Penang a popular choice for Chinese property buyers

PENANG emerges as the leading metropolis favoured by Chinese investors who ranked Malaysia as among the top five countries for property investment

China Communications Construction Group (CCCG) Overseas Real Estate Pte Ltd director Zhang Bao said Chinese companies that are looking to expand and diversify their operations have set their eyes on the northwestern city-state. 

This is in line with Penang’s aim to become a tech hub with an established electric and electronic (E&E) industry, offering Chinese companies a regulatory framework and talent base for success. 

Bao also revealed that Kuantan, Pahang, has been a sought-after investment destination since 2013 due to the Malaysia-China Kuantan Industrial Park (MCKIP) and has experienced significant growth. 

“As of May 2023, MCKIP has recorded RM14.55 billion in investments, with an additional commitment of RM15.45 billion,” he said to The Malaysian Reserve (TMR). 

A report from Juwai IQI showed that Johor, Kuala Lumpur (KL) and Selangor are also top picks for Chinese investors. 

Since Johor has a developed economy and a close proximity to Singapore, it is a potential property investment area for Chinese nationals. 

The Johor Baru-Singapore Rapid Transit System (RTS) link is expected to be completed in 2026, with 50,000 more residents expected to live cross-border by 2030. 

The link will attract Singaporeans and Chinese seeking higher returns, lifestyle and affordability, hence increasing investment. 

The project connects Bukit Chagar in Johor Baru to Woodlands in Singapore. 

The latter’s construction has reached the halfway mark, while Malaysia’s construction is around one-third complete. 

The next milestone is the “drop-in span bridge”, which will be commemorated by both countries’ prime ministers (PM) early next year. 

Meanwhile, being Malaysia’s largest urban hub, KL and Selangor have also attracted property buyers from China. 

Why Chinese Investors Find Malaysia Appealing

Malaysia is ranked one of the top five destinations for Chinese citizens to purchase property due to the slowdown in the property market. 

A research report from Juwai IQI revealed that many Chinese buyers anticipate Malaysia’s property market to recover and receive rewards for their investments. 

Malaysia secured a record RM170 billion of Chinese investment in April 2023, potentially contributing 10% of its GDP. 

“Malaysia is geographically proximate, affordable and offers an appealing lifestyle to buyers from China, especially from the colder north. 

“Malaysia’s new premium visa programme (PViP) opens the door to wealthy migrants who wish to reside and work in the country. 

“It is the latest move towards transforming the emphasis of Malaysia’s immigration policy from quantity to quality,” it said in the report entitled “China Property Slowdown Drives South-East Asia (SE Asia) Property Investment”. 

As a side note, Thailand and Vietnam are the preferred property investment destinations in SE Asia for Chinese investors. 

Bao explained to TMR that Malaysia is an attractive destination for Chinese investors due to its reputation as a manufacturing investment hub, even amid global trade and economic uncertainties. 

Moreover, the country’s robust supply chain, talent pool and infrastructure make it attractive for manufacturing investments. 

According to Bao, Malaysia is an attractive destination for Chinese investors due to its reputation as a manufacturing investment hub (pic source: Core Precious Diamond Sdn Bhd)

Strengthening Economic Links

Bao believed that the Chinese investors and cross-border residents in Malaysia will strengthen economic links, promoting commerce, corporate partnerships and technology transfers that benefit both countries. 

“The increasing significance of Chinese investments in Malaysia has been underscored by PM Datuk Seri Anwar Ibrahim’s recent trip to China. 

“To give you some perspective, this year, Chinese investors are expected to pour over US$38 billion (RM175 billion) into Malaysia. 

“That alone makes up 10% of Malaysia’s GDP of RM1.79 trillion in 2022,” he said. 

Chinese investors are diversifying operations in Malaysia, expanding in renewable energy (RE), technology, logistics, oil and gas (O&G) and manufacturing sectors across SE Asia. 

These companies dominate the region surrounding the Strait of Johor, with PetroChina Co Ltd controlling Singapore Petroleum Co Ltd. 

Malaysia’s strategic location and land availability make it an attractive location for investments. Chinese company EcoCeres is also reportedly planning to construct a renewable fuels production facility in Tanjung Langsat, Johor, for RM1 billion.

“New projects keep getting announced. Last year, there was a RM2 billion silica sand mining and processing plant project by China-owned SBH Kibing Solar New Materials (M) Sdn Bhd announced in Kudat, Sabah,” Bao added. 

The Rise of Taiwanese Investors

In addition to Chinese investors, Malaysia also attracts property investors from Singapore, Japan and South Korea. 

Singapore’s doubling of non-resident property taxes is expected to increase foreign purchases in Malaysia by 15% over the next 12 months, especially in Johor, KL and Selangor where the majority will seek property worth RM2 million or more. 

Investment banker-turned-investor Ian Yoong Kah Yin revealed that Taiwanese manufacturing companies are very keen to establish factories in Malaysia. 

“Many Taiwanese companies have asked us for assistance in finding suitable locations for their factories. 

“Taiwanese pharmaceutical companies are also asking us to help seek dispensation from the Ministry of Health for certification and testing of pharmaceutical pro- ducts that are exported,” he said. 

He added that the Malaysian government is considering establishing special economic zones for 100% export-oriented manufacturing firms, exempting certification and testing. 

Yoong also revealed that many wealthy Chinese nationals want to have a second home in Malay- sia and find the lower cost of living here attractive. 

“The Malaysia Digital Economy Corp’s (MDEC) DE Rantau programme is expected to cement Malaysia’s position as one of the preferred digital nomad hubs in the world. 

“The rapid growth of retirement/ assisted living in Malaysia could spark an influx of foreigners to our shores under the Malaysia My Second Home (MM2H) scheme,” he said.

Yoong reveals that many wealthy Chinese nationals want to have a 2nd home in Malaysia and find the lower cost of living attractive (source: Yoong’s LinkedIn)

FDI to Contribute to the Economy

China is Malaysia’s largest trading partner, accounting for 19% of trade, 16% exports and 32% imports and was the largest investor last year. 

“Foreign direct investments (FDI) will contribute to higher employment and higher domestic consumption. 

“As most of the manufacturing output of Chinese manufacturers in Malaysia are exported, this will strengthen our ringgit,” Yoong explained. 

He also said Malaysia’s proximity to China and Singapore, attractive investment incentives, high cost-competitiveness, modern infrastructure, rule of law and ease of communication attract Chinese manufacturing companies. 

Moreover, Malaysia is also a major beneficiary from the China-US trade tensions. 

Multinational companies (MNCs) from the US are diversifying their investments under the China+1 strategy, with Asean nations like Malaysia emerging as potential destinations for new investments. 

The alternative Asian supply chain, known as “Altasia”, spans from Japan to India. 

Malaysia’s location in the “crescent” makes it an ideal location for MNCs seeking investment opportunities.