The government has once again sent a strong signal of its desire to promote Malaysia as an international real estate investment hub. Besides easing guidelines on foreign property investment as stipulated by the Foreign Investment Committee, the government has roped in the private sector to do more via the newly created Malaysia Property Incorporated (MPI).
A joint private sector-government initiative, the MPI’s mission is to brand Malaysia as an exciting and irresistible international real estate destination. The target is to rake in RM20 billion worth of foreign direct investments in Malaysia’s real estate in the next 10 years or RM2 billion in sales yearly.
Even before its official launch last week, the MPI had organised property roadshows in the UK, Japan and Singapore. More are in the pipeline and the talk is that it will work closely with Tourism Malaysia to create a buzz for Malaysian real estate through the Malaysia My Second Home programme (MM2H).
The MPI is a non-profit organisation and has received a RM25 million grant from the government. On its board of governors are distinguished names like
Tan Sri Thong Yaw Hong and Datuk Dr K Govindan of the country’s Economic Council Secretariat. Others include key property and industry players like Datuk Richard Fong, Tan Sri Mustapha Kamal, Tan Sri Lee Kim Yew, Datuk Abdul Wahab Maskan, Datuk Krishnan Tan, Kumar Tharmalingam and Shahril Ridza Ridzuan.
The MPI is headed by Fong and has representatives from the International Real Estate Federation (Fiabci) Malaysia, Real Estate Housing and Developers’ Association Malaysia and the Malaysia Institute of Estate Agents. Fong is also the president of Fiabci Malaysia.
Be that as it may, a question that begs to be asked would be, is the RM20 billion sales target set by the MPI achievable? Besides selling Malaysia
through the dissemination of information, roadshows and other planned activities, what else will be done to attain the target?
Any attempt to respond to these questions must be made in the context of the fact that last year, foreigners invested a mere RM200 million in Malaysian property, as disclosed by Fong himself. Of an estimated 120,000 new homes sold in a year in this country, only 2.5% or 3,000 units are bought by foreigners. In contrast, Singapore sells 22% of its new property to foreigners each year.
As rightly pointed out by Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop, despite the global economic crisis, there is significant global liquidity currently in search of investments. Malaysia, therefore, should leverage its natural link to countries such as China and Singapore and offer them quality and value-for-money properties.
While cost is important, it is clear that it is not the only consideration for homebuyers. High-rise residential properties in the Kuala Lumpur city centre are on the market at an average of US$600 psf — very attractive indeed compared to similar properties in countries like Hong Kong and Singapore, where the cost is more than three times higher at US$2,000 or so psf.
Perhaps, there is a misconception among foreigners of the potential and attractiveness of Malaysian real estate, which is one area that Tourism Malaysia and the MPI can work on.
We may not like to be reminded of it but in the past, Malaysian rules governing foreign acquisition and ownership of domestic property have changed course midstream. This is not something foreign investors, or any investor, will take lightly. This is especially so when the whole world, literally, is now on sale as far as real estate is concerned. So, let’s not kid ourselves that because we are seemingly cheaper, we are irresistible.
While it is good that the government has shown a determination to woo foreign real estate purchasers in recent times, it would not hurt if it reiterated, from time to time, that there will be no flip-flopping of policy.
Simple reassurance is an all-important marketing tool when it comes to pushing Malaysian real estate.
Buying property off the plan does have its perils — will the developer fulfil its promises in terms of timing of completion and quality of the property?
For Malaysia to be a preferred property destination for foreigners, the government, and in this case the MPI, must give the assurance that properties, especially those promoted in its roadshows, are of international quality and not just on paper. Not only must these be of quality but the sales and after-sales services must be of international standard as well.
Sub-standard goods and services will only come back to haunt us in a marketplace that is competitive and unforgiving.
So, how do we do this? For a start, only developers with a proven track record in completing projects satisfactorily in terms of timing and qualityshould be allowed to participate in the MPI roadshows and other promotional materials. Developers that meet these requirements but are small and niche should not be penalised — they too must be allowed to participate in the government-private sector initiative, if they can guarantee to the government their ability to deliver the goods.
The bottom line is, all developers that sell their products via the MPI must be held accountable for their goods and services.
This will no doubt greatly reassure buyers.
Never underestimate the power of selling through word of mouth.
Also, never downplay the role of marketing staff. They can make or break a brand. So, all those who deal with international prospects must be properly trained for the job.
It is noteworthy that the MPI blueprint includes a matching contribution of RM25 million from the private sector to make Malaysia a property hub.
The shape of the contribution from the private sector and its formula has yet to be determined.
Industry leader and veteran builder Tan Sri Lee Kim Yew, also a prime mover of the country’s Silver Hair programme that has since evolved into the MM2H, is among those who favour making the contribution. Others, it is believed, are hesitating pending a positive response from the government to their request for more relaxation of building-related rules.
Unless the intention is to make the existence of the MPI a short one, which should not be the case, every effort must be made for it to be self-sustainable. This can only be done if the MPI is able to generate its own income, which should come from those who benefit directly from the government’s grant of RM25 million.
In MPI-organised roadshows, expenses would definitely exceed that paid to transport the project models of participating developers, flights, meals and accommodation for sales staff. So, how can developers expect to participate in any roadshow for free? Contributions could come in various forms, such as a sales commission.
And since the government is spending RM25 million to tell the Malaysian real estate story abroad, there must be a KPI for the cost. How good is the storytelling going to be? What kind of results will it produce? Otherwise, we might as well call the MPI a government-appointed PR agency that is helmed by professionals outside the PR fraternity.
Au Foong Yee is editor of City and Country
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 766, Aug 3-9, 2009.
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