PETALING JAYA: Malaysia has benefited from changes in Chinese international commercial real estate investment, according to a report released earlier this week by Asia’s largest property technology company, Juwai IQI.
Meanwhile, the United States and to a lesser degree Australia have lost out on investment.
“There have been two big changes over the past 12 months,” said Juwai IQI co-founder and group CEO Kashif Ansari. “Chinese outbound commercial real estate investment has declined significantly, and investment has markedly shifted towards Malaysia and other Southeast Asian countries – especially Indonesia and Thailand.
Looking ahead, he added Southeast Asia should benefit from China’s recovery, even if that economic resurgence takes place more slowly than we expected earlier in the year. There will be strong growth in travel, tourism, agricultural goods and production offshoring.
“Chinese investors consider Malaysian commercial property appealing because business ties with China are growing. Also, Malaysia’s strong economy provides opportunities in developable land, tourism facilities, industrial parks, data centres and industrial and logistics facilities,” he said, adding that it is also relatively easy for Chinese investors to obtain approval for investment in Malaysia compared to North America or Europe.
Property is a top investment class for Chinese investors because the industry has common fundamentals that are easily understood across borders. Property also may provide stable long-term income uncorrelated with the Chinese economic cycle, Ansari said in a statement.
In this era of higher interest rates, he added Chinese investors with access to ready capital are able to make compelling offers to vendors.
Johor, Kuala Lumpur and Selangor are the top destinations for Chinese commercial property investors, he said.
“Johor has a relatively developed economy and proximity to Singapore. Together with its neighbour, Johor is part of a transnational metropolitan area of about six million people.
“We expect increasing investment in Johor as the rail link to Singapore approaches its 2026 completion.”
Juwai IQI forecasts 50,000 additional residents could be living cross-border lifestyles by 2030, which would provide a significant uplift to demand for commercial real estate.
“We see that Johor’s Singapore links are already the basis for much Chinese investment in the state, and this investment will increase. The rail link will lead to more spill over investment from Singapore and will attract additional more Singaporeans and Chinese seeking the higher returns, lifestyle and affordability that Johor offers,” Ansari said.
The next most popular destinations for Chinese commercial property investors are Kuala Lumpur and Selangor, Malaysia’s largest urban and business hub.
Malaysia first became a top-five destination for Chinese commercial property investors in 2022. Achieving the third-ranked position like it has done this year is unprecedented.
Looking forward, Ansari said they don’t believe global economic uncertainties will prevent Malaysia from achieving gross domestic product growth of 4.7% in 2023. China after Singapore is Malaysia’s second largest export market, with a total of RM16.7 billion in March 2023. That is about 13% of all exports.
“Malaysia also imports more from China than any other market. China accounts for 20.5% of exports, worth RM21.2 billion in March. Malaysia will increasingly attract more investment. Its initiatives to reduce red tape and grow the economy will support this trend,” he added.
