Foreign interest picks up in property

KUALA LUMPUR: Even as the government implements measures to cool the property market, foreign investors continue to acquire real estate in Malaysia, some paying record prices.

Just last week, Singapore-listed GSH Corp Ltd and its executive chairman Sam Goi, known as the “Popiah King”, jointly invested RM700 million in a 77.5% stake in The Sutera Harbour Group Sdn Bhd, which owns and operates two five-star hotels in Kota Kinabalu, Sabah.

GSH is also acquiring stakes in two pieces of land within Sutera Harbour.

Two weeks ago, on Boxing Day, Iskandar Waterfront Holdings Sdn Bhd sold 36.8 acres (14.89ha) of land in Danga Bay, Johor to Singapore-registered developer Hao Yuan Investment Pte Ltd for RM1.6 billion, setting a new record for land deals in Johor Baru.

The price translated into RM998 per sq ft (psf), surpassing the previous transaction of RM890 psf when the Sultan of Johor sold 116 acres of land to a China-based company, Guangzhou R&F Resources Pte Ltd, for RM4.5 billion in early December.

Zerin Properties CEO Previndran Singhe said the trend of foreign investment in Iskandar Malaysia from China and Singapore is likely to continue.

“The Chinese investors have probably been given more attention recently thanks to the high-profile deals they were involved in. Country Garden’s Danga Bay project was promoted very heavily in China and there are also tax incentives for investors within certain locations of Iskandar,” he said.

Country Garden @ Danga Bay is a luxury high-rise residential development in Iskandar Malaysia, developed by one of China’s largest property developers Country Garden Holdings Ltd.

Foreign investors have also been buying in Kuala Lumpur.

In November, Singapore-listed Oxley Holdings Ltd bought a parcel of land measuring about 12,575 sq m in Kuala Lumpur for RM446.7 million.

This is not Oxley’s first acquisition here. In May, it bought a local company with rights to acquire a 99-year leasehold, 1.9ha mixed development site on Jalan Hang Tuah, for RM267.9 million.

The group has added other parcels of land in the Kuala Lumpur City Centre area as well as in Johor to its portfolio.

Shortly after, it acquired a 2.2ha plot of land for commercial development in Sungai Buloh in Selangor.

GSH, a photo imaging company, also acquired a 5,800 sq m parcel of land on Jalan Kia Peng, Kuala Lumpur, in November last year for RM132.4 million.

Danny Wong, CEO of asset management company Areca Capital Sdn Bhd, did not rule out that Singaporean investors could be interested in shifting their attention to Kuala Lumpur since it is the central business hub of the country. Therefore, any property purchases within the city will only increase in value over time, given the amount of money being poured into the development of KL’s infrastructure.

With the mass rapid transit and light rail transit extension works currently being carried out, the value of the new property developments along these routes will skyrocket when the projects are completed.

“Those who are savvy property investors will buy land in KL due to the prices. Since there is a scarcity of land in the city, the value will only appreciate over time. They are investing in its potential,” Wong said.

He said the high speed rail project, which promises faster travel time between Kuala Lumpur and Singapore, could also be a big attraction to Singaporean investors and developers alike.

The ringgit has continued to weaken against the Singapore dollar. Last year, the Singapore dollar gained 4.66% against the ringgit.

Zerin’s Previndran said the presence of Singaporean investors in KL will continue to be the norm.

“Singaporeans will always invest in KL. There are a lot of factors which make the city an attractive opportunity to our neighbours,” he said.


This article first appeared in The Edge Financial Daily, on January 06, 2014.