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Monday, November 3, 2008

Local real estate cheap for foreigners

Despite the current global financial meltdown, the Malaysian property market still remains attractive to foreign investors, according to International Real Estate Federation (FIABCI) Malaysia honorary treasurer Yeow Thit Sang.

“The local property market is still attractive in terms of prices. Properties in Malaysia are among the cheapest in the region,” he told StarBiz.

“Our laws are also comparatively more lenient for foreigners to buy and sell property in Malaysia,” he added.

Yeow said foreigners wanting to purchase property in countries such as Indonesia, the Philippines, Thailand and Vietnam were generally put off by the countries’ respective laws.

Another plus point for foreigners who bought property in Malaysia is that they are not subjected to death taxes, Yeow said.

“Japan has a death tax of 70%. Even in England death duties are stringent. That is why all the Lords are becoming paupers!”

Yeow said FIABCI-Malaysia would be sending a representative to Japan in December to create more awareness about the local property market and to encourage more foreign direct investment (FDI) into Malaysia.

He also said the local political development was not creating uncertainty and was not deterring foreign investors from Malaysia.

“The political scene in Malaysia is a normal democratic process. It is a sign of political maturity rather than uncertainty. It is not causing chaos like some countries,” Yeow said.

On another issue, when asked if the local property market was in a slump, Yeow said: “Our property market has not hit a slump. It is more of a slowdown.”

He attributed the slowdown to rising raw material prices that was sparked by the fuel price hike in June.

“Problems occur when construction cost goes up midway through a project and it is uncertain if it is the developer, contractor or consumer that will bear the cost,” Yeow said.

He said many contractors were increasingly reluctant to take on projects without a variation clause spelt out in the contract.

“Both contractors and developers should insist on a variation clause in their contracts to safeguard their interests.

“Should construction costs go up midway through the project, they can immediately determine who bears the cost and not have projects hanging,” Yeow said.

Going forward, he said he did not foresee see a slump in the local property market.

“There can never be a slump so long as there is demand. There is a lot of migration from rural to urban areas.

“The population is growing steadily and there will always be a need to house people,” he said.

“From an investment point of view, buying property is also a good safeguard against inflation,” Yeow added.

Yeow believes a high level of unemployment in the country could cause the local property sector to tumble.

“If unemployment were to rise, people will not be able to pay their loans and that will cause a slump. When that happens, banks will also take back the property,” he said, adding that the unemployment rate in Malaysia was low now.

“We still need to bring in foreign workers,” Yeow said.

On another note, Yeow said the standard of property development in Malaysia had improved tremendously over the years and it was being benchmarked against international standards.

“Our developments are definitely on par with those of other countries. Many of our projects have won international awards such as FIABCI International Prix d’Excellence,” he said.

The International Prix d’Excellence is an annual competition that honours the world’s best property projects.

On the local front, developers are recognised for their development projects and are honoured at the annual Malaysia Property Award.

Winners of the Malaysia Property Award in their relevant categories will go on to represent Malaysia the following year at the International Prix d’Excellence.

FIABCI Malaysia will be organising its 16th Malaysia Property Award on Nov 12 at the One World Hotel in Petaling Jaya, with Malayan Banking Bhd as the official sponsor.

The categories that will be contested are: Property Man of the Year, Master Plan, Residential Development (low rise and high rise), Retail Development, Industrial Development, Specialised Project (two categories), Office Development, Hotel Development and Resort Development.

The Yang di-Pertuan Agong and Raja Permaisuri Agong will be the guests of honour at the prestigious event.

By The Star (by Eugene Mahalingam)

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