaysia property investment. Be wary of investing in those branches. As a whole, Malaysia property investment remains a remarkably strong proposal.There are no indicators that this will change soon.