Today’s episode is about the Malaysian real estate market with Jensen. Comparing to the Amos episode, he shares more on the commercial side, industrial side, and how to purchase land as a foreign investor.
Jensen Siow is the Assistant Sales Manager for a real estate development firm Capital City in Johor Bahru, Malaysia which focuses on property developments in Johor Bahru. He is also practicing his Real Estate Agent (REA) license in SLP Malaysia, an international real estate agency which has more than 40 residential projects and 70 industrial projects in Malaysia alone. Prior to joining the two companies, Jensen was with another developer – IJM Land, a prominent Malaysia real estate development company.
- Investing in Malaysia as a foreigner
- Which areas to look into for commercial investment?
- How do investors differ sector to sector?
- What are the government regulations for overseas investors?
- What are the limitations?
As it can be difficult to catch some minor errors, transcripts may contain a few typos or inaccuracies.
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Private viewing auctions: Unlike open auction, private auction is only open to a selected group of buyers. The exclusive buyers get the chance to take part in the auction and place bids even before the property is available in the open market.
Foreclosure: When a lender auctions a borrower’s asset in order to recover the money lent, this legal process is called foreclosure.
Bumiputera: Bumiputeras are one of Malaysia’s indigenous races who reportedly cover 68.8% of the population.
WorldBank: The world bank supports the developing countries by providing them with assistance in various matters.
SLP Malaysia: https://www.oneslp.my
National Property Information Centre (NAPIC): https://napic.jpph.gov.my
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Alright, let’s get back to the transcript of the show. Enjoy!
Darren: Well Jensen, welcome to the show.
Jensen: Hi, yes, hi Darren.
Darren: Yeah, so like I want to tell the audience how I know you and before this interview, because I know you through a really good friend called Harold and he told me about you because I was trying to find someone from Malaysia to talk about the real estate market. And it’s just funny because after all along back and forth, I finally have a conversation with you and you know in a better world, I wish I could have a beer with you to talk about each other because this whole notion of this whole Denzity Insight is to relax a little bit, talk about what’s going on. And I really wish the audience know more about the Malaysian market and what to do if they come to invest in your area.
Jensen: Yes, yes, yes, thank you. Thank you for having me here. Yes, thank you. I appreciate it.
Darren: Would you mind telling the audience a bit about yourself and then your work?
Jensen: Ok, firstly, I’m actually working for both companies in Malaysia, in Johor Bahru and it’s just right next to Singapore. I am working for a property development company called Capital Well, Limited. OK, so I’m doing sales and marketing for the company and on the other hand, I’m actually doing the real estate practicing my real estate agent license in SLP Malaysia, which is an international company. And we have more than 40 projects in Malaysia myself, residential and 70 industrial projects in relation. So yeah. So I’m actually doing like seven days a week.
Darren: That’s good. That’s the real estate life.
Jensen: Yeah, yeah, yeah, yeah.
Darren: Because like I’ve done an interview with a good friend of yours, Amos, and before that I was talking and thinking about how it’s very interesting because a lot of investors or audiences are watching are partly residential, but commercial, industrial is something that we obviously want to cover. And at the same time you is that you want to know people what’s going on in different sectors, that maybe they consider that, hey, you know what, let’s find something, a very small commercial building or industrial buildings or a floor of it. And so this conversation is more about residential, commercial, industrial and other opportunities, that these people want to know more what’s going on in Malaysia. So let’s get straight to it. So for the audience who might not know about or is familiar with Malaysia, what are the area which overseas investors tend to be interested in? And then would you mind giving the audience a bit more about the neighborhood and give the audience the bigger picture, what’s going on?
Jensen: Yeah, totally. Okay, so basically there’s this thing called the National Property Information Centre (NAPIC), there are these data from the NAPIC. There’s actually three popular areas and NAPIC is actually a government statistical website for Malaysia where you can find all your information regarding properties. So these three cities that I’m about to say, they have the most international awareness as well as all the embassies so basically in these three major cities. Okay, so I’ll compare it with cities like in China. And so the first one is Kuala Lumpur, which is like Beijing in China. So Kuala Lumpur all the embassies are in and it’s the capital of Malaysia. So that’s the first place where overseas investor would actually look into. And secondly, we are looking at Johor Bahru, which comparatively is Shenzhen to Hong Kong. So basically Johor Bahru is Shenzhen and Hong Kong is Singapore. So Johor Bahru is actually just right next to Singapore. And it’s about 20 minutes drive from the bridge over the Cross Bridge. Okay, so a lot of embassies, a lot of Singapore companies are in Johor Bahru as well. This is where people focus all their investments on. And that third one, it’s actually an up north city building called Penang. That one we can compare it to Hangzhou. Hangzhou in China. So its culture is a tourist destination and, of course, a lot of investments are actually there so a lot of the investors actually look into these three places because the price appreciation is good. The rental return are good. And these are three major big cities in Malaysia.
