PETALING JAYA: The requirement of property ownership for the Malaysia My Second Home (MM2H) programme is expected to renew international buyers' interest, says the Real Estate and Housing Developers' Association (Rehda). "The integration of a property purchase condition for MM2H is expected to stimulate foreign investment in the Malaysian real estate market. However, we are still determining the potential scale of this impact," said Rehda president Datuk Ho Hon Sang.
"We anticipate that future revenues could see positive changes as the government has received a total of 2,164 MM2H applications from November 2021 to September 2023, with 1,905 being approved. “Should this trend persist, the compulsory property purchase for each tier will likely drive interest in properties priced at RM600,000 and above." Ho said the current market availability of residential units above the RM600,000 threshold had negated developers' need to create additional homes specifically for MM2H participants.
He added that foreign purchases of higher-priced properties could, as a result, support affordable housing in Malaysia. "For over 40 years, developers have embraced the concept (of) cross-subsidising affordable housing through the sales of regularly priced homes," he said. Ho added that increased purchases by MM2H participants could bolster this subsidy model, especially given the requirements for a significant number of affordable homes in each development project.
Starcity Global managing director, Florence Ten, said clients were prepared to invest in properties at the RM1mil minimum threshold in Kuala Lumpur, although the Silver category of the programme requires only a minimum property purchase worth RM600,000. Starcity Global is an MM2H agency. "My clients, mainly from Hong Kong and the United States, are ready for both the Silver and Gold MM2H categories, accepting property at price points of RM600,000 and RM2mil, respectively.
"International clients lean towards immersing themselves in Malaysian society, often selecting neighbourhoods heavily populated by locals, such as Kuala Lumpur, Sri Petaling, Puchong and Bangsar," she added. Asst Prof Nur Shuhadah, who is head of the Tourism Department at International Islamic University Malaysia, described the MM2H initiative as significantly beneficial to the country's economy. She said it would draw foreign investment into the real estate sector and enhance foreign exchange reserves.
"With Malaysia envisioned as a retirement and extended holiday destination, investments in real estate are crucial for ensuring the participants' long-term stay. "Longer stays lead to increased spending on tourism and non-tourism-related goods and services, unlike short-term tourists," she said. Nur Shuhadah said the updated guidelines target higher-net-worth individuals, aiming for a more significant contribution from participants to the Malaysian economy.
She added that stricter financial criteria are also in place to attract dedicated long-term residents who are financially stable and committed to living in Malaysia. Nur Shuhadah said that, when comparing MM2H with similar programmes in neighbouring countries, Malaysia is a more exclusive destination for wealthy expatriates. “With the revision of requirements that ‘niche’ towards the luxury segment, this might result in a slight reduction in the number of participants, which may affect long-term tourism, the real estate market, and local economies that have traditionally relied on a diverse expatriate community,” she said.
Nur Shuhadah also highlighted the introduction of the Special Economic Zone (SEZ) category within MM2H as a strategic decision that could catalyse investment in Malaysia's tourism industry and propel economic and physical development within these zones. She added that this approach could additionally address the problem of unsold properties in less favoured areas..
