Buying Property in Malaysia – A Singaporean Perspective


Buying a property in Singapore seems to be a good investment at any point in time. However, buying a property in Malaysia can be a good alternative to Singaporeans.

Buying a property in Singapore seems to be a good investment at any point in time – if you have the appropriate amount of cash to burn, of course. And this is not likely to change anytime soon, as the local property prices have been on the rise since 2008. Multiple rounds of cooling measures adopted by the government barely made a dent. So what alternatives are given to those Singaporeans who still want to own a property, but don’t want to sell a kidney in order to get proper financing? Given the close proximity of Malaysia to the north, buying a property there can be the solution many Singaporeans have been searching for.

Why Would I Buy Property in Malaysia?

Price seems to be the obvious driver of purchase here, since you can buy more land for less money. But other factors contribute to the allure as well. One of those is definitely the wide array of available properties. Let’s face it, Singapore doesn’t exactly have a lot of selection in the real-estate sector. Malaysia, on the other hand, offers a diverse selection of land and every property buyer will find something appropriate if they look hard enough.

Another major constraint in Singapore is the loan restrictions MAS adopted this year. If you are still paying off your first home loan, you will be pleased to hear that you are only able to get up to 50% of the property value for the second one (notice the sarcasm?). To make things clear, if you are buying a second property worth S$1 million, you are looking at a down payment of S$500k. Ouch indeed. In Malaysia, this number rises up to 80, or even 90%. Couple that with the lower property prices and your down payment decreases significantly. Additionally, you will be paying a much higher stamp duty in Singapore (Additional Buyers Stamp Duty (ABSD) of 7% on your second property and 10% on your third!) than in Malaysia (1-3%, depending on the property value). You put all of those things together and you can end up with a pretty sweet property deal in Malaysia.

The “Dark Side”

It’s not all milk and honey across the bridge, of course. The most notable downside will be the mortgage interest rates. The rates in Singapore are currently somewhere around 1.5% while in Malaysia the number is roughly 4.5%. You can check the home loan offers in Malaysia here. This is quite a substantial difference that you have to keep in mind, as every percentage point will result in a noteworthy increase in monthly payments. And don’t forget about the currency risk. It’s true that the SGD has been slightly on the rise for the past few years, but this is a two sided blade. When taking a loan in MYR you can profit and you can lose, be aware of that. An alternative that could fix that would be taking a loan in Singapore. A few banks like Maybank and CIMB offer this kind of packages and might be worth checking out – the rates will most likely be lower than the ones across the causeway and the loan will be in SGD, eliminating your currency risk.

Additional Things to Consider

There are some additional restrictions and considerations you should think about before deciding to buy a property in Malaysia. First of all, you need to explore where to buy a property. Some of the areas worth looking into are Iskandar, Kuala Lumpur and Penang. If you are buying it as an investment, be careful with Iskandar – the prices there are a bit inflated due to all the interest coming from the Island, and might not reflect the actual situation. Investors in Malaysian real estate should also know about the Real Property Gain Tax, which amounts to 10% on any property sold in the first 2 years, and 5% if sold in the period from year 3 to year 5. A minimum purchase price for foreign investors is also imposed. While it differs state to state, a rough average is MYR 500k. Now this might seem like peanuts compared to property prices in Singapore, but you should never compare apples and oranges. If you want to compare the price of a property, compare it with other similar properties in the area. It’s as simple as that.

Taking all the discussed aspects into account, and investing an appropriate amount of time in research, buying a property in Malaysia can turn out to be not only a great weekend getaway, but also a nice investment opportunity!

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