Darren: Actually have you been to China before? It sounds like you’re familiar with the country.
Jensen: Yeah, I’ve actually been to China like four or five times, yeah, for business and pleasure.
Darren: I see, because it’s good that like because like obviously this channel we’re from Hong Kong and then a lot of people might not have been to Malaysia before and actually might have been to Beijing or like Hangzhou or other places. So I think it’s a really good comparison to give people to understand what’s going on. So for the audience that might be interested in Malaysia real estate, would you mind giving them an update of the market? And then I’m aware that, like, you know, we talked about this before, not only that you done residential, you do commercial and then retail and industrial and other other asset class. Like, obviously, I’m not going to ask you to do like a three hours deep dive of what’s going on. Would you mind covering a little bit about each property type?
Jensen: Yeah, of course, of course, happy to do that. Okay, basically what we got from the government statistics website as well, from 2016 to 2019, just last year, Okay. Property prices have been going upwards, upward trend. So interestingly, there’s actually two main types of property. I don’t know about Hong Kong, but in here it’s actually called a retail and commercial are actually a bond one we call it commercial in Malaysia. So for commercial, there’s actually a very good trend in Kuala Lumpur, which is worth noticing. It’s because in the Kuala Lumpur where my office lots like they sell the inside building, they sell the office lots to individual landlords. This is actually gaining attraction because of the co-working space around Kuala Lumpur and we have more than 90 percent occupancy. So if anyone is actually looking into investing in commercial lot in Malaysia, that could be something to dive into, something to dig into. And we go into residential lots okay, interestingly, as of now, there’s about a 130 000 residential lots, whether they are completed or whether they are not completed, they are still on the market. So for anyone who actually wants to dive into investing in a residential property in Malaysia, that’s one there, a lot of options, a lot of lines.
Darren: I see. Yeah. So, you know, like obviously, you covered three main places in Malaysia, and it’s a huge country right, and then obviously this channel is to talk about, you know, the little dirt or like inside scoop that no one has really thought about before. So one thing I always ask, like a lot interview is this that are any popular areas or types of properties that you think are overrated or underrated at the same time?
Jensen: Ok, I am going to be very frank. I’m from Melaka myself, Melaka is actually a historical city, but the investments there it’s quite overrated. Melaka itself, okay it’s basically one and a half hour away from Kuala Lumpur. Why? Because fundamentally, Melaka, as a city, it has only 600 000 – 700 000 population which does not suffice the spending power; the affordability of the people living in Melaka cannot cater for the price appreciation of properties. So although, yes, Melaka is an UNESCO, a Heritage area, it’s a touristy place and stuff, but in terms of investing a property, a commercial or residential property in Melaka, it’s actually slightly overrated because you don’t really get the rental returns and you don’t really get the price appreciation because the population is small.
Darren: Yeah, yeah, I see that’s good, I’ve actually never heard of that before. No, no, it’s good. It is really good.
Jensen: I actually feel bad saying that about my own city but yeah.
Darren: Well you got to separate it then right, as a rational investors, you got to try to suppress the emotion and really think about what’s your money, because a lot of time, a lot of investors, they think too much about the emotion, they neglect that what’s practicality. And sometimes that the money is for your savings, for your family, for your retirement. There’s something that you have to be aware of. So it’s good that you pointed it out. And I’m sure you say out loud because you just want the audience to know more about what is the better choice in terms of whether or not and then it is their choice to think about if that’s true or not too so, you know, like when we first started right, you talked about residential, you have two different companies you work for and there’s commercial, retail, there’s industrial, there’s so many different focuses right. You know, it’s something that I want to know personally too, how do you manage to keep in touch with so many different markets and so many different types?
Jensen: To be honest, it’s impossible to keep up with the entire Southeast Asia market, not let alone even in Malaysia, but fortunately I’ve been working seven days a week and working with them, the first hanging out with property agents, with the people who work in property. So I get all this information from bits and pieces of information, from WhatsApp, from emails, from Facebook and stuff. But the bottom line is this: property, it’s always supply and demand, which pushes the price up and down. So basically the bread and butter to a property investment is actually the full site to the market as in what you think of the market. So it’s really hard to catch up. It’s really hard to follow all the markets at once. But if you really want to, if you really have the heart to actually invest or learn about a market, you can actually learn from all the information that are readily available online.
