Tuesday, February 19, 2013

Sometimes foreigners just won't buy

How many times have I read of statement which says a prospective investment is attractive because it is under invested by foreigners...

I read an article today which claims as below...

"Meanwhile, Malaysia Property Incorporated (MPI) said only up to three per cent of property investors in Malaysia are foreigners."

Let me ask a few questions:

  1. Is Malaysia yet a main destination for foreigners (high income) seeking work or as an alternative place to stay? How successful is our MM2H?
  2. Is Malaysia yet a strong education hub? Look at performance of the education sector (colleges and universities) such as HELP, Paramount. The strong performance are due to strong interest in private and international schooling, not foreigners looking at Malaysian universities or colleges.
  3. Are we there yet in terms of safety? 
  4. Is Malaysia a destination for hot money flowing in? Or rather flowing out!!!
  5. MYR cheap? MYR will always remain to be cheap. What is the prospect of Malaysian Ringgit over a horizon of 10 years? Will Malaysian Ringgit outdo other regional currencies such as SGD or RMB or even Aussie Dollar?
  6. What makes Malaysian property hot - speculation? Or investments i.e. including for stay?
  7. Will interest rates remain this low over the next 5 years?
  8. There is a reason why Singapore and Hong Kong are trying to cool down their property prices despite the much liquidity in the market. It is hightime we do the same rather than continuing to provide more liquidity to the property market as in what the government is doing. One can't provide more than 100% loan to a buyer. That's the limit.
  9. Iskandar? Singaporeans are buying for investments, speculation or stay? Will there be a third, fourth or fifth link into Singapore. MRT right through Iskandar as mentioned or planned. Has anyone thought of the security concerns and checks that Singapore does to its visitors? Has anyone gone through the Singapore security checks especially peak hours? Will there be bottlenecks for daily travels into Singapore? If Singapore is ever willing to do connections like Hong Kong Island and Kowloon or Manhattan and New Jersey then ISkandar will thrive. Travel has to be seamless. Can that happen with Singapore? If there is a bottleneck getting in and out of Singapore, then I am doubting that Iskandar will be hot over the longer term. For Iskandar to succeed, Singapore government's mindset has to change - not just Malaysia.
  10. Schooling. Singapore's children studying in Malaysian schools in Iskandar? Have you seen the number of Malaysian children commuting to Singapore for schooling everyday? They basically travel into Singapore through the causeway before 6 am every morning. With Singaporean buying properties for stay in Iskandar - that will reverse? I think Singaporeans have much trust in their own public schools than our private schools - at least for now...
Note who all the interviewees are for the article...they are all industry players with vested interest.


Eye on Malaysia as HK, Singapore curb property investments

KUALA LUMPUR, Feb 19 — Iskandar Malaysia, Kota Kinabalu, Kuala Lumpur and Penang are set to become hotspots for foreign property investors as the Hong Kong and Singapore governments “cool” their respective overheated property industries.
Malaysia has become a preferred country for foreign property investors and is now the main focus after Hong Kong and Singapore imposed 15 per cent levies to slow down foreign investments that had overheated their property markets.
These “cooling” measures have shifted some of the surging demand for residential and other properties to Malaysia, including a Malaysian-Singapore joint-venture iconic wellness project to be launched in Iskandar Malaysia later today.
Prime Minister Datuk Seri Najib Razak and his Singaporean counterpart Lee Hsien Loong will be accompanied by the largest gathering of Cabinet ministers from both side of the Causeway for the wellness project launch, according to officials involved in the venture.
A survey carried out by iProperty revealed that Malaysia is fast becoming a preferred investment destination for Singaporeans.
In the survey conducted among 2,099 Singaporeans, 42 per cent chose Malaysia as the number one destination for overseas investment, with Australia and the United Kingdom following close behind.
“According to Bloomberg, the Singapore dollar has risen more than 5.5 per cent in the past 12 months, the second-best performer among 11 Asian currencies.
“With a stronger currency, it is likely that even more respondents would pick Malaysia’s comparatively weaker currency (increased from 33 per cent to 42 per cent) over Australia (14 per cent) as their preferred overseas property location,” stated the iProperty Asia Market Sentiment Report (H1) 2013.
Fiabci Asia Pacific executive director Dr Yu Kee Su agrees that the cooling measures will drive up Malaysia’s property market and increase purchases in Malaysia and Australia.
“These two countries are the region’s investment grade countries for property investors from China,” he said.
He pointed out that Iskandar Malaysia, Kota Kinabalu, Kuala Lumpur and Cyberjaya will be the main hotspots that foreign investors are looking at.
Fiabci Malaysia national committee member Michael Geh concurred, saying that Kota Kinabalu and Iskandar will be the fastest growing spots due to both destinations’ flight connectivity to China.
“These two destinations are in the top tier of investments with new launches but this will not necessarily drive up prices as these investors will soak up the supply of new launches to keep the industry alive,” Geh said.
iProperty chief executive officer Shaun Di Gregorio seemed to have the same view by stating investments from Singaporeans will only have a marginal impact on property prices here.
Geh said foreign investors will only form the 10 to 15 per cent of the buyers.
“This is actually good for Malaysia’s property industry with external money coming in especially at a time when our domestic market is experiencing a credit crunch and liquidity,” he said.
Meanwhile, Malaysia Property Incorporated (MPI) said only up to three per cent of property investors in Malaysia are foreigners.
MPI agreed that the tightening of property investment regulations in Singapore and Hong Kong will likely draw more foreign buyers to Malaysian shores.
“Internally, Malaysia has also improved in the Doing Business 2013 report which would boost investors’ confidence in the country’s growth so this could help in attracting more foreign direct investment into the country and possibly translate into some property purchases,” MPI said.
MPI also said a large portion of foreign property owners in Malaysia are Singaporeans.
On whether this could somehow drive up prices in the housing industry, MPI said the industry in Malaysia was not a speculative market.
“Looking at our historical house price index, we can see that we have had steady appreciation in prices over the years with no peaks or troughs, unlike the more speculative markets of Singapore, Hong Kong or Shanghai which experience acute fluctuations during the recent economic crisis,” MPI said.
According to Smart Investors Club co-founder Jeffery Lam, Malaysia’s property industry is still one of the most affordable in the Southeast Asia region and that it still has a very huge potential to grow.
“Malaysia will definitely be one of the shining stars in the region and this is surely a good sign for the country’s economy,” he said.

1 comment:

sophialevis said...

Your opinions are quite interesting, I enjoy reading what you write. Hope to hear more from you.Alabama Land Surveyor