Both foreigners and local investors are subject to similar property regulations. Malaysia’s land tenure is based on the Australian system of land ownership – the Torrens system. A small percentage of land, mainly in rural areas, is reserved for the indigenous Malay people and cannot be owned or purchased by the non-native locals or foreigners under normal circumstances. However, most properties viable for investment are located in predominantly urban areas of the larger cities like Penang, Malacca, Johor Bahru and of course, Kuala Lumpur – and these areas have no such ownership restrictions.
KL’s housing property market has cooled off slightly of late, due to a combination of factors such as a relative excess of supply, cautious consumer sentiment, hikes in fuel prices and in interest rates. According to government data, the overhang in the residential market increased to 22,185 units from 15,083 units in the same period a year earlier. Housing developers said the soft market continued up to the next year. Housing developers and real estate agents have mixed views on the outlook of the property market. A recent survey by the Real Estate And Housing Developers’ Association Malaysia (Rehda) shows a general decline in the earnings of property players regarding houses for sale in Kuala Lumpur.
The study on the housing sector said the hike in interest rates as well as stricter consumer financing criteria by banks is hampering the industry’s growth. However, the current oversupply of residential properties has not occurred across the board as take-up rates continue to be strong in prime and established locations. The negative issues were proved more relevant to domestic buyers and have prompted a number of their developers to switch their focus on the growing foreign buyer market. Rehda deputy president Datuk Michael K.C. Yam said, “In Penang and Kuala Lumpur, developers are likely to focus on mixed and higher-end market with renewed interests in commercial and mixed development project.”
Major developers do not seem unduly concerned and Malaysia’s Guocoland Bhd recently announced it is to buy a piece of freehold land and two bungalows in KL’s Changkat Kia Peng area for US$17 million. The acquisition was the latest step in Guocoland’s steady bid to increase its landbank in the city.