Numerous foreigners want to invest in property in Malaysia because of the country’s promising real estate market. Malaysia has become an ideal location for property investment due to its strategic location in Southeast Asia and rich trading history. However, investment in Malaysia for beginners has challenges due to legal regulations and restrictions on foreign ownership. This article will cover crucial information on investment property and discuss how to invest in property in Malaysia.
Why investing in Malaysia is a smart choice
Investing in Malaysia is a smart choice for foreigners due to many advantageous reasons. Malaysia’s economic stability makes it an ideal country for investments. Since gaining independence in 1957, Malaysia has undergone a remarkable economic transformation. The country has strong economic growth, with an average annual GDP growth of 6.9% between 1960 and 2017. Malaysia’s global trade integration is significant in international trade, with extensive connections to countries worldwide. Malaysia has solid economic connections with other countries through international bilateral Free Trade Agreements (FTAs) and regional membership with the Association of Southeast Asian Nations (ASEAN). Malaysia’s population living below the poverty line has reduced to 2.7%, and life expectancy has increased to 76.79 years due to advancements in healthcare.
Furthermore, Malaysia has government incentives to attract foreign investment, such as tax exemptions and investment programs, like the Malaysia My Second Home (MM2H), which offers foreigners the opportunity to invest in property in Malaysia and establish private limited companies. In 2024, real estate investment in Malaysia has become lucrative because of the country’s property capital appreciation of 5% to 7% and average rental yield of 5.24%. Foreigners who invest in property in Malaysia can guarantee the security of their investments with the country’s robust legal framework that protects their rights and interests.
Can foreigners invest in property in Malaysia?
Property investment in Malaysia for foreigners is allowed, subject to specific regulations and restrictions of the National Land Code. Some of the legal limits to invest in property in Malaysia as a foreigner include the following:
- Property price requirement: Depending on the state, foreigners can only invest in properties in Malaysia priced more than RM 1 million ($210,000). Investment property valued at less than RM 1 million ($210,000) is unavailable to foreigners.
- Properties built on Malay Reserved Lands: Properties built on Malay Reserved Lands are exclusive to Malaysians and cannot be rented or sold to foreigners buying property investments in Malaysia.
- Low and medium-cost housing: Foreigners cannot invest in property in Malaysia under low and medium-cost housing since these properties are intended for local citizens.
- State and regional differences: Under the Federal Constitution of Malaysia, each state and federal territory has its own jurisdiction and land laws. Prices and other restrictions might vary in individual states and federal territories.
Benefits of property investment in Malaysia
Real estate is the best investment in Malaysia for foreigners. Numerous foreigners who invest in property in Malaysia benefit from the following:
- Growing property market: The Malaysian property market is valued at $0.87 trillion in 2024. The dominant segment within this market is residential real estate, with a market volume of $0.65 trillion in the same year.
- Potential for capital appreciation: Capital appreciation of 5% to 7% is attractive to foreign investors, increasing demand for investment property in Malaysia.
- Potential for rental yield: Investment properties offer attractive rental yields, making them a good source of passive income in Malaysia. The country’s average rental yield was 5.24% in 2024. Moreover, Airbnb activities contributed over RM 5 billion ($1.05 billion) to Malaysia’s Gross Domestic Product (GDP) in 2022 and accounted for approximately 4.9% of the tourism industry’s contribution to GDP.
- Foreign ownership: Under certain conditions, foreigners can invest in property in Malaysia, making it a popular investment option.
- Government incentives: The Malaysian government offers various incentives to attract foreign investors, such as tax exemptions and visa programs like the Malaysia My Second Home (MM2H).
- Partnerships with other countries: Foreigners who invest in property in Malaysia can benefit from the country’s economic partnerships with other countries. Currently, Malaysia has seven bilateral Free Trade Agreements (FTAs) with the following countries: Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey. Another is the ASEAN Free Trade Area (AFTA), a trade bloc agreement supporting local manufacturing in all ASEAN countries.
How to start investing in Malaysia property
Starting an investment in Malaysia for beginners can be challenging, especially when buying properties. Many foreign investors choose real estate as an efficient investment option because of its security and high returns. Below is the streamlined process for investing in property in Malaysia.
Step 1. Research and conduct thorough due diligence
The first step to investing property in Malaysia is researching the investment avenue you want to pursue. If you want to venture into the rental business, purchasing a suitable property for this purpose is essential. Researching the real estate market ensures that you start right and understand the procedures you must undergo. Moreover, selecting a real estate investment in Malaysia requires thorough due diligence. Foreigners who invest in property in Malaysia must conduct legal due diligence by checking property ownership legitimacy, confirming property prices by professional valuation, and determining property taxes and other costs.
Step 2. Find a reputable real estate agent
Finding a reputable real estate agent in Malaysia will help you streamline the investment process. You need to hire a real estate agent because they know Malaysian property laws and regulations, are familiar with local property hotspots and are connected to local professional networks. Their expertise in the real estate market enables them to provide invaluable insights that can help you invest in property in Malaysia. They are also reliable and can accompany you through the process.
