City&Country: Promoting Malaysian real estate in Russia

Russia today is a far cry from the former Soviet Union described by Ian Fleming in his James Bond novels. As the country embraces global capitalism, many affluent Russian-speaking individuals are looking to invest their money overseas.

Ruslan Israpil, president and one of the founders of the Malaysian-Russian Business Association (Malruba), believes Malaysia is an ideal location for them to do so, especially in property.

alt“Malaysian real estate is attractive because prices are low and there is good tax legislation, infrastructure and standard of living,” he tells City & Country.

There are hardly any Russian investments in Malaysia at the moment, says Israpil, but there are signs that things are picking up. He reveals that there is currently one property deal worth RM400 million in the works for an office building in the Golden Triangle area. The deal, Israpil says, should be completed by 3Q2010. He declines to give any further details as talks are still on-going.

Besides this, negotiation on a transaction of shares — worth about RM200 million — in a Malaysian hotel and resort is on-going. Again, he declines to go into the details as nothing has been confirmed.

Prior to these developments, there have not been any major property deals involving investors from Russian or any of the other former states of the Soviet Union. But there is a small number of Russian investors in Malaysian property who, to Israpil’s knowledge, have mostly bought residential properties like condominium units. When asked how they got to know about Malaysia, he says most of them learnt about the country on the Internet or by word of mouth.

Malaysian real estate is potentially attractive to Russian-speaking investors because an increasing number of Russian-speaking parents are sending their children to study at tertiary institutions here due to the affordable fees and good living standard.

“There are about 1,000 Russian-speaking students studying in universities and colleges in Malaysia, and their parents could buy property here for their children,” Israpil says.

Russian-language magazine
Israpil has resided in Kuala Lumpur for the past nine years, running his international expo and forum consultancy firm called Universe Expo. He doesn’t own any property of his own at the moment.

In 2008, he discovered that his fellow countrymen were interested to learn about property investment opportunities in Malaysia after the delegation of Malaysian developers he had brought to Russia via his consultancy company garnered positive enquiries about property in Malaysia.

However, no deals were signed because of the lack of information on how taxes are calculated in Malaysia, as well as other details. Information on Malaysia is not available in Russian and English isn’t widely spoken there.

As result, Israpil decided to form Malruba in 2009 as a go-between for Malaysian and Russian-speaking investors/businesses, and to promote Malaysia as a viable place to do business.

To provide more information on Malaysia, Universe Expo publishes a Russian-language quarterly magazine called Malaysia Plus, which is distributed to Russian-speaking nations and groups living in Southeast Asia. It was officially launched in Kuala Lumpur on May 17.

About 80,000 copies were printed for the first run, half of which are for sale while the rest are distributed as complimentary copies in the Russian-speaking nations of the former Soviet Union. The magazine may also do well in Phuket, Thailand, where a large number of Russian-speaking tourists visit yearly.

A leading distributor in Russia will be engaged to help with distributing the magazine, which is printed in Malaysia. It will be available in airports and major retail outlets.

Malaysia Plus will highlight investment opportunities as well as provide an overview of the country. As there are about 300 million Russian-speaking individuals all over the world, Israpil hopes that the magazine will be one way of reaching out to them.

In September, Israpil will organise a roadshow to promote Malaysia in Moscow, where a select group of property developers will be invited to showcase their high-end products. The number will be small to ensure that there is a sufficient number of interpreters for each participating group.

Although investment activities between Russian-speaking nations and Malaysia are still slow, the ones that are taking place are worth big bucks. One example, Israpil says, is the Malaysian Investment Development Authority’s announcement in April that Irkut Corp, a leading Russian aircraft maker renowned for building the Sukhoi Su-30 multi-role combat plane, had committed to investing US$5 billion (RM16.5 billion) to build an integrated and diversified original equipment manufacturing (OEM) facility in Sungkai, Perak. The location will be developed into the Malaysian Defense Security Technology Park by year-end.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 813, July 5-11, 2010

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