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Oveseas: A taste of paradise
It has tropical forests, fine beaches and a cosmopolitan vibe. So when will the Brits wake up to Malaysia? By Laura Latham

Wednesday, 10 September 2008, By Laura Latham, The Independent, UK

You may not know very much about Malaysia but that looks set to change. In an attempt to generate increased overseas investment, the Malaysian government is soon to launch an initiative to encourage more Europeans to make the country their second home.

This isn't the first time it has targeted foreign buyers. The Malaysia My Second Home campaign, which kicked off in 2002, tried to lure expats to its shores with a range of perks that included renewable 10-year visas and tax breaks. However, lack of information about the programme meant it didn't work as well as hoped and a new directive, Malaysian Property Incorporated, is launching in the coming months.

Rich in tropical forests, beaches and cosmopolitan culture, Malaysia has drawn tourists to resorts such as Penang and Langkawi for years, but fewer people have taken up the invitation to buy here. Given the country's natural attributes, its first-class health care, education and infrastructure, alongside the affordability of property, this reluctance is a mystery to those who know Malaysia well.

Andy Davison, a British expat who has lived there for 25 years and runs the My Second Home advisory service, believes the country offers more than most realise. "The biggest attraction for British buyers is the superb lifestyle and lower cost of living," he says. Davison, an advisor to the Malaysian Property Incorporated scheme, explains that overseas income is tax-free for anyone who decides to relocate to Malaysia and there's no inheritance or capital-gains tax, plus "you can own freehold, one of the few places in Asia where this is possible".

One stipulation for foreign buyers is that any property must cost more than RM250,000 (around £40,000). This shouldn't pose a problem as prices, though still reasonable by European standards, have risen dramatically in the past five years.

The capital, Kuala Lumpur, is popular with buy-to-let investors attracted by prices as low as £80,000 for two-bedroom apartments. However, as dynamic as the city is, there has been talk of overdevelopment, with rumours that many new high-rise properties remain empty.

A better option for second-home buyers may be the coast, which attracts international tourism as well as locals escaping the city. "Recent capital appreciation has been as much as 14 per cent but anyone buying now is still getting good value," says Alistair Powell of Seven Continent Investment.

Prices in coastal resorts can start at under £100,000, with one- and two-bedroom apartments in popular Port Dickson, an hour from Kuala Lumpur, costing as little as £45,000, and water chalets from around £80,000.

Malaysia's showcase development is the Golden Palm on the Sepang coast, around 70 minutes from Kuala Lumpur. This Dubai-style project features water villas on stilts in the shape of a gigantic palm, and is part of a wider plan to create a series of resort communities. Prices start at around £70,000 for a one-bedroom apartment in the on-shore development Tropical Cluster Village, with apartments in the water villas retailing from around £90,000.

"It's like Thailand without the sleaze," says John Scott of Asset Property Brokers. "Malaysia has the same great climate, low cost of living, friendly people, fabulous beaches and scenery – but you don't get seedy elements, such as go-go bars, lining the resorts."

Scott also claims the government is restricting development to preserve the environment. "Certain areas have suffered from a stack 'em high, sell 'em cheap mentality," he says. "But the government is now switched on to preserving Malaysia's natural beauty alongside development."

Penang, once called the "Pearl of the Orient", is now a mass tourist hub with high-rises and resorts a plenty. Though still relatively affordable, with average prices at around £625/sq metre, many prospective buyers are turned off by the amount of development. However, the older part of Georgetown, with its colonial buildings and temples, recently came under Unesco protected status. At £375/sq m it is expected to draw in buyers seeking cheap character properties in a heritage site.

Buyers' guide

*Flights to Malaysia take about 12 hours with several carriers including Malaysia Airlines, Emirates, British Airways and Cathay Pacific, from around £600 return.

*Malaysia's legal system is based on English law and sale and purchase agreements for property are in English.

*Laws permitting freehold foreign ownership don't apply to locations designated Malay Reserve Land. Coastal land can only be held via 99-year lease, which can be extended.

*Non-nationals applying to relocate need to have a monthly income of at least £1,600 and assets worth £80,000 (£56,000 for over 55s), as you can't work in Malaysia if you move there through the My Second Home scheme.

 


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