Sharen Kaur
INVESTMENTS by Kuwait Finance House and Macquarie Global Property Advisors in properties purchased in Kuala Lumpur and the landmark value paid for the Four Seasons in Langkawi by Prince Alwaleed of the Kingdom Group have encouraged the flow of foreign direct investments (FDIs) in real estate in Malaysia.
Hall Chadwick Asia (HCA) Sdn Bhd chairman Kumar Tharmalingam said Malaysia's real estate attracted international attention when it removed its shackles from the 1997 regional meltdown.
While there's no fixed rule to what assets are purchased, Middle East investors try to be more syariah-compliant, failing which, they become short-term investors and sell the assets as soon as the project is ready for occupation.
"Other private equity funds will look at the whole range of assets that can give them development profits and income after completion. That provides them with the base returns they are used to in the Gulf, which have been in double-digits," Kumar told Business Times.
He said most investment funds have five-year time frames, where they would look at their real-estate portfolios and sell what they don't need.
He added that tourism has been a great catalyst for the development of real estate in Malaysia.
"Tourists from the Gulf have been arriving here for the last four years in growing numbers. When they return to their home country, they realise that Malaysia is not just a haven for tourists but a good place to invest in," Kumar said.
He said Malaysia's targeted tourist countries like South Korea, Japan and the Middle East have generated positive investments in real estate.
Tharmalingam believes there is also a new wave of investments coming in the food and beverage, and hospitality industries.
"We have investors looking to set up Syariah-compliant five-star hotels in Malaysia, aimed at the Middle East family market. They think there is a market for it here," Kumar said.
He said these hotels will become the centre piece launch pad for similar hotels in Asia, and Malaysia would probably be the hub because of the country's direct air connections within three hours to China and India, and Southeast Asia.
"China, India and Southeast Asia have a total population of three billion people, of which, 800 million are Muslims. Investors believe they can cater to these non-traditional Muslim markets as well through the establishment of the hotels," he added.
Kumar said some of HCA's clients are now looking at buying existing hotels, or building new ones in the Klang valley.
He said the Four Seasons Hotel, currently under construction, will be the magnet for more five-star hotels to be developed in Kuala Lumpur.
Meanwhile, investors from India, Saudi Arabia, South Korea, China and Singapore prefer to buy condominiums, services apartments and luxury houses in Kuala Lumpur, Johor and Penang, worth in excess of RM2 million, representing the premier segment in real estate.
In terms of pricing, Tharmalingam said, Malaysia is still 10 per cent and 20 per cent of Hong Kong's and Singapore's value respectively, in ringgit terms.
"The appetite is always urban. They believe where there is a large urban population, the quality of assets are better and there is also higher rental income returns," Kumar said.
He said Malaysian property buyers would not be affected by foreigners buying homes here. Foreigners buy homes worth in excess of RM2 million, which is not of majority Malaysian interest.
Middle East investment agencies, meanwhile, are looking at providing the large number of investors here with facilities they are comfortable with.
Kumar said there will be more financial institutions, credit card firms and Syariah-compliant tourism facilities like transport and up-market residential accommodation coming up.
"Indian and Chinese government-owned funds are also seeking to invest in Malaysia. They are planning to replicate the success story of Temasek Holdings, which has a good track record of investing outside Singapore," Kumar noted.
Source:
Business Times
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