Malaysia, the tropical paradise of the South China Sea, often beckons with beautiful, lush rainforests, powdery white sandy beaches, cloud piercing mountain ranges and caves that have stood for centuries. When you put all that together with a stable government, a very low cost of living, the infrastructure and modernities of a quickly developing nation, Malaysia truly sounds like paradise on earth. And you wouldn’t be very far off in thinking that.
Buying property in Malaysia is not as complicated as one would think. With a consolidated banking and finance industry and the escalation of property value over the last ten years, owning property in Malaysia, whether for investment or buying a home to live in, makes a whole lot of economic sense.
Malaysia’s capital Kuala Lumpur, is home to a large expatriate population. Some, who have come for business or work secondment, have chosen to stay on for a variety of reasons. Kuala Lumpur is blessed with luxury condominiums galore, especially in the plush Bangsar, Mont Kiara and KLCC areas. A large 2500 square feet luxury condominium costs just over USD$ 600,000. All this is for luxury in the heart of a modern, thriving capital. If you prefer living out near one of the many crystal clear oceans in Penang, a seafront bungalow could cost you all of USD$ 250,000 to 350,000.
The Malaysian government has recently launched an initiative aimed at foreigners, called the ‘Malaysia My Second Home program’ (MM2H). Under this program, foreigners can hold a ten year, renewable, Multiple Entry Visa and own multiple properties in Malaysia costing a minimum of 1 Million Malaysian Ringgit each. Considering the fact that the Malaysian Ringgit has remained between 3 to 3.7 Ringgit to the Dollar over the last ten years, foreign currency fluctuation risks are mitigated.
The local banking industry also provides multiple platforms of financing property purchases. The banking system for property works on a Base Lending Rate (BLR), which is the predominant interest rate per annum over a said number of years. This BLR has been hovering around the 6% rate for the last ten years. Even during the Asian financial crisis of 1998, the BLR pushed to 10.5%, only for a year, before eventually returning to the 6.6% rate where it currently stands. Most banks offer BLR minus 2.4% currently.
One method of financing is a term loan with the possible fluctuation of the BLR. Another is the Islamic financing option, which uses the Islamic Financing Rate (IFR), where the rate is the same as the BLR, but capped at a 10.6% regardless of how high the rate goes in the future. The KLIBOR or the Kuala Lumpur Interbank Offered Rate is also offered, which is what some developed countries offer.
One of the most attractive financing is that of flexi loans, where a current account acts as an overdraft facility and the interest is calculated on a daily basis, based on the difference of the loan amount and the balance amount in that account. Technically, one could have an account with the entire loan amount in this account and not pay a single cent of interest, while still having access to these funds if needed.
All in all Malaysia is safe, stable, and attractive place to live in. With a government programme inviting you in, stable Forex and Interest rates, and a relatively low standard of living, Malaysia continues to be the country of choice for buying properties in the region.