Will Chinese capital control affects Malaysian property?

Contrary to public perception, Malaysia may prove to be the biggest beneficiary of China’s capital controls. Despite forebodings that the Chinese worldwide property shopping spree has come to an end following capital controls imposed by Beijing in late December, local expert, Dato’ Sri Gavin Tee believes the measures will benefit the markets in the long-term.

In particular, he is of the opinion that Malaysia will be the main beneficiary due to its close connection and cultural similarities with China.

“The impact is certainly positive for Malaysia even in the short-term. I foresee more Chinese investments coming in due to several strong factors,” he said during a press conference at the signing of the Memorandum of Understanding between Swhengtee Property Expo and One Belt One Road Property & Finance Expo recently.

He added that Western nations, up till now, are the favourite destinations for Chinese property buyers, may have to adjust to the new environment of fewer Chinese buyers but their property market won’t collapse. “Prices of property in hotspots like London and Vancouver might be affected but this is a healthy trend in the long term.”

Tee believes the inconvenience the Chinese buyers face in taking money out of China would not be a long-term problem and sooner or later, there will be some adjustments to accommodate this. Tee is positive the Chinese will continue to invest in overseas property and in the long-term may even make up the biggest share of the world’s property market. In the meantime however, the capital controls will definitely change the way the Chinese invest overseas.

He continued that many Chinese have traveled around the world and have finally come to the conclusion that Malaysia is still the best place for them as their ‘final destination’ for business, education, health and wellness, and retirement.

At the same time, they are encouraged by the fact that their government has warm ties with the Malaysian government, with many mega projects being jointly undertaken or are in the pipeline. “Our Malaysian government policies are friendly to them and that’s a very strong pull factor,” he stressed.

“Chinese investors in general are also suffering from ‘Western fatigue’ where many Western nations (as well as Hong Kong and Singapore) have imposed protectionist policies including high barriers to property investment in their countries, for example, the UK and Australia.

“This has prompted the Chinese to shift their attention to more welcoming regions like ASEAN. Within ASEAN, Malaysia stands out for being the most China-friendly in terms of our policies and our government-to-government co-operation.”

Rise of the SMIs/SMEs

He singled out Malaysian SMI and SME development which is currently at a matured stage – and which the Chinese entrepreneurs are hoping to leverage on – to drive the growth ahead.

“I expect the Chinese SMIs/SMEs to invest heavily in Malaysia. At the same time, our Malaysian SMIs are moving to China. Imagine the huge movement of trading/business and people between these 2 countries. Being the smaller country, the Malaysian economy will definitely benefit immensely.”

“So, contrary to the general perception, Malaysia will gain a lot of market share of Chinese investment worldwide.”

Tee, who is also the President of Swhengtee International Group, believes that after the mega-project era (which is still ongoing), the activities would shift back to small and medium enterprises, with technology being the underlying factor. “The SMI/SMEs will dominate economic growth again similar to the 80s and 90s when SMIs/SMEs were the engine of growth.”

Along with this growth, there will be more functional type of investments like manufacturing rather than just pure investment. “In the next 3 – 5 years, I foresee the Chinese to come in greater numbers for business, tourism, education and retirement. The basic elements for coming here are all there – but this will not create a bubble. This is the healthy type of investment – such as entrepreneurship, which the Chinese government encourages as well.

Many Chinese Mainlands have already secured their MM2H residency in Malaysia and are bringing their business enterprises and network to Malaysia as well as their families. This augurs well for the property market in Malaysia as they would need to acquire property for both their business and dwelling.

“At the same time, the cultural similarities with Malaysia draw them in compared with Western culture. In particular, those coming from China’s Tier 2 and 3 cities feel more at home in Malaysia than say, the US, Europe or Australia,” he added.

The facilities in Malaysia also meet their needs – manufacturing, health and wellness, education, tourism, infrastructure and IT – these 6 factors are the same factors sought by Chinese throughout the world. “And luckily for Malaysia, we provide all of them,” Tee noted.

For this reason, Swhengtee Property Expo has brought in officials from Chinese cities to introduce the advantages of their cities; accompanying them will be hundreds of investors from China. In addition, due to the long Hari Raya weekend, many outstation shoppers visiting Mid Valley City will take the opportunity to attend the expo.
Swhengtee Property Expo is expected to be a success in providing a great networking platform for both Malaysian and Chinese developers/real estate stakeholders as well as a one-stop venue for potential home-buyers and investors.

Source : Propertyguru

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US Justice Dept files lawsuits seeking to seize properties worth more than $1.35 billion tied to Malaysia’s 1MDB

WASHINGTON (REUTERS/AFP/BLOOMBERG) – The United States Department of Justice filed lawsuits on Wednesday (July 20) seeking to seize dozens of properties worth more than US$1 billion (S$1.35 billion) tied to Malaysian state fund 1Malaysia Development Berhad (1MDB), saying that over US$3.5 billion (S$4.7 billion) was misappropriated from the institution.

The lawsuits, filed in Los Angeles, seek to seize assets”involved in and traceable to an international conspiracy to launder money misappropriated from 1MDB”. The lawsuits said the alleged offences were committed over a four-year period and involved multiple individuals, including Malaysian officials and their associates, who conspired to fraudulently divert billions of dollars from 1MDB.

None of the lawsuits named Malaysian Prime Minister Najib Razak. But they named Riza Aziz, his step-son, as a “relevant individual” in the case. They also named Malaysian financier Low Taek Jho, or Jho Low, and Abu Dhabi government officials Khadem al-Qubaisi and Mohamed Ahmed Badawy Al-Husseiny.

The US lawsuits said funds misappropriated from 1MDB were transferred to the co-founder of Petrosaudi, a company that had a joint venture with 1MDB, and thereafter to a high-ranking official in the Malaysian government it identified only as “Malaysian Official One”.

