There is apparently an influx of Chinese nationals buying houses in Malaysia, which has led to both positive and negative effects on the real estate market in Malaysia and the country’s economy.
The positives include the boost to the real estate market, especially in the luxury real estate segment in major cities such as Kuala Lumpur, Johor Bahru and Penang, which then contributes to economic growth, infrastructure development, large-scale projects, an increase in job opportunities in construction and real estate, and more.
According to a report by Harian Metro, the Director (Real Estate) of the Faculty of Built Environment and Surveying at the Universiti Teknologi Malaysia (UTM), Professor Madya Dr Muhammad Najib Razali shared that there is also a significant negative impact due to the influx of foreign buyers.
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One of the main concerns is the increase in property prices, especially in the luxury segment, which will lead to difficulty for locals, especially those in the low and middle-income brackets, to buy a house.
“This also contributes to the imbalance in the real estate market. The development of premium properties may cause oversupply in that segment and there is a lack of affordable housing for locals. Additionally, the large-scale purchase of houses by foreigners can raise concerns about land sovereignty and foreign influence on local properties,”
“This, in turn, creates dissatisfaction among local communities. Furthermore, Chinese investments can encourage speculation in the real estate market where purchases are made solely for investment purposes without the intention of settling down. This increases market instability and the risk of a real estate bubble,” he said.
Overall, he believes that an increased demand for luxury properties from foreign buyers will cause an imbalance in the supply of affordable housing, which could also lead to property prices increasing and difficulty for Malaysians to own a house.
These purchases by foreigners may also cause issues for locals who are renting
Dr Muhammad Najib went on to explain that, if foreign buyers purchase properties for investment purposes and not to live in them, it may cause many properties to be left empty. This can affect community development and bring further instability to the real estate market.
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On top of that, the high demand for rental units could cause rental rates to increase and lead to a higher cost of living for locals as there isn’t enough supply to meet demand.
“Overall, although the presence of foreign investors such as those from China make a positive contribution to the development of the real estate sector, it poses serious challenges to locals in terms of home ownership and cost of living,”
“It must be remembered that residential real estate is among the sectors that are quite sensitive for Malaysians because it involves national sovereignty,” he said.
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