Are Chinese nationals really ‘flocking’ to Malaysia over new visa scheme?
- Lack of publicly available data on foreign ownership of properties makes it difficult to estimate Chinese demand, industry players say
When China announced last year plans to invest 170 billion ringgit (US$35.9 billion) into Malaysia, property players had already started rolling out the red carpet for potential investors and homebuyers looking to join the expected rush to set up shop in the Southeast Asian nation.
The optimism was infectious, as industry executives were encouraged by the promising numbers shared by the government on uptake by Chinese nationals in its Malaysia My Second Home (MM2H) programme.
The most recent figures, released in March showing take-up of the scheme up until January this year, said 24,765 MM2H pass holders were Chinese nationals. That equates to 44 per cent of the over 56,000 active pass holders under the programme and up from 16,000 total passes held by Chinese emigrants in 2019.
But some are not convinced that it has translated to as big of an economic benefit for the property sector – and the economy – as had been hoped.
There is no publicly available data to quantify total foreign ownership of properties in Malaysia, which makes any estimate of Chinese demand pure guesswork, according to Siva Shanker, chief executive of the estate agency at property consultant Rahim & Co.
“The problem is nobody has any [overall foreign ownership] figures, and even if they give any numbers it cannot be verified,” Siva said.
“Are there Chinese coming to buy properties in Malaysia? Sure, just like how there are British buyers. But I don’t think they [Chinese buyers] are flocking to Malaysia.”
China has been shifting its external focus by ramping up investments and trade in Southeast Asia as it grapples with a trade and tech war with the United States and middling post-pandemic recovery of its domestic economy.
While Malaysia’s MM2H stands to benefit from China’s southwards push, the programme’s agents have raised concerns that it may fall short of expectations due to prohibitive requirements such as mandatory property purchases and a monthly overseas income of at least 40,000 ringgit.
Malaysia’s property market had previously seen a boom in Chinese demand in the mid-2000s, especially with the influx of Chinese mega-projects, the flagship of which is the now-troubled Forest City development in southern Johor state.
The US$100 billion project, launched in 2016 as a new hi-tech city that would eventually house 700,000 people, has ended up a ghost town as thousands of prospective buyers from China pulled out after Beijing imposed capital controls that also crimped developer Country Garden’s ability to build its project.
“That was the heyday of Chinese demand. That’s done and dusted,” Siva said.
The lack of publicly available data, however, has not stymied general expectations of resurgent interest among Chinese buyers.
Beijing’s planned investments, anchored by the public declarations of stronger economic and cultural ties by leaders of both nations, feed into a positive outlook for Chinese foreign property ownership in Malaysia, according to Paul Khong, group managing director of international property consultancy Savills Malaysia.
Chinese demand was likely to get a boost once the Johor-Singapore Special Economic Zone was launched later this year as scheduled, potentially helping rescue Forest City, he said.
“Moving forward, we foresee market prospects for Iskandar Malaysia [in Johor] will move well and attracting larger numbers of Chinese buyers like the current demographics of Forest City homes,” Khong told This Week In Asia.
But property is not the only sector that could benefit from Chinese attention.
Nearly 1.2 million Chinese tourists had visited Malaysia over the first five months of 2024, spending around 8.8 billion ringgit during their stay, according to government data released last week. It was a 194 per cent spike in arrivals compared to the same period from a year earlier.
Malaysia expects to host 5 million Chinese tourists this year – surpassing its pre-pandemic record of 3.1 million Chinese arrivals – with the help of visa-free travel arrangements that were implemented in conjunction with the 50th anniversary of diplomatic ties between the two nations.
Higher education is also expected to draw more Chinese interest, with Malaysia among several Asian destinations seeing a spike in demand from Chinese international students seeking alternatives beyond Australia, the United Kingdom and the US.
More than 39,000 Chinese students enrolled in Malaysian universities in 2022, according to data compiled by international education market intelligence firm ICEF Monitor.
An additional 26,630 Chinese international students filed new applications to enter Malaysian universities in 2023.
Malaysia, along with other Asian destinations such as Japan, Singapore, Hong Kong and Thailand, “now commands [a] significant share of interest due to advantages such as proximity, affordability, and the presence of many highly ranked universities”, ICEF Monitor said in a July research note.
