Situated in southeast Asia, Malaysia is a federation of thirteen states, split into East and West Malaysia.  West Malaysia is on the Malay Peninsula and shares borders with Thailand and Singapore, while East Malaysia is situated north of Borneo, and borders Indonesia and Brunei.

The country is heavily influenced by China and India who have a sizeable presence in the country, although politically the islands are dominated y the Malays.  The political system is modelled on that of the UK system, which is a reflection of the historic British rule - and the strong contacts which continue to this day.  The country’s land mass is some 239,000 km2 with a population currenty in the region of 27 million.

Introduction to Malaysia

While the two areas of Malaysia are separated by the South China sea they have very similar types of terrain and climate.  The coastal areas slowly but surely rise as you move inland, taking in dense forestry and mountainous areas in the centre of the islands.  As you would expected from the differing terrains, the climate also varies taking in hot and humid weather on the lowlands, and a colder climate in the inner mountainous areas.

There have been major changes in the Malaysia economy over the last twenty years, and while parts of the economy still depend upon the natural resources of rubber, palm oil, timber, coca, pepper, pineapple and tobacco, there is also a highly profitable financial sector. Malaysia is one of the major success stories of the area, with a growing economy and an expanding expat community.  The strong ties with the UK are still evident in many areas of Malaysian life,  which is one of the main reasons why it has become such a magnet to UK expats.

Property Market in Malaysia

Over the last few years the Malaysian property market been one of the better performers of the region, bringing significant investment returns to both national and foreign investors.  As the tourism industry continues to grow, the property market is starting to split between the tourist areas and social / professional housing - both areas are performing well for a host of different reasons.

The coastal areas have seen a major increase in foreign visitors over the last 10 years, resulting in both a significant increase in tourist developments as well as a strong appetite for holiday homes.  As you would expect from a fairly young property market there are a number of hot spots, but the general increase in property prices is starting to spread across much of the country. 

The large expat community and heavy overseas business interests in the country have spawned a very lucrative business property market, which is evident from the mass of skyscrapers under development.  This has also created a totally separate market to the tourist sector, with foreign employers requiring properties as close to their work place as possible.  Due to this, Kuala Lumpur has become one of the most heavily populated and heavily developed cities in the region.

To many, Malaysia is a market which reflects both the culture and values of the area, while also incorporating a strong western style market policy.  While many countries in the area have strived to create such a mix, few have been successful, and Malaysia is certainly reaping the rewards of much ground work carried out over the last decade.

Buying Property in Malaysia

The process for buying property in Malaysia is a lot simpler than many other countries in the area, after the government introduced changes to the rules of the 1960s which prevented foreign ownership of local properties. 

The property purchase process can be split into three simple stages which include :-

· The signing of a letter of offer, once a property has been found. The buyer will be expected to forward a 3% deposit to the seller.
· After 14 days a full sale agreement is signed and a further 7% of the purchase price will be passed to the seller.
· The balance of the sale price must be settled within 3 months of the paperwork being completed.

As a rule of thumb with investment in any overseas market, it is essential that you employ the services of local property and legal experts to represent you and give you the best advice available.  While these local service will obviously add a little to the overall cost of any transaction, it is a must for those not up to speed with local markets and local buying patterns.

The rental market in Malaysia is also going through a major growth phase, with areas such a Kuala Lumpur experiencing a lack of quality properties for the many expats and foreign workers in the city.  Yields have steadily grown, as have the value of the underlying properties, something which offers investors a long term lucrative income stream, with little real risk.

Future Property Market

The Malaysian property market is only now beginning to reap the benefits of government attempts to attract both foreign investors and foreign workers - a process that began many years ago.  The simplified buying process together with the lack of any restrictions on foreign ownership has opened up a market fairly free of any local legislative risks - although the market itself will experience swings at some stage.

Experts are predicting that the Malaysian economy is on a firm long term growth path, with growth of 5.3% reported in the first quarter of 2007 alone.  The influx of both foreign businesses and foreign national shows no sign of slowing, thereby offering support to an already robust economy.

The hot spots of the likes of Kuala Lumpur have ensured that the property boom has spread to other areas of the country, although local prices can still differ markedly.  When you add in the fact that unemployment remains low, interest rates are relatively low and GDP is increasing year on year, the building blocks are there for what should be a lucrative property market for years to come.

The only possible risk may be that of over heating, although the government seem to be very proactive in their polices, with inflation and unemployment firmly under control.  One of the major success stories of the area, the stature of Malaysia continues to grow and grow - the potential for both short, medium and longer term growth in the property market is their for all to see.