Malaysia's Real Estate Market – Bubble or Opportunity?

View on Petronas Twin Towers in Kuala Lumpur

The real estate market is a hot issue in Malaysia and that is not only because of CNBC, which rated Malaysia 9 of the top 10 hottest real estate markets globally. This rating was based on research by Knight Frank, an international real estate consultancy. (for more details: CNBC 2012: The World’s hottest Real Estate Markets) While everybody remembers the headache of the US subprime crisis, in Malaysia people feel determined to venture into property right now. Just a few days back, I met with the brother of a famous fashion designer here in Malaysia. It was obviously about getting some new suits, but we ended up talking about real estate. I told him that I will stay in Malaysia and intend to buy property myself. He promptly said: "Buy now." I asked him, in a quite naïve way, if we are not heading straight into a real estate bubble. Prices have been rising and almost everybody tried to make a profit out of it recently. He responded in a pretty simplistic way: “There could be a slight downfall or setback, but the prices will keep on rising.” From my observation, this is a general attitude of Malaysians and many people hope to make a fortune in real estate. In other words, property is a booming business with prices rising by about 28 %.(CNBC 2012: The World’s hottest Real Estate Markets)

Now that looks like a bubble, doesn't it?

Many educated people would say, the undisputed belief in ever rising prices is not going along well with fundamental economic theories as well as real-world events such as the global downturn caused by Europe and slowing growth in China. However, there is a lot more happening in Malaysia, than what I told you so far. In order to give you an idea and also some thoughts on the investment environment, I would like to throw some figures at you and see what happens in the market. In addition, I talk a bit about regulation changes and round it up with recent discussions on foreign investment in real estate, price caps and similar desires.

With REITs becoming more important and less restrictions on property investments for foreigners, Malaysia offers more opportunities than the highly regulated market of Singapore. Stay tuned for more insights into the development and prospects of Malaysia's property market.