Darren: Yeah, like this platform.
Jensen: Yeah, that’s right. Yeah. Yeah, exactly.
Darren: Pretty much because I think I told you about my background. I use to work for a fund. We worked in the Paris market, we worked in UK, in Japan. And then I have so many things that I’m not really good at because there’s so many things going on that’s why I want to personally ask you too, because maybe some investors like the audience at the moment are looking at three or four different places or three different, four different areas in Malaysia that might be just hard to keep in touch. So which comes to the next one and obviously, like Denzity tries to bridge the gap. What other places can the audience learn more about the Malaysia real estate market?
Jensen: Right now, we’re all connected via internet. So the biggest two websites, I mean, you can find a link. The biggest two websites in Malaysia, legit websites is PropertyGuru.com as well as Iproperty.com. But these places, there are a lot of information crowded around. You have a lot of price and a lot of agents and advertisements on it. So still, yes, you can find a property and you can use the websites as a reference, but most importantly, you have to find a trusted party in the locality itself, in Malaysia itself, to actually if you really want to invest in Malaysian properties, I think that’s why Denzity was actually born to build this.
Darren: Hopefully, yeah. Well, first of all, if Iproperty.com or Property Guru sees this, pay me advertising please, you know we should get as many costs. But then it is something that is like interesting right because a lot of places are hard to find. So hopefully this will mean more than the media.
Jensen: Of course, of course.
Darren: So you know, like I said before, when I introduced you and then I told the audience that I know you through Harold. And both you and Harold, use to study abroad in Australia like I work in the Australian market. And then obviously the reason why I’m asking is because I wanted to know, like, if you learn something about real estate in Malaysia, do you apply that kind of thinking in Australia, different markets?
Jensen: The fundament.Yes, I mean, I graduated since 2015 sorry I mean, I graduated in 2011, work for four years in Australia, in the retail industry then I came back to Malaysia since the 2015 so I’ve never caught up with the market in Australia. But I think fundamentally, properties are the same in Malaysia and in Australia. I think the price goes up and down and stuff, but the thinking and the transaction and the process is totally different in Australia, they have open houses there, they have private viewing auctions whereby you could just drive the price up. But in Malaysia, it’s totally different. We do not have that kind of system. So yes and no. Yeah, yeah. We do not have those kind of system.
Darren: So there’s no over viewing and stuff like that? There’s no such thing?
Jensen: No, no. There’s no open auction. There’s no private viewing and stuff before auction.
Darren: So if I invest, how will i know if that asset is good? Let’s say this right, how do you assess the credentials or the real estate asset?
Jensen: Interestingly, for auction properties in Malaysia for properties that are on auction in Malaysia are basically properties that require a fire sale, meaning the landlord has gone bankrupt or meaning the landlord is in need cash to pay debt.
Darren: Oh for the foreclosure.
Jensen: Yeah, yeah foreclosure, a foreclosure. But these type of properties, you can’t actually go inside to view all the properties, even if you really want to buy it, you cannot just go in and find a sentimental value, whether is the property good, whether is the property bad and stuff.
Darren: Really? Okay.
Jensen: Yes, yes. Yes.
Darren: So, question right, so can I hire someone else like an appraiser or surveyor to look into it or another due diligence, kind of like a party to do that or no one can do it?
Jensen: You can hire, but then no one is allowed to actually enter the property itself.
Darren: Wow, I didn’t know that.
Jensen: Yeah, that is actually part of the auction properties, but for private properties which are on sale on the open market, you can actually do that, you can just go to a private viewing.
Darren: Oh that’s good. Yeah I understand. That’s an interesting question right, because I was like, “Woah, you cannot see what I want to buy?” It’s like, hey, you know, maybe it’s Bentley, like people always joke around saying that, like, “Oh, you can’t try it until you buy it.” So it’s interesting. So I was wondering too right, in your experience, have you worked with different people with different nationality in terms of like investors? Because I always want to know, like different investors, like Malaysian investors, Chinese investors or other different culture, like do they act differently or would they look at real estate differently?
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Jensen: Yeah, I basically deal more with investors from Singapore or from Malaysia, so only these two countries. So most people are from Singapore or Malaysia and basically everyone’s looking for the cheapest deal and the best location.
