Travel restrictions lead to fewer foreigners buying homes in Malaysia

The country’s property market is still attractive to foreign homebuyers because its average price is comparatively lower, says expert

By S BIRRUNTHA / Pic By MUHD AMIN NAHARUL

INTEREST of foreign buyers, especially from Hong Kong and China, in Malaysian properties has fallen since the beginning of cross-border travel restrictions due to the Covid-19 pandemic.

VPC Realtors (JB) Sdn Bhd AsiaPacific property consultant Bruce Lee said the pandemic and the implementation of Movement Control Order (MCO) in the country has definitely imposed “severe effects” on the sales of local proper- ties to foreign buyers.

“Reliable data on the total units of property sold to foreign buyers to date since the pandemic began is hard to obtain, but we believe the number is decreasing.

“Majority of foreign home purchasers still prefer to visit and view the property and location physically before making decisions, and the pandemic has obviously halted those activities,” he told The Malaysian Reserve (TMR) recently.

Nevertheless, Lee said the country’s property market is still attractive to foreign homebuyers because its average price is comparatively lower to other South-East Asian countries.

He added that despite a small number of foreign purchasers buying properties online or virtually, many of them had formerly visited the project and the Internet is only a platform for both sellers and buyers to complete the sale and purchase.

Centre for Market Education CEO Dr Carmelo Ferlito opined that the lockdown restrictions imposed worldwide have put many foreign investors adopting a “wait-and-see” approach on the property market.

He noted that there are many forces at play at the moment moving in different directions, but there remains speculative and investment capital that is in search of a safe harbour.

“In this scenario, Malaysia has adopted an ambiguous attitude toward foreigners, which may discourage investors to step in, particularly on the fact that the property market in the country is already pretty mature.

“With great uncertainty, a mature market characterised by a certain oversupply and the likelihood of a lower number of expats to be attracted in the near future, I believe Malaysia will struggle to attract investors in the property sector,” he told TMR.

He added that this scenario will, therefore, lead to less potential tenants for high-end units in the local property market in particular.

“First of all, we have to see if investments will come. Secondly, I believe foreign homebuyers can play only a limited role in supporting the market, unless, we observe a massive outflow of capital seeking for a refuge from a specific country, like Hong Kong.

“Malaysia now needs to face competition from other countries. Indonesia, for example, has reduced the limitations for foreign buyers,” he noted.

Ferlito emphasised that the lockdown restrictions, rather than the pandemic per se, having greatly affected many investment decisions.

He also said uncertainty is never a good friend for investment, but noted that some high-end properties may have suffered less because they are a refuge investment, but the property sector as a whole was surely affected.

Before the Covid-19 pandemic confined global travelling, Malaysia’s property market saw an influx of interest by foreign investors.

The country remains an attractive destination for Chinese, Hong Kong and foreign homebuyers despite the adverse effects of Covid-19.

According to a report by Juwai IQI in December last year, Malaysia is expected to see an increase in foreign purchases in the next 12 months due to the country’s diverse culture, year-round warm climate and friendly locals.

Malaysia was ranked seventh in the third quarter of 2020 and among the world’s most preferred destinations by Chinese homebuyers.

The report stated that Malaysia has been a top destination for many affluent foreign property investors since 2002.

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