Authored by the expert who managed and guided the team behind the Malaysia Property Pack
Everything you need to know before buying real estate is included in our Malaysia Property Pack
Are you considering investing in Malaysia’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before taking the plunge? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
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1) Consider serviced apartments in Malaysia, as they typically have fewer restrictions for foreign buyers than landed properties
Serviced apartments in Malaysia are a great option for foreign buyers due to fewer restrictions compared to landed properties.
In 2023 and 2024, 90% of the serviced apartment demand in Kuala Lumpur came from foreign buyers. These buyers often needed a place to stay for extended periods, from three weeks to six months, making serviced apartments an ideal choice.
Most of these buyers hailed from the UK, Australia, USA, and Japan, working in sectors like oil and gas, IT, and infrastructure. In contrast, buying landed properties was tougher due to stricter rules. The Malaysia My Second Home (MM2H) programme, once a popular route, saw a 90% drop in applicants since 2021 because of these tougher conditions.
The Malaysian government is trying to make the MM2H programme more appealing by easing some conditions. They're revising guidelines to be more competitive. Even though the stamp duty for foreigners is a flat 4% rate, it might be less restrictive than the previous sliding scale.
Sources: The Star, Zerin Properties, Emerald Insight
2) Foreigners cannot own Malay Reserved Land, as it is exclusively for ethnic Malays
If you're thinking about buying property in Malaysia, it's important to know that foreigners cannot own Malay Reserved Land.
This land is specifically set aside for ethnic Malays as part of Malaysia's efforts to support the economic and social development of the Bumiputera, which includes ethnic Malays. The National Land Code 1965 makes it clear that properties on Malay Reserved Land are off-limits to foreigners.
The Economic Planning Unit (EPU) guidelines also back this up, reinforcing the restrictions on foreign ownership. These rules are in place to protect the interests of ethnic Malays and ensure that the land stays within the community.
In 2023, the Environment Minister emphasized that Malay Reserved Land is exclusively for ethnic Malays, showing the government's commitment to this policy. This exclusivity is a key part of Malaysia's property laws, and it's crucial for foreign investors to be aware of these restrictions.
Understanding these rules can help you avoid any legal complications. The government is serious about keeping this land within the Malay community, so it's best to look at other property options if you're a foreigner.
Sources: The Vibes, Malay Mail, Azmi & Associates
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Malaysia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Prioritize properties near amenities and public transport in Malaysia, as location is crucial and often overlooked by foreigners
In Malaysia, location is key when buying property.
Being close to amenities and public transport can significantly boost a property's value. For instance, in Kuala Lumpur, house prices can rise by 5.6% for every 100 meters closer to a rail transit station. This makes properties near transit stations a smart investment choice.
Properties near MRT and LRT stations often come with higher price premiums. If you're considering investing, these areas could offer better returns. Research indicates that properties near LRT stations in Kuala Lumpur have seen higher price increases compared to those further away.
Rental yields also tend to be higher in areas with good access to public transport and amenities. Popular expatriate spots like the city center and Mont’Kiara enjoy rental yields of 4% to 4.5%. Meanwhile, student-heavy areas like Bandar Sunway can offer even higher yields, ranging from 6% to 7%, thanks to the high demand from students.
Foreign buyers sometimes overlook the importance of location, but in Malaysia, proximity to amenities and public transport is crucial. This can make a significant difference in both property value and rental income.
Sources: Sciendo, The Edge Malaysia
4) Consider properties near future MRT or LRT stations for significant value appreciation
Investing in properties near upcoming MRT or LRT stations can be a smart move for maximizing your profit.
In the Klang Valley, properties close to MRT stations have seen a 15% to 25% increase in value over the last five years, outperforming areas without such connectivity. This trend is evident in neighborhoods like Cheras, Damansara, and Kajang. In Cheras, property prices rose by about 20% due to the convenience of commuting via MRT lines. Similarly, Damansara saw a 15% increase, and Kajang experienced an 18% rise in property values, making these areas attractive for investment.
Real estate agencies note that properties within 1.5 km of an MRT station tend to have higher prices per square foot compared to those further away. Surveys show that homebuyers in Malaysia prefer properties with easy access to public transportation, which boosts demand and value.
Moreover, government planning documents often predict that new transit lines will spur growth in local real estate markets. The introduction of MRT3 and other projects is expected to further accelerate the development of transit-oriented residential areas, enhancing property values.
Sources: PropSocial, EdgeProp, The Edge Malaysia
5) Consider properties in Mont Kiara or Bangsar for steady rental demand due to high expatriate concentration
Buying property in areas like Mont Kiara or Bangsar can be a smart move for ensuring steady rental demand.
