Malaysia Property General Investment Guide for Foreigners

Investing in overseas properties can be a tough and costly process, and requires stringent and careful research to make a well informed and knowledgeable decision on any real estate purchase in Malaysia.

As a foreign investor, some pointers to consider include the policies of no quantity restrictions to the number of residential properties owned, waiving of the Real Property Gains Tax, and ease of funds transfer back to overseas countries.

Transaction Process and Financing

With a budget in hand, foreigners can select from a choice of landed residential properties, condominiums, commercial developments or land.

Properties purchased from the secondary market will require four to six months for transaction completion, while those acquired from a developer will usually be ready within two to three years from development launch. Leasehold properties should be avoided as such transactions often involve a complicated process with a lengthy wait involved.

Local bank financing is available for foreigners of about 70 to 90 percent of the property value, with no limit on the number of loans applied for.

Developer and Property Research

Once the type of property, location, price and its other details have been researched, a background check on the developer and its track record including its financial standing, figures, necessary permits and approvals, and its other projects should be conducted.

Factors determining the future capital appreciation of the property should also be carefully determined, e.g. quality of interior finishing, directional positioning of the unit, other facilities or amenities next to the property etc.

Before the Sale & Purchase Agreement is signed, a final check that no hidden costs will be incurred has to be thoroughly undertaken.

Post-Purchase Decisions

With the purchase deal concluded, owners will now decide whether to move in to the property, leave it empty, engage a caretaker, or put it on the rental market to earn income.

To maximize rental returns, renovation works and interior decor should be matched to fit the desired target market.

Non residents are subjected to 28 percent tax on rental income or an effective rate of 20 to 25 percent after allowable business expense deductions. Investors can look forward to a gross rental yield of between five to seven percent and higher in exclusive and premium areas such as Mont' Kiara.

Malaysia provides a rich investment climate for real estate, and is turning the eye of many foreign buyers. With its improving economic, social climate and high capital growth figures, the country presents itself as the ideal market to park international investments.

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