MPI to attract RM20b FDI in real estate in five years

KUALA LUMPUR: Malaysia Property Inc (MPI) aims to bring in RM20 billion worth of foreign direct investment (FDI) into all sectors of real estate in the country within the next five years, half the time of its original mandate of 10 years.

MPI chief executive officer Kumar Tharmalingam told The Edge Financial Daily that one way to achieve the target is to promote and brand the country as a real estate investment destination.

“While Malaysia is well-known as a tourist destination, many still do not see or know of the investment opportunities here,” he said. However, Kumar noted there has been a gradual increase in awareness of Malaysia as an investment destination, and the country is regarded as a stable economy compared with neighbours such as Vietnam and Thailand.

There is also the need to change the mindset of local developers as the Malaysian property market has become “domesticated” in the last decade.

“I have had a few developers tell me that they are selling so well locally that they don’t need to market overseas. We think the domestic market is sufficient but it is not,”  said Kumar after a briefing for the Real Estate and Housing Developers’ Association of Malaysia yesterday.

The past decade has seen the rise of countries such as Indonesia, Thailand and Vietnam which have taken shares of FDI in the region, added Kumar.

“That is why the government is taking initiatives and putting structures in place to encourage the flow of FDI into the country. The new MPI platform is part of that strategy,” said Kumar.

MPI was formed in 2008 with the objective of promoting Malaysian properties overseas, emphasising product quality and focusing on consumer markets in developed countries such as the UK and Japan.

However, a few months after the formation of MPI came the global financial meltdown which affected MPI’s original business model and rendered it ineffective as the economies of developed countries declined.

Its business model and focus have since been revamped. Kumar said MPI now focuses on bringing in FDI into all sectors of real estate in Malaysia; instilling awareness of the potential of the Malaysian market; provide real estate data to foreigners on the local property market; and provide real estate education to improve skills locally.

MPI is taking a multifaceted approach to branding Malaysian real estate, which includes global and regional conferences that position Malaysia as an investment destination, government investment missions that channel investment prospects to local partners and overseas market learning events that will give insights on best practices and current trends.

“We also bring foreign reporters and high-net worth individuals here as guests to show them what Malaysia has to offer, so they will go back and talk about us,” said Kumar, adding that to invest in Malaysia, a long-term strategy is recommended.

He acknowledged that Malaysia cannot compete with small city states such as Singapore and Hong Kong when it comes to capital appreciation and rental yields.

“But you will not lose money here either. A six to 10-year investment strategy is ideal for your investment to see good growth in Malaysia,” Kumar said.

Kumar also encourages developers to participate in MPI’s overseas promotions, saying that initially MPI went overseas with brand names to instil confidence.

“We are opening the doors to all developers now but you must have a viable product and must be able to complete the project on schedule. A good track record is also necessary. We cannot allow a developer to come with us and later fail to deliver,” stressed Kumar.

Coming up are three overseas real estate events in Seoul, London and Hong Kong where Malaysia’s investment potential will be presented.


This article appeared in The Edge Financial Daily, November 19, 2010.