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Buying properties abroad helps hedge investments

STAR business 28.5.07

MOST Malaysian property buyers are a discerning and sophisticated lot nowadays, with the more affluent ones casting their sights on properties overseas.

S.K. Brothers Realty chief executive officer Charlie Chan sees Australia, Singapore and Britain as popular countries for Malaysians investing in properties overseas.

Chan said those who had invested in properties in Britain years ago would be enjoying capital appreciation and foreign exchange gains, thus encouraging them to invest further.“With the growing affluence of Malaysians, investing in properties overseas is one way to hedge their investments. They want to put their eggs in different baskets,” he said.

Australia is also a favourite place – especially Melbourne, Sydney, Perth and Gold Coast – for Malaysians to buy property as many have children who are studying there.

“I don’t see these investments affecting our local property market. People are still buying properties here to stay and invest in.

“We are also attracting foreign buyers into our market, especially after the recently introduced policies such as the abolition of the real property gains tax,” Chan said.

He believes these cross-border property investments are good for the country.

“People are looking for security and good returns on their investments,” he said.

General manager Chan Ai Cheng said investors were always on the lookout for new opportunities. “Land investment in Britain is also something worth considering. Investors can expect a return of 300% to 700% over a five to 10-year period,” she said.

Strategic land investment involves buying land with agricultural status or brownfield land which would be converted into residential, commercial or industrial land in future.

The strategy is simple – buy an undeveloped piece of land, wait until its price goes up (with planning permission) and then sell.

“We have clinched a deal worth over RM500,000 from a single investor before,” Ai Cheng said.When the land is sold, a capital gain is made, but since the British government only taxes people who live or work in Britain, Malaysians will not pay this tax.

Khong & Jaafar Sdn Bhd managing director Elvin Fernandez noted that one of the hottest sectors in the property market in Asean was the high-end luxurious condominium in Singapore.

“That market has been hot for the past one year. International buyers including Malaysians – high net worth individuals – are buying into the sector for capital appreciation and rental income,” he said.

Some high-end luxury condos are said to be selling at about S$3,000 per sq ft.

Elvin pointed out the need for good rental returns for a well-supported luxury high-end condo market.

“We will need a strong expatriate market to push up rental income for Malaysia so that the local luxury high-end condo can benefit from the spillover effect from Singapore,” he said.

He added that there could be more foreign workers in the country with projects from the Ninth Malaysia Plan rolling in and this would strengthen the luxury high-end condo market, as they would be looking to rent the condos.

Colliers International Property Consultants Sdn Bhd deputy managing director Lee Vun-Tsir reckoned the prices of luxury high-end condos in Singapore had doubled in the last eight months.

Lee expects a bigger expat workforce in Singapore, especially with the construction of Genting Inter- national’s Sentosa integrated resort, which will have the region’s first Universal Studios theme park and a casino.

He said this would help boost the property market there and make it even more attractive for foreign investors.

“Indonesia, especially Bali, is also one of the places Malaysians invest in – cash-rich individuals looking to buy resort developments, private villas and other such properties.

“Bali’s resort developments are a favourite as they are relatively cheaper compared with the other resorts in the region – for example, it is one third the price of resort properties in Phuket. We also speak a similar language,” he said.

Lee said the company was not aggressively moving into the overseas property market but rather catered to a niche market with resort properties such as the Angsana Resort and Spa in Bali.