KUALA LUMPUR: Malaysian investors are increasingly diversifying their capital beyond traditional hotspots, turning to emerging markets as a hedge against global risks.
High interest rates and punitive taxes have prompted many to withdraw from Australia, while in the United Kingdom, investors are either offloading London assets or refinancing to unlock capital for redeployment.
This shift signals growing awareness that emotionally driven decisions – such as buying property near children’s schools – can often result in less-than-optimal outcomes.
“Savvy investors are realising the importance of aligning property purchases with clear objectives, whether it’s for pure investment or as a family home. Trying to achieve both often leads to compromised decisions,” CSI PROP International Properties executive director Virata Gamany told SunBiz.
He added that investors facing challenges in Australia and London are now redirecting funds towards stronger-performing markets such as Dubai in the United Arab Emirates (UAE).
“While the UK remains attractive to some – particularly due to the pound sterling – Manchester continues to be the country’s top-performing investment city, offering compelling opportunities for forward-thinking investors,” Virata said.
He noted that the UAE, particularly Dubai and Abu Dhabi, is rapidly emerging as a wealth magnet for Malaysians.
Dubai’s appeal lies in its zero-tax regime – no income, capital gains or inheritance tax – coupled with an 85% surge in property values over the past five years and rental yields ranging from 6% to 12%.
Abu Dhabi, meanwhile, is drawing major institutional interest.
BlackRock, for example, has committed US$1 billion (RM4.2 billion), while the city is rolling out landmark developments, including six world-class museums and a planned Disney entertainment hub.
“These markets are fast becoming strategic pillars in globally diversified portfolios,” Virata said.
He observed that Malaysian investors are either adopting a more defensive approach or aggressively expanding their global portfolios amid ringgit volatility and domestic economic uncertainty,
“Wealthy Malaysians have long viewed international property as a backup plan. While Australia and the UK were once top picks, interest is waning due to policy shifts and less favourable conditions,” he explained.
In Australia’s eastern states, a new 4% land tax – layered on top of high income and capital gains taxes, elevated interest rates and weak capital growth – has pushed many foreign investors into losses, triggering a wave of exits.
“The latest land tax was the tipping point,” Virata noted.
The UK is experiencing similar headwinds.
New tax rules targeting non-domiciled individuals have led to capital flight, weighing heavily on London’s property market, where average returns have stagnated at just 0%–2% over the past seven years.
In contrast, Manchester has delivered around 7% capital growth in the last 12 months, retaining its appeal among Malaysians.
“Malaysians are now casting their nets wider,” Virata said.
“Dubai and Abu Dhabi are increasingly on the radar – often driven by word-of-mouth from peers – though broader awareness is still growing.”
Asked about the most common mistakes Malaysians make when entering international property markets, Virata pointed to the danger of emotional decision-making and reliance on informal advice.
“Property is one of those topics everyone has an opinion on, but not all advice is created equal,” he said.
He recalled meeting a successful businessman who nearly bought a property in London based on an Uber driver’s recommendation, until he realised he was about to make a major financial decision based on advice from someone with no real estate experience or market insight.
Another frequent pitfall, Virata noted, is blindly following a close friend or relative into an investment without conducting proper due diligence. “When things go south, it’s not just your money you lose; it can also damage personal relationships.”
Vitata urged investors to constantly question the credibility of advice, even from agents, by asking if they are personally invested and what their track record looks like.
“In today’s uncertain and fast-evolving environment, especially with the rise of AI and disruptive technologies, it’s nearly impossible to forecast five or ten years ahead,” he said. “That’s why investors must focus on fundamentals and assess markets using a clear, proven framework.”
Virata said CSI PROP employs a proprietary seven-step framework known as G.O.L.D.M.I.N.E., and only invests in markets that meet all seven criteria.
On whether Malaysians consider factors such as currency risk, tax exposure and capital controls when building cross-border portfolios, Virata said the Covid-19 pandemic served as a wake-up call, particularly for high-net-worth individuals, that a “Plan B” is no longer optional.
“When safety, stability or access to capital can’t be guaranteed at home, diversification becomes essential. Currency risk, tax implications and capital controls are now front-of-mind when making cross-border decisions.
“There is risk everywhere. The key is not to over-concentrate in a single market. Many Malaysians already have significant exposure in Australia and the UK.
“But the current climate demands a broader geographic spread. Familiarity should no longer be mistaken for stability. The world is changing too quickly for that,” Vitrata said.
