Chinese nationals drive up interest in Malaysia high-end homes

Luxury residential properties are usually defined as units priced at RM1 million (US$226,000) or more.

The number of inquiries global real estate technology firm Juwai IQI received from Chinese customers rose by 42% quarterly in the first quarter, Kashif Ansari, its chief executive officer, told The Straits Times.

"They [Chinese buyers] made up the largest segment of foreign buyers in Malaysia, who are generally looking to buy either landed or high-rise apartments, mainly in Kuala Lumpur and Johor, of up to RM2 million," he said, adding that the surge in interest has resulted in a similar influx of homebuyers.

Previn Singhe, CEO of real estate consultancy Zerin Properties, said in the first half, his firm recorded a jump in foreign high-net-worth individuals purchasing high-end properties valued at over RM4 million and an estimated 20% increase in transactions from the latter half of 2023.

Of these, Chinese and British buyers make up the largest segment of foreign buyers, he noted.

The growth in interest and demand for premium properties in Malaysia was driven by the increase in the number of Chinese citizens studying and working in the country.

Malaysia’s Education Ministry reported that higher education institutions enrolled 44,043 students from China last year, up 35% from 2021.

"Students will be the significant driver of housing demand in Malaysia because many families find it more convenient to purchase a home," Kashif noted.

A Chinese trade official told British newspaper Financial Times that the number of Chinese executives and employees working for Chinese companies in Malaysia has surged fourfold over the last three years to approximately 45,000 now.

Ngeow Chow Bing, director at the Institute of China Studies at the University of Malaya, estimated that the number of individuals from China who are residing in Malaysia has nearly doubled during the same period to 200,000 this year.

Another factor driving foreigners’ property purchases is the Malaysia My Second Home (MM2H) residency visa scheme, which was revamped in June to require foreign residents to buy a property worth between RM600,000 and RM2 million in the country and hold it for at least 10 years.

MM2H is a program designed to attract foreigners to Malaysia by offering them long-term multiple-entry visas and allowing them to buy property and reside in the country.

As of this January, 24,765 MM2H participants were from China, up 54.8% from 2019 and accounting for 44% of the over 56,000 active pass holders, as reported by the South China Morning Post.

What draws wealthy people from China to Malaysia, according to businesses, are the country's relative political stability and its expected stronger economic growth compared to a year ago.

This trend is further amplified by other nations tightening business, education, and investment opportunities for foreigners due to domestic and geopolitical factors.

These restrictions have prompted Chinese citizens to turn their attention to Malaysia instead.

Higher education is also a magnet that draws in international students from China.

A July research note by international education website ICEF Monitor remarked that the country, along with other Asian destinations such as Japan, Singapore, Hong Kong, and Thailand, "now commands [a] significant share of interest due to advantages such as proximity, affordability, and the presence of many highly ranked universities."

Furthermore, a slowdown in China’s real estate market, which saw an over 10% drop in domestic property investment in the first half, has also influenced their decision.

A high-end developer in Malaysia said: "Chinese buyers’ assets in mainland China have gone down in value, which has influenced their investment appetite to look outside of China."

Meanwhile, the Malaysian market is showing signs of improvement as more foreigners plan to move from China, they added.

Jeremy Tang, a senior negotiator at Espirit Estate Agent, said properties in Kuala Lumpur, the capital of Malaysia, present stronger prospects for capital appreciation and higher rental yields.

"I believe the demand for properties, particularly in Kuala Lumpur, will increase on the back of MM2H visa applications, with the highest percentage of the applicants likely to be Chinese," he speculated.