China replaces S'pore as top property investor in M'sia

PETALING JAYA: China has become the top foreign investor in the Malaysian real estate market. In the past two years, it has eclipsed Singapore as the biggest source of foreign investment in Malaysian real estate.
Soaring domestic property prices have pushed mainland Chinese investors to hunt for bargains abroad. They are drawn by large-scale projects such as Iskandar in Johor and Bandar Malaysia in Kuala Lumpur.
According to a report by property consultancy Cushman & Wakefield on Monday, Chinese companies, mainly developers, invested an estimated US$2.1 billion in Malaysia between 2014 and 2016, compared with Singapore's US$985 million in the same period.
At the height of Iskandar's development boom in 2013, the Chinese committed about US$1.94 billion.
Malaysia has emerged as a favoured destination for mainland Chinese investors seeking a cheaper alternative to Australia and Hong Kong.
"The Chinese investor today has a lot more options and has become more comfortable going to Europe and the US, but not everyone has the same options — Malaysia is much more affordable," said Sigrid Zialcita, managing director of Asia-Pacific research at Cushman & Wakefield.
"If you compare prices, even between Malaysia and China, you are looking at a significant difference."
Boosted by the proximity to Singapore, development opportunities in Iskandar have been a favoured destination for Chinese capital in the emerging market space, Zialcita said.
In the last three years, Chinese investors also accounted for 46% of real estate investments in the country and were involved in some of the largest land transactions in the country, she added.
"While the variety of options in a globalised real estate market, as well as a desire to diversify could have shifted Singapore investments, there is no denying that this is similar to what has been seen around the world — Chinese capital is shaking up the marketplace," she said.
"However, since last year, there has been a notable shift of Chinese investments into economic projects that will deliver longer-term benefits to the Malaysian economy.
"Significant investments from Chinese companies have filled a crucial link in fuelling Malaysia's economic vision.
"The Malaysian government, since 2010, has unveiled several initiatives to propel the country up the income ladder.
''These projects will continue to lend viability to future plans as it develops critical infrastructure and foster commercial activities. We expect real estate values to benefit from the government's sustained efforts to raise the level of economic development and income in the country.''