These neighborhoods are popular among expatriates because they offer a diverse range of amenities like international schools, restaurants, and shopping centers. This makes them attractive places to live, which in turn keeps the rental demand high.
When it comes to rental yields, Mont Kiara and Bangsar are quite competitive. In Mont Kiara, you can expect yields of 4.0% to 4.5% for mid-range condos. Meanwhile, Bangsar offers around 3.85% for high-end high-rise residential properties. These numbers suggest a reliable income stream for property investors.
The demographic data shows a significant number of expatriates living in these areas. The presence of international schools and western amenities makes these neighborhoods even more appealing, ensuring a consistent demand for rental properties.
Sources: Investing in Malaysia Property, Education and Schools in Malaysia, Rental Market in Bangsar
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6) Stay updated on policy changes in Malaysia, as government policies can impact the property market
Government policies play a crucial role in shaping Malaysia's property market.
Take the Housing Credit Guarantee Scheme from Budget 2025, for example. With a hefty RM12.8 billion set aside, this initiative is designed to assist over 57,000 first-time homebuyers. It's particularly aimed at the B40 and M40 income groups, ensuring they can secure housing loans. Such efforts are expected to boost housing transactions and bring stability to the market.
Looking back, we see how policy shifts have swayed the market. The Malaysia My Second Home (MM2H) program initially sparked interest, but changes in its rules have since dampened enthusiasm. This is a clear example of how policy tweaks can directly influence demand.
Another policy to note is the new 4% stamp duty for foreign buyers. This could affect property deals, especially in places like Johor. Despite this duty, Johor has experienced a notable rise in property transactions, showing the complex interplay of factors at work.
For anyone considering buying property in Malaysia, it's essential to stay updated on these policy changes. They can have a significant impact on your investment decisions and the overall market landscape.
Sources: Malaysia Property Reviews, The Straits Times, Global Property Guide
7) Be aware that renewing a 99-year leasehold in Malaysia can be costly and complicated
In Malaysia, leasehold properties usually come with a 99-year lease, which is the standard term.
As these leases approach their end, property owners often face tough decisions. For instance, in Petaling Jaya Old Town, around 150 shophouse owners are grappling with lease renewal issues as many leases are nearing expiration. This situation is causing quite a stir among the local business community.
Renewing a lease isn't just a hassle; it's expensive. Take Andrew Sin's story: his father-in-law bought a commercial property in the 1960s with a 60-year lease. Now, Andrew is in a bind because the renewal premium is RM952,253, nearly the property's current market value. This makes the property almost worthless. Similarly, Liew Seong Loong, who runs a 70-year-old business, is anxious about the high renewal premium, fearing a big drop in property value if he can't renew.
The renewal costs differ by state but are generally steep. In Selangor, for example, the premium is calculated using a specific formula, which can lead to hefty amounts. The Selangor government knows these challenges and is trying to make leasehold land extensions more affordable by exploring a more reasonable formula for renewal premiums.
Real estate experts point out that lease renewal is complex. They emphasize that as the lease tenure shortens, the value of a leasehold property decreases, impacting its market worth. This depreciation makes renewal costs high, adding to the property owners' woes.
Sources: The Star, HomeCity, The Edge Malaysia
8) Be aware that Malaysia's Real Property Gains Tax (RPGT) varies based on how long you hold the property before selling
Real Property Gains Tax (RPGT) is a key factor when selling property in Malaysia.
If you're a Malaysian citizen or permanent resident, selling a property within the first three years means you'll face a 30% tax on your gains. Hold onto it for six years or more, and you won't pay any RPGT at all. This setup is designed to encourage long-term investment in real estate.
For non-citizens, the rules are a bit different. They pay 30% if they sell within the first five years, but this drops to 10% from the sixth year onwards. Companies follow a similar pattern to citizens but always pay at least 10% from the sixth year onwards.
These varying rates aim to stabilize the property market by discouraging quick, speculative sales. The idea is to keep the market from overheating and ensure that property remains a stable investment.
Understanding these details can help you make informed decisions about when to sell your property. It's all about timing and knowing how long to hold onto your investment to minimize tax impact.
Sources: IQI Global, ACCA Global, Hasil
We have made this infographic to give you a quick and clear snapshot of the property market in Malaysia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Check local regulations, as most Malaysian states require properties to be valued above RM1 million, but some have higher thresholds
If you're a foreigner eyeing property in Malaysia, you'll need to look at options priced above RM1 million.
In Kuala Lumpur, the minimum property value for foreign buyers is set at RM1 million. But if you're considering Selangor, be prepared for a higher threshold; some districts require properties to be valued at RM2 million. Over in Penang, the rules shift again. On the island, landed properties must be at least RM1.8 million, while strata-title properties need to be at least RM800,000. On the mainland, these figures drop to RM750,000 for landed properties and RM400,000 for strata-title properties.
