Updated: Jan 23, 2020
If you're a property investor looking at diversifying your portfolio through international acquisitions, there are plenty of cities to consider.
One of my favourite online sites to see what cities are hot is IP Global. They have a periodic list of cities they're investing in. London almost always makes their list. Kuala Lumpur was on their list some years ago.
It is also interesting to check out cities that they're not investing in. In 2018, the list of countries or cities they were not investing in included:
Ho Chi Minh City
In this article, my focus is Kuala Lumpur and why it is a great property investment destination. Without further ado, here are 6 reasons why this city should be on your radar:
#1 Malaysia Has a Very Good Migration Program
The Malaysia My Second Home Program (MM2H) is supposed to be one of the best migration programs in the world. According to Investment Migration Insider, it’s also one of the most popular Golden Visa programs "rivalling those of US and Greece."
It’s relatively easy to qualify if you can afford the mandatory deposit of USD $72,000 if you’re below 50 years of age, or USD $36,000 if you’re above 50.
This money is kept in a fixed-deposit with a local bank in your name and will earn you the usual interest.
You should also be able to show proof of foreign income amounting to roughly USD $2,500 per month.
The MM2H program does not allow employment but you can setup business. You will enjoy a 10-year social pass which can be renewed.
Now, the more important question; why would anyone want to migrate to Malaysia?
#2 Malaysia Has One of the Most Affordable Living Costs
Malaysia is the 15th cheapest country to live in. In this ranking by GoBankingRates.com, countries were evaluated against 4 key metrics:
local purchasing power index,
groceries index, and
consumer price index.
Besides cars which are overpriced due to taxes, everything else is pretty much affordable by global standards. Food is abundant, delicious, and cheap.
What more could you ask for?
#3 Malaysia Is One of the Best Countries to Retire In
When it comes to drawing foreigners, Malaysia rarely beats its neighbour Thailand. However, as a place to retire in, Malaysia is the 5th best country in the world beating Thailand by 4 spots.
The Annual Global Retirement Index (AGRI) has maintained Malaysia in its Top 10 list since 2016 at least. In the AGRI report by International Living, they cite the beautiful beaches, pristine rainforests, deliciously cheap food, affordable health care, good value apartments, and ease of getting around only knowing English as reasons for loving it as a retirement haven.
I would add good infrastructure, fantastic shopping opportunities, and if you live in the capital; superb public rail transportation.
To top that off, International Living ranks Malaysia's healthcare as best among the top 6 countries to retire in.
And it gets better...
#4 Malaysia's Laws on Foreign Ownership of Property Are Very Liberal
Nationalities of all countries that Malaysia has diplomatic ties with, can buy property in Malaysia with relative ease. There are minimal restrictions and taxes for foreign ownership.
IP Global, in its 2018 list of countries that they're not investing in, cites the following reasons for their decision:
Strict restrictions on foreign buyers
Tight mortgage regulation for foreign buyers
Lack of attractive mortgage options
High transaction costs
Malaysia has virtually none of these problems. There are some controls to curb speculation in the form of Real Property Gains Tax and a minimum price threshold but nothing that puts a serious damper on your investment returns.
The minimum price threshold to buy property as a foreigner in Kuala Lumpur is RM1,000,000 (USD $250,000). Foreigners can own freehold, residential, and commercial properties.
I can hear you thinking, "How expensive is property in Kuala Lumpur?"
#5 Property Prices In Kuala Lumpur Are Relatively Cheap
If you read the local news, affordable housing is a problem in Malaysia... but it is also a problem in many other countries. There are many reasons to this, including the fact that wages are growing very slowly.
Compare Kuala Lumpur's median price per square foot of RM1,165 (USD $280) to other cities in the region:
Singapore RM7,235 (USD $1,738)
Bangkok RM2136 (USD $513)
Manila RM1,069 (USD $257)
Ho Chi Minh City RM1,007 (USD $242)
Jakarta RM849 (USD $204)
Kuala Lumpur's price is almost the same as Manila and not very far off from Ho Chi Minh City. However, Kuala Lumpur's infrastructure, public transportation, access to health care, safety, ease of getting by with English, and consumer protection laws are superior to Manila, Ho Chi Minh City and Jakarta.
In other words, Kuala Lumpur's price-to-value ratio is good.
And if that's not enough...
#6 Good Capital Appreciation
Malaysia has been through 3 recessions in the last 35 years. There was the recession of 1985, the Asian Financial Crisis in 1997, and to a smaller extent, the effect of the Global Financial Crisis in 2008.
Malaysia's property market has been fairly stagnant since 2015 (after a good boom) and is only just seeing a pick-up.
Through all this, Malaysia's property prices on average did not decline. This has been the same for Kuala Lumpur.
Prices consolidate or remain stagnant but do not usually drop. Over the last 35 years, Kuala Lumpur's housing price has grown at a higher rate than inflation. With properties that we were able to track between 1983 to 2018, the appreciation averaged 6% per annum.
Kuala Lumpur's relatively low price-per-square-foot is an indication of how much more potential growth there is in terms of appreciation.
Foreigners looking to buy properties in Malaysia, will find it relatively easy to purchase property and live in Malaysia under the MM2H program. Malaysia has plenty to offer in terms of property value and quality of life.
You will be treated to some of the oldest rainforests in the world, beautiful beaches, amazing dive spots, and friendly locals who can converse in English. There are some localities like Mont Kiara, Bangsar, KL Sentral and KLCC that cater for expatriates. In these places, Western, Indian, Korean, and Japanese grocers and specialities are easily available.
The build quality of luxury developments are generally good with great facilities. There is a very good price-to-value ratio not only because prices are relatively cheap but because of the facilities and amenities usually offered.
Property value is accentuated by good appreciation, liberal foreign ownership regulation and the fact that Kuala Lumpur has a very well developed public transportation system and infrastructure.
Kuala Lumpur also boasts and array of good international schools, namely International School Kuala Lumpur, Mont Kiara International’s School, Garden International School and Fairview International’s School. There are more in Greater Kuala Lumpur.
Access to good healthcare is easy. According to International Living, Malaysia ranks best in healthcare. Malaysia's medical tourism has been growing in double digits over the last 5 years.
There are downsides to Kuala Lumpur and Malaysia like poor wage growth, corruption, mild ethnic tensions, and relatively low rent yield. This post is not necessarily glossing over such concerns but the country would not be one of the best places in the world to retire in if such problems were endemic.
All factors considered, Kuala Lumpur is a city that should be on the radar of international property investors. Speak to us, for our selection of property investment opportunities.