PETALING JAYA: Prices of high-end properties in Kuala Lumpur are expected to surge upward, no thanks to foreign buyers who are scooping up luxury homes, said Universiti Teknologi Malaysia property economics and finance associate professor Dr Muhammad Najib Razali.
“As a consequence of this, Malaysians in the middle and upper-middle-income brackets will find it increasingly difficult to afford properties in major cities where prices are already high.”
He said another danger is that as foreigners have greater purchasing power and prefer luxury residences, developers might focus more on catering to their demands instead of those of the general population.
“This could reduce the availability of affordable housing for Malaysians and limit their options in the market. Some locations or property types might become largely owned by foreigners as well. If this happens, it would cause an imbalance in the housing market.”
In March, Tourism, Arts and Culture Minister Datuk Seri Tiong King Sing said Chinese nationals were the highest holders of Malaysia My Second Home (MM2H) passes, with a total of 24,765, followed by South Koreans at 4,940, Japanese at 4,733 and Bangladeshis with 3,604.
A report by Juwai IQI, an international real estate technology group that powers property transactions and ownership locally and globally, said inquiries from Chinese buyers increased 42% in the first quarter of this year compared with the previous quarter.
Real Estate and Housing Developers’ Association Malaysia president Datuk Ho Hon Sang said under the new MM2H programme requirement, there are three tiers of eligibility, in which prospective MM2H homebuyers must purchase properties priced at RM600,000 and above for the Silver tier, RM1 million and above for the Gold tier and RM2 million and above for the Platinum tier.
“Interest in the MM2H programme is due to factors such as the country’s ideal geographical location, stable political climate, new and upcoming infrastructure projects, and investment opportunities.
“The Juwai IQI report also said foreigners have specific interest in niche products and high-end luxury homes priced at RM1 million and above near Bukit Damansara, Bangsar and Kenny Hills,” Ho said.
Muhammad Najib said the increase in demand for high-end properties can create a situation in which property agents themselves inflate prices to attract foreigners.
“They may use the increased interest in luxury properties to drive prices higher when demand from affluent foreign buyers increases.
“Property agents might take advantage of the urgency that often comes with a surge in demand by suggesting that prices will keep rising or that buying opportunities at current prices are limited.
“This pressure can lead foreigners to quickly agree to the higher purchase amount, further driving up prices.”
He said the growing interest from foreign buyers could also lead to speculative purchases, in which properties are purchased as an investment for future resale.
“Speculation artificially inflates property values and creates market instability, making it even more difficult for local buyers to enter or stay in the market. While the increase in foreign interest brings financial and investment benefits, the government may need to enact laws or modify existing ones to protect local buyers.
“Failure to do so could worsen existing social problems and further widen the gap between foreign investors and residents.”
However, property agent Nor Robiah Abd Rahman said the market for locals is not all bad.
“There are still plenty of opportunities for Malaysians to purchase properties, especially affordable ones. We should not worry too much as developers are continuing to build affordable houses.”
She also said foreign housebuyers are restricted from buying certain types of properties, such as low-cost houses and Malay Reserve Land. “They also need to get approval for transactions and follow specific procedures, including paying consent fees when purchasing properties in Malaysia,” she said.
