Malaysian developers turn to foreign investors

Malaysian developers turn to foreign investors

The big woo-athon for overseas buyers begins

A weak ringgit, growing oversupply and slow local sales saw developers courting foreign buyers, sending their agents to road shows abroad to promote their projects.

And with China as their biggest market, some agents travel to different Chinese cities on a monthly basis.

To reduce staff count, developers outsource the marketing aspects to agents. Most of them even use the services of multiple real estate agencies.

Metro Homes Sdn Bhd director K.L. See, who has been promoting a number of Malaysian properties abroad in the last three to four years, said the market has changed over the last couple of years.

“Malaysians are not actively buying. But developers have a holding cost. They have already delayed launching their projects and they see the weak ringgit as an opportunity to offer their projects abroad. So instead of waiting around, they proactively use multiple channels to sell to foreigners,” said See.

He noted, however, that marketing abroad can be costly.

“To run an event in Hong Kong for the weekend in a five-star hotel costs between RM500,000 and RM1 million. Developers may have three or four core local agents who work with overseas agents.”

He revealed that Malaysian agents’ commission range from three to five percent of the unit price while Chinese agents’ commission stands at seven to 10 percent. The company usually sells 10 to 15 units on a successful weekend against two to three units on slow days.

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“Foreigners buy in order to earn on the foreign exchange. They also hope to profit from capital appreciation from their property investment,” he added.

Meanwhile, a marketing personnel of a developer with a project in KLCC said the huge investments by Chinese developers in the country, particularly in Iskandar Johor, will benefit Malaysian developers.

“Who do you think developers like Country Garden and R&F Group are selling to? They are targeting the Chinese back home. So they have huge advertising campaigns in different Chinese cities and this is a huge endorsement for Malaysia,” she said.

According to her, Chinese buyers in KLCC are average people, who are amazed by the price competitiveness here given that an average apartment in China costs RM5,000 psf.

A prime landmark in Shanghai or Beijing could go as high as RM20,000 psf, said See. A typical two-bedroom apartment could go for around RM8,000 psf, said Savills.

“So to these Chinese buyers, a non-branded but new unit priced at RM1,500 psf-RM2,000 psf is very attractive and they get a landmark project,” said the source.

This article originally appeared on PropertyGuru.com.my on November 23 2016.

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Source: Property Report