Last updated July 28th, 2019.
Land (along with real estate in general) is one of the investments that you can physically touch and see with your own eyes.
Not every investor cares about this sort of thing. Yet some people do and “physicality” remains an attribute that neither stocks or bonds possess.
Once in a while, I’ll help a client who wants to buy land in Asia. They will usually have their own reasons and won’t settle for anything else, insisting on physical land.
I almost always end up advising land-loving clients that they should buy property in Malaysia.
Not many countries in Asia allow foreigners to buy real estate – even condos and apartment buildings. China, India, and most other nations in the region ban foreigners from owning any type of property.
A few countries such as Thailand and the Philippines allow condominium ownership with some limits. However, foreign ownership is truly rare when it comes to land.
Malaysia is a beacon for land investors because of its simple-to-understand property laws and a general friendliness toward foreign buyers. They don’t have the greatest economy compared to the rest of Asia. But Malaysia’s additional, more-positive attributes help make up for that.
Here are two main ways you can invest in Malaysia as a foreigner. Specifically, through buying either property or stocks.
Buying Land, Houses, and Condos in Malaysia
Foreigners investing in Malaysia have practically the same land ownership rights as locals. The only main restrictions are on buying low and medium-cost housing.
Properties priced under RM500,000 (~US$125,000) cannot be owned by foreigners at all. Some states, such as Penang and Johor, have an even higher minimum requirement of RM1,000,000 (~US$250,000).
This minimum purchase policy is aimed toward separating the high-end sector from the rest of Malaysia’s housing market.
It sort of does make sense. Otherwise, wealthy foreign buyers would drive Malaysia land prices up beyond a range where most locals could afford it. Especially considering Malaysia is a small, fairly-open country with China and India right next door.
Furthermore, some types of old heritage buildings are only open to local buyers. Ethnic Malays or “Bumiputera” also usually get a discount of up to 15% on all new purchases.
Our free guide to buying property in Malaysia includes detailed information about such topics and countless others, if you’re interested.
Foreign buyers can own houses, land, and bungalows in Malaysia albeit with a few minor restrictions. Of course, that’s in addition to condo units.
Buying Stocks in Malaysia as a Foreigner
Malaysia also enjoys Southeast Asia’s third biggest stock market in terms of market cap.
Unfortunately, it’s not easy to open a bank or brokerage account in the country. You must be a Malaysian resident before any bank will let you open an account with them.
There are still other options. Brokerages in Asia will often let you trade on all equity exchanges throughout the region. You aren’t just limited to buying stocks in the country your broker is in.
United Overseas Bank (UOB) located in Singapore is one of the banks and brokers in Asia I can recommend.
Are you not living in Asia? Then your first option is to open a bank account in a place like Hong Kong remotely, through the mail.
The second one is trading stocks in Malaysia through a brokerage based in your home country.
I don’t suggest the second option. Brokerage firms in the US and Europe charge incredibly high commissions for buying and selling stocks in Asia. You’ll substantially reduce fees by opening a local account.
Should You Invest in Malaysia?
There’s far better options if you’re seeking returns. Malaysia’s economy has done rather poorly over the past several years.
Places like Cambodia and the Philippines are growing noticeably faster and boast even greater long term prospects.
But Malaysia is practically the only option in Southeast Asia for owning land while easily living in the country you’re buying real estate in.
The Malaysia My Second Home (MM2H) program, a longstanding government initiative, even gives investors a renewable 10-year multiple entry visa.
Foreigners under the MM2H visa program can bring their furniture and even a live-in maid to Malaysia from another country completely free of tax.
In short, you should think about investing in Malaysia if you want to own land in Asia. Consider looking elsewhere if you’re mostly seeking profit or rental yields though.
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