Malaysia "Second Home" for Foreigners

"Right now, the [property] market is in high-end properties," said Khor.

"Property is much cheaper here than in Singapore or Hong Kong," a retired businessman from Scotland told Reuters on Monday, April 9, sitting in his sun-kissed new home in the northern coastal state of Penang, which he bought under the "Malaysia My Second Home Program" introduced by the government at the end of 2006.

A three-storey villa at the swanky Kuala Lumpur suburb Kiara Hills on the edge of the jungle costs a cool four million ringgit ($1.14 million).

Up the coast in northern Penang state, about 100 kilometers from the resort island of Langkawi, 500,000 ringgit ($140,000) will buy a foreign investor a tropical seaside apartment with a pool, 24-hour security and a gymnasium.

"Right now, the [property] market is in high-end properties," said Khor Teng Tong, Executive Chairman of builder Hunza Properties.

"Property is not an easy business, but if you get the market positioning right, it can be very lucrative."

Hunza, founded almost 20 years ago by Khor, expects net profit to leap 80 percent to 35.6 million ringgit ($10.16 million) for the financial year to June from a year ago. In 2008, the firm expects a further 55 percent jump to 55 million ringgit.

Bigger players than Hunza like SP Setia, Mah Sing, Bandar Raya Developments and Sunway City have been selling more homes to foreigners.

As many as a fifth of the homes built by Sunway City have been snapped up by foreigners, while up to one third of Hunza's properties are foreign-bought.

In general, some $100 billion was directly invested in Asia-Pacific property last year, 40 percent up on a year earlier, according to property consultants Jones Lang LaSalle.

State Facilities

Malaysia wants as much as it can get of the property inflow, adopting a series of measures to make life easier for potential investors.

In March, capital-gains tax on property was summarily scrapped, which paid off, according to analysts.

Interest rates are low and the government has slashed red tape to welcome wealthy foreigners.

Malaysia's benchmark interest rate of 6.75 percent are lower than other southeast Asian countries, including Indonesia, Thailand, Vietnam and the Philippines.

The government has also waived the requirement that foreign buyers seek approval from a foreign investment panel.

More and more, foreigners can now also buy any number of properties.

"We think this would have a positive effect on the property market, and on the mid-to-high end property segment in particular," Deutsche Bank analyst Aun-Ling Chia has said.

"Property prices in Malaysia are still among the cheapest in the region."

Multicultural Malaysia has recently taken a series of measures to become more tourists-friendly.

In a swift response to the call of Prime Minister Abdullah Ahmad Badawi, the conservative Northeastern state of Terengganu has abandoned controversial plans to recruit "spies" to snoop on unmarried couples in khalwat (close proximity).

Last October, police in the state sparked off an outcry when they mistakenly raided the rented holiday apartment of a Christian American couple.

Analysts, however, agree that Malaysia should try its best to curb rising crime rates in the country

Tourists are basically complaining about bag snatchings and carjackers as well as burglaries.

Police figures show that crime in Malaysia rose 14 percent last year to 225,836 incidents against 198,017 in 2005, and the proportion of serious crimes, such as murder, rape and armed robbery, grew by 26 percent.

Malaysia; nevertheless, offers the image of an ideal Muslim country.

It is heading towards the status of a developed nation with skyscrapers, beautiful cities and a fast track economy.

Prime Minister Abdullah launched last year an ambitious development plan for Malaysia to become the first developed Muslim nation by 2020.