Step 3. Complete the legal process
The legalities involved in real estate investment in Malaysia are the most challenging. A property lawyer is crucial in handling paperwork, especially when buying properties and transferring ownership. After determining the property you want, agree with the seller to determine the price. You must pay a deposit of at least 10% of the cost before you can sign the Sale and Purchase Agreement (SPA). Furthermore, the Memorandum of Transfer (MOT) must be signed to transfer ownership from the seller to the buyer. Stamp Duty is required for this document, which costs anywhere from 1% to 4% based on the property price bracket.
Step 4. Complete the payment
Pay for the remaining balance to close the deal and receive the updated title deed in your name. After obtaining an investment property, foreigners can further venture into businesses and take advantage of their property ownership in Malaysia.
Where to invest in Malaysia?
Foreign buyers have options regarding where to invest in property in Malaysia. Among the country’s 13 states and three federal territories, these are some of the best locations for property investment in Malaysia:
- Selangor and Kuala Lumpur: Home to the national capital, Kuala Lumpur, Selangor is a hotspot for real estate investment, particularly in residential apartments, luxury condos, and townhouses, offering high returns. Kuala Lumpur’s robust economy also makes it appealing to commercial property investors.
- Johor: Located at Malaysia’s southern tip and a gateway to Singapore, the Johor-Singapore Special Economic Zone (JSSEZ) development promises to enhance Johor’s economic ties and position it as a rapidly growing economic hub for foreigners investing in Malaysia.
- Penang: Renowned for its tourism, including the George Town UNESCO World Heritage site and famous street food scene, Penang’s demand for hotels and high-rise buildings as investment properties in Malaysia presents lucrative business opportunities for foreigners.
- Perak: Perak, a state in Malaysia known for its tin mines, borders Kedah, Penang, Kelantan, Pahang, and Selangor. In Malay, Perak means silver, reflecting its rich tin deposits. Ipoh, the capital of Perak, is a historic city known for its colonial architecture and rich heritage. Houses, apartments, and condominiums are available in this area, where foreigners can invest in property in Malaysia.
Malaysia My Second Home Visa (MM2H)
Investment property in Malaysia is a requirement for foreigners to qualify for the Malaysia My Second Home (MM2H) visa program, which the government initiated to allow foreigners to reside there. This visa scheme is designed to attract more foreigners to invest in property in Malaysia. In addition to MM2H’s multiple-entry investor visa, participants are granted several benefits and privileges. They can purchase residential properties, with the minimum price varying by state, although they cannot be rented unless acquired through a company. Participants also benefit from tax exemptions, including exemptions on foreign income, offshore pension remittances, and imported personal items, without needing to file taxes for foreign income. MM2H visa holders can start private companies and do business investing in Malaysia.
Is property a good investment in Malaysia?
Real estate is a good investment in Malaysia for several reasons. The government allows foreigners to invest in property in Malaysia, offering foreign investors a chance to leverage the property market. Rental businesses are becoming in demand, offering a lucrative rental yield opportunity. Moreover, real estate appreciates over time and provides investors with a guaranteed income on capital appreciation.
Expert guidance for foreigners investing in property in Malaysia
Investing in property in Malaysia as a foreigner requires a clear understanding of the legal landscape, market trends, and investment opportunities. Our experienced team is here to guide you through every step of the process—from identifying the right property to navigating legal requirements and securing a successful investment. Whether you’re looking for a residential or commercial property, we offer personalized assistance tailored to your needs. You can also email us at [email protected] for detailed inquiries and specialized guidance. Contact us today to ensure your property investment in Malaysia is smooth and profitable!
Frequently Asked Questions (FAQs)
Can foreigners start a real estate investment company in Malaysia?
Yes, foreigners can start a real estate investment company in Malaysia. However, specific requirements and regulations must be met, including registration with the Companies Commission of Malaysia (CCM), foreign ownership restrictions in specific sectors or types of businesses, and compliance with Malaysian laws and regulations related to business operations, taxation, and labor.
What is a real estate investment trust in Malaysia?
A real estate investment trust in Malaysia, also known as REIT, is an investment option that allows foreign investors to pool their money to invest in real estate properties managed by professional teams specializing in real estate investment. The Securities Commission in Malaysia regulates REITs.
What is the best investment to earn a passive income in Malaysia?
The best investment in Malaysia to earn a passive income is through real estate. Foreigners who invest in property in Malaysia can enjoy rental income by establishing rental businesses like Airbnb and steady capital appreciation on property investments.
How much tax do I pay on real estate investment in Malaysia?
When investing in real estate in Malaysia, you must pay a tax of 1% to 4% of the property value. This tax, known as Property Stamp Duty, is levied on the Memorandum of Transfer (MOT), the legal agreement that transfers property ownership.
How much does property in Malaysia cost?
Investment property in Malaysia costs an average of RM 467,000 ($98,070) for houses, RM 496,945 ($104,358) for land, and RM 1.19 million ($249,900) for condominiums.
What is the easiest way to live in Malaysia?
The easiest way to live in Malaysia is to apply for the Malaysia My Second Home (MM2H) program or Premium Visa Programme (PVIP). This government program allows foreigners to reside in the country and provides participants a multi-entry visa and other benefits. Foreigners must also invest in property in Malaysia to qualify for MM2H.
