More Indonesians buying Malaysian apartments
For many affluent Indonesians, buying a house in neighboring countries such as Australia, Singapore or Malaysia is not unusual.
Although such purchases have significantly declined since the financial crisis hit Indonesia in 1997, the demand for foreign homes among Indonesian buyers remains high.
In the past, many Indonesians chose Australia or Singapore for a second home. However, due to the higher living costs in these two countries, many people have now turned to Malaysia, which is relatively less expensive for living or studying.
Besides investment purposes, the motive for most Indonesians who purchase a house in Malaysia is to provide a house for their children who are studying in the country.
"Many Indonesians generally buy apartments in Malaysia for their children to study," Vivi Yanti, a marketing employee at Knight Frank property company, told The Jakarta Post.
She said demand for Malaysian property was quite high among Indonesian buyers. "Day-to-day inquiries are on the rise," she said referring to the response to the company's advertisements.
Besides its proximity to Indonesia, the quality of Malaysia's higher education system is also a lure for Indonesians.
Many Indonesians also choose to buy a second home in Malaysia because they have close relatives in the country, which shares the same cultural and linguistic roots with Indonesia.
"I think the main reason many Indonesians prefer Malaysia is because of its cheaper living costs. The tutorial costs at a good university in Malaysia are even lower than those at international universities in Indonesia," Vivi said.
In term of prices, apartments in Kuala Lumpur are generally cheaper than in Jakarta. An apartment with four rooms plus one studio costs about 1 million ringgit, or about Rp 2.3 billion.
"The price of apartments in Indonesia is between 10 percent and 15 percent higher compared to apartments of the same class in Kuala Lumpur," Vivi said.
Apartment owners in Malaysia are becoming more aggressive in selling units to foreigners following the relaxation of regulations on the purchase of residential property by foreigners in May 1998.
Indonesia is one of their most promising markets thanks to the continued growth of the middle class here, many members of which prefer to send their children to school overseas.
Before considering a house purchase in neighboring Malaysia, it is worth reading the important guidelines a foreigner must follow (below).
The guidelines are reprinted from home buying tips provided by Malaysian property company Sutera Properties Development's website www.suteraharbourproperty.com.
1. Foreigners are not allowed to purchase any residential properties as follows:
- Double/single story terrace or linked houses
- Low-cost and medium-cost houses
- Low-cost and medium-cost flats
- Houses on Malay reserve land
- Bumiputera (Malaysian indigenous) quota units
2. Foreigners are allowed to purchase:
- Terrace or linked houses above two stories, but limited to 10 percent of the total number of units built of its type. It must be valued at 250,000 ringgit (about US$66,000)
- Land/bungalows and semi-detached houses, but limited to 10 percent of the total number of units built of that type. It must be valued at 250,000 ringgit per unit and above as exercised by respective State's Guidelines. If the purchase of land is for investment purposes, they must establish a local company with 49 percent Malaysian equity (inclusive of at least 30 percent Bumiputera equity).
- Condominiums or apartments worth 250,000 ringgit and above but limited to 50 percent of the total number of units within each block.
3. Foreign individuals (including husbands and wives) are not allowed to own more than two residential units (either condominiums or one condominium and one non-condominium). Foreign interests will not be allowed to purchase more than one non- condominium residential property. Those who wish to own more than two units will be considered to be purchasing units for investment purposes and therefore must establish a local company with 70 percent Malaysian equity (inclusive of at least 30 percent Bumiputera equity).
4. Local companies/industrial firms owned by foreign interests can purchase more than two residential units for their staff. They are allowed to purchase residential units worth more than 60,000 ringgit per unit except low-cost apartments, low or medium-cost houses, houses on Malay reserve land and Bumiputera- quota units.
5. Permanent residents are allowed to purchase residential units worth more than 60,000 ringgit per unit, subject to the following conditions:
- Husband or wife must be a Malaysian citizen, or
- They must be qualified to apply to become citizens and have submitted the necessary applications.
-- The Jakarta Post