These variations make it clear that understanding local regulations is crucial. Real estate agencies like Emerhub offer detailed guides on these differing requirements, helping you navigate the landscape. Legal advisories, such as those from AzmiLaw, also stress the importance of obtaining state consent to avoid any legal hiccups.
Before you dive into the market, it's wise to consult these resources. They provide insights into the minimum purchase prices and the necessary legal steps. This way, you can ensure a smooth buying process without unexpected surprises.
Sources: Official MM2H, Emerhub, AzmiLaw
10) Buy during a downturn in Malaysia’s cyclical property market for potential gains when it recovers
The Malaysian property market is cyclical, with regular ups and downs.
In 2023, the House Price Index dropped, signaling a downturn. This isn't unusual; it's part of a pattern seen over the years. After the 2008-2009 downturn, the market rebounded significantly. For instance, Kuala Lumpur house prices jumped by nearly 122% from 2005 to 2015, driven by initiatives like the Greater Kuala Lumpur Plan.
Buying during a downturn can lead to substantial gains when the market recovers. Investors often scoop up properties at lower prices, sometimes through distressed sales or foreclosures. This strategy, known as opportunistic investing, allows them to benefit when the market eventually picks up again.
Real estate analysts, like those from UOB Kay Hian, have predicted growth in the property market, indicating a recovery phase after downturns. This means that savvy investors who buy during these low periods can potentially see significant returns.
For those considering buying property in Malaysia, understanding this cycle is crucial. It’s not just about timing the market but also about recognizing the potential for long-term gains. The cyclical nature of the market means that downturns are often followed by periods of growth.
So, if you're thinking about investing, keep an eye on these cycles. The market's history shows that downturns can be a great opportunity for those who are prepared to take the plunge.
Sources: Global Property Guide, Crowdstreet, The Exchange Asia
11) Consider properties in Iskandar Malaysia for good returns, as they benefit from proximity to the Singaporean market
Iskandar Malaysia, close to Singapore, is catching the eye of property investors for its potentially high returns.
One reason for this interest is the historical rise in property prices in the area. Places like Iskandar Puteri have seen prices climb, thanks to better connectivity and a growing demand for industrial spaces. This trend is particularly appealing to those looking for a solid investment opportunity.
The region's proximity to Singapore is a major factor driving this growth. In 2022, over 70 million people traveled between Malaysia and Singapore, highlighting the strong cross-border workforce. This has piqued the interest of Singaporean investors who see the strategic advantage of investing in a location with such easy access to Singapore.
Infrastructure improvements are also making Iskandar Malaysia more attractive. The Johor-Singapore Rapid Transit System Link and expanded highways are enhancing connectivity, making the area more accessible. These developments are not just about getting from point A to B; they are about making the region a more appealing place to live and invest.
Adding to the allure are new amenities and lifestyle facilities. Plans for a college and a medical center are in the works, which will boost the region's livability and vibrancy. These additions are expected to draw more residents and investors, further driving up property demand.
For those considering a property purchase, Iskandar Malaysia offers a unique blend of strategic location and growth potential. The combination of rising property values, improved infrastructure, and proximity to Singapore makes it a compelling choice for investors.
Sources: Global Property Guide, Global Future Cities Programme, The Perfect Media Group, The Star
Don't buy the wrong property, in the wrong area of Malaysia
Buying real estate is a significant investment. Don't rely solely on your intuition. Gather the right information to make the best decision.
12) Avoid properties with high maintenance fees, as they can reduce your rental yield
When buying property in Malaysia, watch out for high maintenance fees.
In areas like Mont Kiara, owning a high-rise condo could mean paying RM525 to RM750 monthly just for upkeep. This can significantly cut into your rental income, leaving you with less profit. Imagine expecting a steady income from your property, only to see a big chunk of it disappear into maintenance costs.
High fees can also make it tough to attract tenants. In a competitive market, renters often prefer newer buildings with lower fees, which could leave your property empty longer than you'd like. An empty property means no rental income, further reducing your yield.
Maintenance fees don't stay the same; they tend to rise. With increasing costs for utilities and labor, these fees can climb, further eating into your profits. This trend has been a growing concern for property investors, especially in recent years.
It's crucial to consider these factors when investing. High maintenance fees can be a hidden cost that affects your overall return. They might seem manageable at first, but over time, they can add up and impact your investment's profitability.
Be cautious and do your homework. Look for properties with reasonable fees to ensure your investment remains profitable. High fees can be a deal-breaker if you're not prepared for them.
Sources: Ohmyhome, Malaysia Property New Launch, Global Property Guide
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.