MPI opens doors to Malaysia’s property market

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Malaysia Property Incorporated (MPI) is a relatively new company set up by the government under the Economic Planning Unit to promote real estate investment in Malaysia to overseas investors.

Launched in July, 2009 by YBhg Tan Sri Nor Mohamed Yakcop, the Minister in the Prime Minister’s Department, MPI takes advantages of its vast network of government agencies, private sector companies, real estate firms and organisations to connect foreign interests with Malaysian real estate industry players.

MPI Chief Executive Officer Mr Kumar Tharmalingam said an early challenge for the company was to sell the profile of Malaysia overseas and ease the fears of potential investors who lack information about the country.

“A large number are afraid to take the plunge because they know nothing about the markets,” he said. “So our first practice was to understand what those markets’ perceptions about Malaysia were.

“We went on our own reconnaissance missions to these countries, met up with investors, fund managers and pension funds and asked them what they knew about Malaysia. The usual answer was no opinion… neither good nor bad, just no opinion because Malaysia was not on their radar for investment. “

That’s when we present our country profile. Once we do that and ask them if they would be interested in Malaysia, they say, ‘yes, I think it is a good market’.”

GCC investors have the potential to drive foreign investment in the Malaysian market. With the US and Europe suffering from financial instability, investors in GCC countries are looking at markets such as Malaysia for safe havens and profitable returns.

IP Global recently released figures that suggest Malaysia is among the favoured destinations for GCC real estate investors. For instance, investment from United Arab Emirates into Malaysia has increased 11.4 per cent for the third quarter of 2011 compared to the same period in 2010.

IP Global’s 94-apartment luxury development in affluent Mont Kiara has experienced a 14 per cent rise in GCC investment in 2011. Malaysia has a number of advantages as an investment arena for foreign real estate investors. The government keeps a tight leash on speculators and regulates the market closely to prevent quick buying and selling, reducing the chances of a boom-bust bubble situation.

The Malaysian Ringgit, is reported to be the third most undervalued currency in the world, according to The Economist, and is expected to strengthen as the government gradually eases controls first put in place during the currency crisis of the late 90s. Malaysia also has some of the most liberal property-ownership rules for foreigners in Asia, although a non-Malaysian individual purchaser cannot buy property for under RM500,000.

The growth of the real estate market and an increasingly wealthy population means that development margins are strong while banks are competing against each other for real estate customers, particularly from the GCC, with lower lending rates.

Among the most significant GCC ventures into the Malaysian market is a tie-up between Mubadala, the Abu Dhabi government’s investment vehicle, and Malaysia’s state-owned development company 1Malaysia Development Berhad to develop the Kuala Lumpur International Financial District, a RM26 billion mega-project to turn Kampung Pandan into a major global financial centre. 1MDB has also signed a $2.5 billion joint-venture with PetroSaudi International Limited.

The partnership is part of a long-term venture and provides a platform for greater investment into Malaysia from the GCC. Another key investment avenue for GCC interests, according to Mr Tharmalingam, is Real Estate Investment Trusts (REITs). There are more than a dozen REITs in Malaysia listed on the Stock Exchange with market capitalisation of more than RM16 billion.

In November 2011, Pavilion Real Estate Investment Trust, a Malaysian shopping mall trust part-owned by Qatar Investment Authority, was issued and soon reached a market value on the Kuala Lumpur Stock Exchange of slightly above $1 billion for just the one asset.

“Our strategy for the GCC is to tell them that if they invest in Malaysia, there is an exit plan through the REITs platform,” said Mr Tharmalingam, who added that REITs invest mainly in the commercial and retail sectors, particularly hospitality, hospitals and plantations.

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Reading Time: 3 minutes

Malaysia Property Incorporated (MPI) is a relatively new company set up by the government under the Economic Planning Unit to promote real estate investment in Malaysia to overseas investors.

Reading Time: 3 minutes

Malaysia Property Incorporated (MPI) is a relatively new company set up by the government under the Economic Planning Unit to promote real estate investment in Malaysia to overseas investors.

Launched in July, 2009 by YBhg Tan Sri Nor Mohamed Yakcop, the Minister in the Prime Minister’s Department, MPI takes advantages of its vast network of government agencies, private sector companies, real estate firms and organisations to connect foreign interests with Malaysian real estate industry players.

MPI Chief Executive Officer Mr Kumar Tharmalingam said an early challenge for the company was to sell the profile of Malaysia overseas and ease the fears of potential investors who lack information about the country.

“A large number are afraid to take the plunge because they know nothing about the markets,” he said. “So our first practice was to understand what those markets’ perceptions about Malaysia were.

“We went on our own reconnaissance missions to these countries, met up with investors, fund managers and pension funds and asked them what they knew about Malaysia. The usual answer was no opinion… neither good nor bad, just no opinion because Malaysia was not on their radar for investment. “

That’s when we present our country profile. Once we do that and ask them if they would be interested in Malaysia, they say, ‘yes, I think it is a good market’.”

GCC investors have the potential to drive foreign investment in the Malaysian market. With the US and Europe suffering from financial instability, investors in GCC countries are looking at markets such as Malaysia for safe havens and profitable returns.

IP Global recently released figures that suggest Malaysia is among the favoured destinations for GCC real estate investors. For instance, investment from United Arab Emirates into Malaysia has increased 11.4 per cent for the third quarter of 2011 compared to the same period in 2010.

IP Global’s 94-apartment luxury development in affluent Mont Kiara has experienced a 14 per cent rise in GCC investment in 2011. Malaysia has a number of advantages as an investment arena for foreign real estate investors. The government keeps a tight leash on speculators and regulates the market closely to prevent quick buying and selling, reducing the chances of a boom-bust bubble situation.

The Malaysian Ringgit, is reported to be the third most undervalued currency in the world, according to The Economist, and is expected to strengthen as the government gradually eases controls first put in place during the currency crisis of the late 90s. Malaysia also has some of the most liberal property-ownership rules for foreigners in Asia, although a non-Malaysian individual purchaser cannot buy property for under RM500,000.

The growth of the real estate market and an increasingly wealthy population means that development margins are strong while banks are competing against each other for real estate customers, particularly from the GCC, with lower lending rates.

Among the most significant GCC ventures into the Malaysian market is a tie-up between Mubadala, the Abu Dhabi government’s investment vehicle, and Malaysia’s state-owned development company 1Malaysia Development Berhad to develop the Kuala Lumpur International Financial District, a RM26 billion mega-project to turn Kampung Pandan into a major global financial centre. 1MDB has also signed a $2.5 billion joint-venture with PetroSaudi International Limited.

The partnership is part of a long-term venture and provides a platform for greater investment into Malaysia from the GCC. Another key investment avenue for GCC interests, according to Mr Tharmalingam, is Real Estate Investment Trusts (REITs). There are more than a dozen REITs in Malaysia listed on the Stock Exchange with market capitalisation of more than RM16 billion.

In November 2011, Pavilion Real Estate Investment Trust, a Malaysian shopping mall trust part-owned by Qatar Investment Authority, was issued and soon reached a market value on the Kuala Lumpur Stock Exchange of slightly above $1 billion for just the one asset.

“Our strategy for the GCC is to tell them that if they invest in Malaysia, there is an exit plan through the REITs platform,” said Mr Tharmalingam, who added that REITs invest mainly in the commercial and retail sectors, particularly hospitality, hospitals and plantations.

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