Darren: So this straight up. That’s what they want.
Jensen: Yeah, straight up. That’s it.
Darren: Oh, okay. How about for self use or investment only. Do they do they think about it differently?
Jensen: With self use, they would actually buy at a location, which they actually prefer. But for investment, I have met a lot of investment, I mean, investors throughout the entirety of my career area, Investors actually they don’t look at like how beautiful is the house or how many square feet and stuff. Investors they just go for the ROI, they go for a return on investment, how much they can make in a year. So the aesthetic of the house are not the concern that these people get.
Darren: And does that apply to residential and commercial as well like for different asset class?
Jensen: Yeah, totally.
Darren: I see, okay, because I know some people in investment only they still want to have this beautiful place and everything. So I think obviously there’s always different people, different ways of looking at it. So just one thing that I’m wondering.
Jensen: Yeah, but that’s from own judgment. From my own opinion.
Darren: Yeah. Yeah. So, you know, obviously this channel is more about overseas investors. So I’m sure they would be interested to know about the limitations. Is there any limitation for overseas investors and what kind of things do they need to be aware of when investing in Malaysia?
Jensen: Ok, surprisingly in Malaysia, you can actually – a foreigner can actually own 100% of a property. There’s no restriction whatsoever. However, in most of the cities in Malaysia, foreigners can only purchase houses which are one million ringgit and above. One million, that’s the bottom line. So that’s the minimum price to purchase a property. And of course it’s something to note for properties in Malaysia in a certain in every single neighborhood or every single project, that’s always 30% to 40%, which are reserved for the only Bumiputera in Malaysia and Bumiputera are like the Aboriginals of Malaysia. So 40% is reserved for them. So make sure if oversea investors, they would like to make a deposit down in Malaysia, buy a property, make sure it’s not a Bumiputera title. If not, you can never have the property. Yeah. And of course, if you want to lend from a bank in Malaysia, a Malaysian bank, the margin of finance that you can get is only 70%. So if you’re borrowing one million ringgit from the bank, so, I mean, if the house price is one million ringgit, OK, you can only get 700 000 worth of loans from the bank. That’s the maximum. Yeah. So that’s the certain trust holds and stuff.
Darren: I see. So like, you know, Malaysia obviously is the growth. I’m sure you see the growth coming up for past couple years and everything. Where do you think we are in the market and what’s your opinion like is for the next three years time?
Jensen: I actually did a little bit of research on this. Okay, so basically, according to data from WorldBank, we are actually 24th place in terms of the east of doing business around the globe. So it makes it a very internationalized economy and it makes it very diversified in export and import. And of course the geographical location of Malaysia is actually quite strategically located between China as well as towards Europe and America. One that one road initiative. So, yeah, that’s why. So in the next three to five years, we can see an increase of foreign investors being in Malaysia. So that will actually drive the entire property market up despite what’s going on from Covid, Covid is some external lease which happens then and there.
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Darren: So what other tips and advice do you have, if you don’t mind sharing with the audience when it comes to choosing different regions in Malaysia?
Jensen: Oh, okay. So in terms of if you are actually looking to settle in Malaysia, looking to buy an investment in Malaysia, if you are a foreigner the first thing you need to do is you need to see what sort of area you’re looking for, which area do you feel more comfortable with. So let’s say in Beijing, in terms of the China market as it is, Beijing, Hangzhou, wherever. So secondly, you need to differentiate because in Malaysia there’s something very interesting. In either rental income which is high, it’s like a dividend or it’s actually price depreciation, which is high. So you need to do it in terms of investing. You need to understand if you want rental income, which is normally in Malaysia, commonly it’s platinum, which are in the centralized location or you want price appreciation, which you look for lender properties in Malaysia.
So my advice is go do research online, but do engage a trusted person in Malaysia to purchase your property and that way you can for sure know that it’s a good investment and stuff.
Darren: I see. So I think that like just now you mentioned that I think a foreign investor can also own 100 percent. So I guess that is a freehold, that means the land as well. So if an investor are interested in purchasing land, what is the challenge of things that they need to be aware of when it comes to that?
Jensen: Okay, there is two lands, which cannot be purchased by overseas investors, foreigners. One, agricultural land, and second, is Malay Reserved Land. These two lands are definitely off the chart for foreigners. Okay, but one thing that is the most challenging in terms of purchasing a land in Malaysia is actually getting the state governments consent with every purchase of every single land in Malaysia, you have to apply a application to write into state government like, why are you buying this land for is it for building properties, for building factories and stuff? And then approval could be six months to two or three years.
