Tips To Buy KLCC Property As A Foreigner
Kuala Lumpur represents an attractive option for both expatriates and foreign citizens who are looking to buy real estate. From a legal perspective, it’s a similar location to both Hong Kong or Singapore, but it is considerably more affordable than either. Malaysia is home to a diverse cultural base that will entice and lure anyone who has even a passing interest in Asian culture or Islamic history. This guide assumes that the reader already understands the process of purchasing real estate, and that they have the resources to operate in Malaysia. It will focus in particular on what separates Kuala Lumpur from other foreign real estate markets. The following is what you need to know as a foreigner looking to buy property in Kuala Lumpur.
Be Aware of Restrictions
Real estate restrictions are the first thing you’ll need to be aware of. The Malaysian government, seeking to “cool” the real estate market for foreigners, has instituted a number of different measures that are intended to discourage real estate speculation that might harm the welfare of their citizens. Consequently, it is impossible to purchase any real estate holding worth less than one million ringgits, or about $310,000. This means no small-scale speculation is possible. However, that price range will give an individual access to a well-located two-bedroom condo, if they are willing to walk or take a monorail into a metropolitan area.
Other restrictions may apply to the way in which property may be bought. Malaysia has taken and is continuing to take more extreme cooling measures than most nations in Asia, so this is something that is subject to rapid change. New developments may be locked out of foreign involvement, or “historic” neighborhoods may be sectioned off that prevent foreign intrusion. You may need to make some compromises to find property that suits your needs if you are not a Malaysian citizen.
Look for Freeholds
It’s very important to look for property on a freehold basis, rather than a leasehold basis. In the West, it is assumed that any property you purchase will be held for life. This is not the case in Asia. Many properties are offered on a leasehold basis, in which you simply pay for a very long-term lease. You’ll want to look for freehold properties for investment purposes. It can be harder to offload leasehold properties later on.
In some cases, it is possible to negotiate for a property offered on a leasehold basis to be available on a freehold basis, instead. However, you should never assume that the freehold title you would expect in the West will be the default you will encounter in Kuala Lumpur.
Have a Business Partner
If at all possible, have a business partner to purchase property through. Unless you are married to a Malaysian native, you will find that you face much higher taxes on all your various earnings and business maneuvers. Capital gains taxes on improved properties, for instance, are as much as 30%. Deductions are allowed, but it can make any sort of development of your property in Malaysia prohibitively expensive. Attaching your property to a business interest with a native partner will give you a lot more breathing room on your Malaysian taxes, allowing you to expand your holdings.
Most of the challenges associated with buying property in Kuala Lumpur as a foreigner are related to Malaysia’s current array of cooling measures intended to discourage harmful speculation practices. As long as you’re approaching Kuala Lumpur with the goal of purchasing a home to actually live in, you should find that you’re able to manage a very reasonable price.