Pros of Buying a Property in Malaysia

• TRENDING AIRBNB DESTINATION

It’s widely known that Malaysia is a tourist destination that has gained the attention of national and international travelers over the past years. For this reason, it has been witnessing substantial growth in its Airbnb market. Consequently, this business model has become a reliable source of income for property owners looking for ways to combat rising living costs.

According to Airbnb, Malaysia is one of the trending Airbnb destinations as it recorded an increase in non-urban nights booked after the pandemic. Moreover, the country also stands out as a top winter destination worldwide by search and one of the best value destinations for Valentine’s Day! With that being said, venturing into Airbnb property investments in Malaysia presents the potential for substantial returns on investment as well as the opportunity to enjoy a fascinating culture coupled with striking natural wonders.

• AFFORDABLE COST OF LIVING

With a relatively low cost of living and accessible housing market, Malaysia stands out as an affordable destination for investments compared to other countries in Southeast Asia. And while affluent cities like Kuala Lumpur can be more expensive, they remain a cheaper option compared to major cities in Singapore or Hong Kong.

On the other hand, the real estate demand in Malaysia is consistently growing, principally fueled by its population increase and urbanization. According to NAPIC, the average house price in Malaysia is currently around RM 355,000 ($75,992). 

• GROWING ECONOMY

While Malaysia’s economy faced many challenges due to the pandemic and a simultaneous government crisis, it’s now heading on the path to recovery. The country owns a diversified economy with a GDP of RM1,110 billion ($252 billion). It also features a strong labor market with an unemployment rate of 4%. Moreover, Malaysia ranks 1st in Southeast Asia for Foreign investment and 3rd as the most innovative upper middle-income economy!

Cons of Buying a Property in Malaysia

Aside from the pros of buying an investment property in Malaysia, let’s discuss some cons so you can know what to anticipate when investing and living in this country. Examining both sides of the coin is crucial for establishing realistic expectations!

• PURCHASING A PROPERTY AS A FOREIGNER

While foreigners are allowed to purchase property in Malaysia, some requirements should be met. For instance, foreigners cannot own property if its value is less than RM1 million (around $215,000) or properties that are located within Malay Reserved land. The process of buying a house also involves many parties and can take up around 4 to 6 months. 

• TROPICAL WEATHER AND CLIMATE CHANGE

Malaysia features a tropical climate, which means that most days of the year are either hot and humid or hot and dry with some rain showers. Yet, climate change heavily affects the country as in recent years it has confronted disasters like drought, landslides, soil erosions, and floods. 

The majority of its losses can be attributed to flooding, which is prone to happen during the monsoon season. Malaysia’s climate is characterized by two monsoon regimes: the Southwest Monsoon, which happens from April to September, and the Northeast Monsoon which goes from October to March.

Airbnb Regulations in Malaysia

Before starting an Airbnb business in Malaysia, knowing the essential Airbnb key metrics in your target market, such as their occupancy rates and revenue, is vital. Yet, there are also other factors that investors should consider like the legality of operating a rental property or Airbnb listing. 

So let’s get to the point – Owning an Airbnb or STR listing in Malaysia is legal. While the country has been looking into regulating STR, there are currently no specific rules regulating short-term rentals. However, investors should keep in mind that this business activity is subject to local council regulations in specific zones. 

Additionally, in following, Malaysia’s Tourism Tax Act 2017, Airbnb hosts are obligated to register with the Malaysian government and remit a tourist tax of RM10 per room per night. In the case that a host doesn’t comply with this requirement, it may lead to penalties, including fines of up to RM50,000 or imprisonment for up to three years.

On the other hand, the island of Penang introduced a ban on short-term rental accommodations in residential units. This ban was chosen in response to residents’ complaints about the inappropriate conduct of tourists. But, commercial properties are not part of the ban. 

MM2H Program: Buying a Property in Malaysia as a Foreigner

The MM2H Program (Malaysia My Second Home) is a government initiative designed to encourage foreign property investment in the country. This involves offering a renewable 10-year visa to foreigners who meet specific criteria. Some of the requirements include:

• Demonstrating proof of offshore income
• Depositing a fixed sum in a Malaysian bank as required
• Covering immigration fees and a security bond
• Visa holders  are required to spend a minimum of 90 days in the country throughout the year
• Be sponsored by a Malaysian citizen (in Peninsula Malaysia, a registered MM2H agent can replace a citizen sponsor).

Just a note: Sarawak has its own rules and requirements, but applicants should be 50 years or older.

Holding an MM2H visa provides certain advantages in the property purchase process, including varying price limits and streamlined loan facilitation. The application procedure is not complicated and can be completed through the official government website

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