Darren: That’s a long time.
Jensen: Yeah. Yeah. So that would jeopardize the entire cash flow. I mean for foreign investors who wants to buy land in Malaysia, that is something to look out for and that’s that’s a challenge.
Darren: So just two questions I have with that. Let’s start with the first one. What dictates a land as agricultural use. Number two, is that so, you know, you said it takes six months to two years right, what are things that would make it take so long? Like what kind of things are people looking at that would be better when it comes to purchasing land? Like what other tips you have?
Jensen: The first question is regarding what dictates of agricultural land? Okay, what do you think as an agricultural land it’s from the zoning planning of the state government because state government actually plans the entire zoning of the city and a town. So certain lands are already reserved for agriculture, so for the rubble plantations and I forgot what was the other one but yeah. So these lands are really defined as agricultural. So you cannot purchase that property.
Darren: So for the second one, how about like why does it take six months to 12 months to go through and what are some things that you can do in order to allow the government to be faster?
Jensen: Because every single application that needs to be submitted in, there’s actually an entire very lengthy process to say yes to different endings. Okay, so six to 24 months, it’s just a ballpark, sometimes it takes even longer. So if you have it well planned out for your final building construction and stuff and if you know yeah, and that’s about it.
Darren: Next time we’ll grab a drink and we’ll ask the same question again, okay? It’s okay, I think this conversation is great because I have a lot of questions regarding that. But so let’s say this right, an investor, the audience that have the money, a little bit more money to consider different asset class, like for example say, hey, you know, I don’t have to put money in residential, I can put money industrial, commercial and so on. Which type would you suggest them to consider if they can do that?
Jensen: Which type of investment costs?
Darren: No not investment costs.
Let’s say this right, for example, if I have a little bit of money where I can consider different asset costs, commercial, industrial retail, like many, many more or residential. Which type of property type would you suggest them to consider?
Jensen: Generally speaking, if you have a lot of money and generally speaking, the trend is like this, if you are purchasing like I said before, if you’re purchasing an apartment, a residential apartment or shop lot, which is a shop lot where people do business in Malaysia like has a long car tire shop and stuff, these two are more stable in terms of rental income. If you’re purchasing lender property, which are more to its own use, when people stay in lender properties in Malaysia, that’s more towards price appreciation because the rental market for lender property isn’t that great in Malaysia. So it’s depending which kind of return you are seeking for.
Darren: I see, that’s cool. That’s something that I was curious, not like I have it but then if people in the audience have it, it’s something they would consider. So you know, I think this has been a really great interview. So what kind of takeaway do you have for the audience before they go?
Jensen: Takeaway, Okay yeah, so basically my general piece of advice is, if you’re looking to invest in Malaysia, really look carefully at the title before you put in your deficit. That’s very important. 40% of the houses foreigners can’t buy. Okay, and secondly, have a trusted agent in Malaysia that could help you with your property purchases. And of course, lastly, look at the rules and regulations from your local governments. It can be from China, Hong Kong, America. Look for those rules and regulations and restrictions in terms of investing overseas.
Darren: Oh, theres a restriction on different nationality.
Jensen: No, I mean, your own country. If you’re from China, then you have your Chinese – the Chinese actually have the investment restriction.
Darren: Yeah. Yeah that’s good. That’s good. So, you know, I think I’m sure a lot of people have questions regarding Malaysian real estate. What are a couple of ways that people can reach out to you and talk to you more about working together or more about the Malaysian real estate?
Jensen: Definitely. You can find me on my LinkedIn account, which is Jensen Siow or you can add my WeChat. My WeChat ID is Machokidd if not, you can always email me my email address @[email protected]
Darren: Obviously I will include everything in the show notes and I must say this is a blast. Thank you so much for your time and efforts. And then I want to do part two with you in the future and then let’s keep in touch. And hopefully we’ll have a second round and you can come in, tell me more about what’s going on and yeah, I just want to say thanks for your time. Thank you.
Jensen: Definitely, definitely Darren. Thank you.
Darren: Have a good day and then I wish you well and let’s have a drink next time if I ever come to Malaysia, then.
Jensen: Yeah man, of course, of course.
Jensen：當然。你可以在我的LinkedIn帳戶上找到我，這個帳戶是Jensen Siow，也可以添加我的微信。我的我的微信地址是@ [email protected]。
That’s all for today. See you later!