The assets involved in the case include penthouses, mansions, artwork, a private jet and proceeds from the “Wolf of Wall Street” movie that it says were illegally acquired through money diverted from 1MDB.

“1MDB maintained no interest in these assets and saw no returns on these investments,” the government said.

“That misappropriation occurred in multiple phases over the course of several years,” the lawsuits said.

“The misappropriated funds were then used to purchase the Defendant Asset, as well as to fund the co-conspirators’ lavish lifestyles, including purchases of artwork and jewelry, the acquisition of luxury real estate, the payment of gambling expenses, and the hiring of musicians and celebrities to attend parties,” it added.

US Attorney-General Loretta Lynch will hold a news conference on Wednesday to discuss the suit seeking to recover more than $1 billion linked to a conspiracy to launder money misappropriated from a Malaysian sovereign wealth fund.

The Justice Department said Ms Lynch and other law enforcement officials would hold a news conference at 11.30am Eastern Daylight Time to announce the filing of civil forfeiture complaints seeking to recover more than US$1 billion in assets.

A spokesman for 1MDB did not immediately respond to a request seeking comment sent by e-mail.

The Malaysia fund is at the centre of several international investigations into alleged corruption and money laundering by public officials. Prosecutors in at least four countries – Singapore, Switzerland, Luxembourg and the United States – are looking into money flows from the investment vehicle, which was established for national development.

Among the questions asked by some international authorities is whether politically connected individuals in Kuala Lumpur may have benefited financially from the fund, whose advisory board was headed by Mr Najib.

Both 1MDB and the Prime Minister have denied wrongdoing.

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Corrupt Malaysian official inflate Melbourne property price

In 2013, the private sale of an unassuming five storey apartment block near Monash University in Caulfield stunned local observers. Even in Melbourne’s booming property market, the $22.5 million price tag for a  building designed like an IKEA cupboard seemed well above the odds.

An eight-month Fairfax Media investigation has traced suspicious money flows, court files and corporate records across three continents to uncover why Dudley House’s purchase price was so high.

Its sale was part of a global money laundering and bribery scheme engineered by greedy local developers and powerful officials overseas who pocketed $4.75 million in bribes on this single deal.  The sale of Dudley House in Caulfield which has been linked with corrupt Malaysian officials, who allegedly intentionally paid 20% over the asking price.

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Singapore Property Agent Loses His Car To Thieves in Tesco Tebrau Malaysia

Screen Shot 2015-05-25 at 9.51.30 PMMr Low a Singaporean property agent, posted on his Facebook wall about his stolen car on 23rd May. He claims his car was stolen in Tesco Tebrau between 8.45PM to 9.45PM, and uploaded a picture of the parking lot where his car was supposed to be. He had to be ferried back to Singapore by friends and has since lodged a police report.

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5 reasons to be careful when buying residential property in Johor and Iskandar

1. The looming supply

The Monetary Authority of Singapore board member Lawrence Wong told Parliament on May 11 that nearly 336,000 private residential units are in the pipeline in Johor, more than all the private homes currently standing in Singapore.Most of these units are coming up in Iskandar.

Malaysia’s National Property Information Centre (Napic) said in its report released last month that “”incoming supply” of housing units in Johor state – units that are being built – total 142,567 units.

There are another 193,271 units under “planned supply” – with planning approval but awaiting construction.

Added together, they total 335,838 units.

This is nearly half of existing residential stock in Johor, which totals 719,421 units.

2. Even more supply from reclaimed land

The new units of homes coming up in Johor do not include another 1,400ha of reclaimed land near the Tuas Second Link that will come on stream from 2020, Mr Wong said.

The project he was referring to is the raising of four giant islands in the Strait of Johor off Tuas, that is named Forest City.

The master developer, Country Garden Pacificview said that when fully completed in 20 to 30 years’ time, Forest City could have total residents of 700,000. The first phase of reclamation is to be ready in about five years’ time.

Assuming one residential unit contains six people, it means that 116,666 homes would be built on Forest City over the next two decades or so, adding to the new supply of nearly 336,000.

3. Falling property prices

Johor property prices weakened the most in Malaysia in the last quarter of 2014, the latest period where data is available.

Johor prices dropped by 1 per cent in the September to December 2014 period, compared to the same quarter a year ago, according to a Maybank research report in April.

This is worse than the drop of 0.2 per cent for property prices in Kuala Lumpur, and a drop of 0.1 per cent in Penang during the same comparative period, Maybank said.

Kuala Lumpur, Penang and southern Johor are three most active property markets in Malaysia.

Mr Wong told Parliament that the number of Malaysian properties – not just in Johor – bought through real estate agents in Singapore fell from 2,609 in 2013 to 838 last year.

4. Curbs on foreign home buyers

Malaysia early last year doubled the minimum price of homes that foreigners can buy to RM1 million, thus reducing the number eligible to buy units in Johor.

In a move to curb then rising property prices, it also raised the capital gains tax to 30 per cent for properties sold by foreigners within five years of purchase. It taxes them 5 per cent thereafter, except for the Medini township in Iskandar. Medini is to be the downtown area for the Nusajaya flagship zone.

5. Danger of projects being abandoned

With the looming oversupply, there is the usual concern that sharp price falls could follow, and lead to some developers from completing their projects if their funds run dry as buyers stop coming in.

This is a remote possibility now in Iskandar. But there are signs of stress for developers already.

Maybank said in its report, that developers with land in the region are deferring their launches, or changing their property mix “so to avoid direct competition with the Chinese developers”. They have also lowered their sales expectations for Iskandar, the bank said.

See more at The Straits Times

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