By Pauline Ng
KUALA LUMPUR - Security or crime issues top the list of concerns for prospective Singaporean buyers of Malaysian real estate, but the ability to flip an asset quickly is also a major consideration, according to PropertyGuru group chief executive Steve Melhuish.
Because many have made money flipping properties in Singapore's dynamic property market, capital appreciation is also foremost to such buyers, who typically ask, "Can I make 20-30 per cent per annum in capital appreciation?"
"The answer is 'no', but there may be capital appreciation," he said at a property panel discussion in Kuala Lumpur yesterday, in conjunction with the rebranding of the group's Malaysia property portal HomeGuru, to PropertyGuru.
Malaysia has tightened up on speculative activities, including implementing a real property gains tax of 10 per cent on disposal profits within the first two years of acquisition and 5 per cent on the third to fifth years.
In any event, more Singaporeans are looking to buy property overseas. In a recent survey by the group, Malaysia was the top choice because of its proximity as well as prices being much cheaper.
Low rental yields have also pushed Singapore investors to invest in Malaysia's biggest cities, Kuala Lumpur, Penang and Johor Baru, where yields are much higher.
Across the Causeway, older condo units in Johor Baru command low yields but the newer ones are doing much better, Malaysia Property Inc general manager Veena Loh said.
A slew of property projects - mostly high-end - are already in the pipeline to cater to the workforce and student population that are expected to grow once Iskandar Malaysia reaches a tipping point.
Investors appear more confident now that much of the infrastructure and a number of catalytic projects are in place.
Panel members observe that some expatriates in Singapore have bought properties in the special economic zone and are commuting to work, while others use their home as a weekend retreat.
"Malaysian prices are still very reasonable although some sectors have gone up," said Ho Chin Soon, who runs his own research firm. He advised those who fear abandoned projects to buy from reputable developers.
Owing to Johor's huge landbank, Ms Ho does not see price pressure in the immediate future.
Reapfield Properties group chief executive Gerard Kho pointed out many of Singapore's rich are not averse to buying Malaysian property, but do not want to be bothered with managing their investments. As such, he suggested there was a service niche that could be met.
This article was first published in The Business Times.