Off Plan Property in Malaysia

Developers, who are investing heavily into the development they are building, off-set their investment and reduce financial risk by selling properties off-plan, many times before construction has begun. For the developers, this provides invaluable cash flow, and an assurance of the return on their investment. For the investor purchasing at this early stage, they are being given access to the most attractive units on the development at heavily discounted prices, however they can not visit the property or “tour” the development as nothing has been built yet.

Offplan Property in Malaysia

The investors rely on the track record of the developer, examining previous developments built by the same developer to similar standards and assessing their own risk ratio based on the plans for the new development. Many times the investors will have access to computer simulations to see what the development will look like when it is finished, which gives them a better idea as to which units will be the most attractive and yield the best ROI upon completion.

However the low price and the benefit of being able to chose the units with the best location and/or views is not the only benefit which comes from off-plan investments. In many cases, very favourable financing plans and structure are in place. Potentially with a small percentage (20%-30%) of the price being necessary to pay up front with the remainder to be paid over staged payments with a lump sum upon completion and delivery of the finished product. It is even possible, in some cases, to arrange financing for some or (in rare cases) all of the investment through a local or international mortgage. Some investors plan on the “buy to flip” strategy which involves selling the property on to a third party before completion, so that they never actually pay the final lump sum and therefore the capital they invested is significantly lower while the gains, in comparison have been very high. The safest strategy overall though is the medium to long term investment strategy which involves selling the property after completion.

As an indication of property prices in Malaysia, RM 520.000 (€ 107.818 or £ 75.262) will purchase an exclusive luxury water home in the renowned Legend International Water Homes development in Port Dickson, complete with private swimming pool, private indoor garden and open air shower close to sandy beaches, a short drive from Kuala Lumpur.

We highly recommended investors to analyze the deals being offered by developers together with one of our advisors to find the best possible investment solution for your personal situation. With predictions of prices doubling in the next four to five years a tidy profit is almost guaranteed.

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