The auspicious Year of the Dragon marks the Golden Anniversary of diplomatic ties between Malaysia and China, and with it, golden opportunities for enhanced cooperation.
For 50 years, relations between the two countries have remained generally friendly despite evolving challenges in the geopolitical landscape. China has been Malaysia’s largest trading partner for 14 consecutive years, while Malaysia is China’s second-largest trading partner in ASEAN, accounting for 20.8 per cent of China’s total trade for most of 2023.
2023 also saw a slew of high-level visits between the two nations, including a meeting in November between Chinese Vice President Han Zheng and Malaysian Prime Minister Anwar Ibrahim to commemorate the 10th anniversary of their Comprehensive Strategic Partnership. These exchanges underscore mutual political trust and a desire for continued collaboration in areas spanning from trade to tourism to technology.
This bodes well for the property investment scene in Malaysia as well. “The positive diplomatic ties and strengthened collaboration between the two nations have instilled a greater sense of perceived stability, enhancing investor confidence," said Winston Lee, Director (Special Projects) at PropertyGuru.
Since China’s post-pandemic reopening, wealthy and middle-class Chinese nationals have seen Southeast Asia as an attractive region to purchase property, with Malaysia being one of its top destinations.
The Malaysian government is equally receptive and enthusiastic about wooing Chinese investors to drive sales in real estate. This reciprocal relationship has manifested in the form of favourable immigration and tourism policies. Here are three major initiatives with the potential to spur greater Chinese participation in the Malaysian property scene.
1. Malaysia My Second Home (MM2H)
Since 2002, the MM2H programme, along-term visa scheme, has allowed non-Malaysians to live in Malaysia for an extended period of time. By 2018, over 40,000 applications from 130 countries had been approved, with most coming from the Chinese, which made up almost 30 per cent of applicants.
In December 2023, the scheme was revamped to feature a more flexible three-tiered system (Silver, Platinum and Gold) to attract foreigners of different income levels to stay in Malaysia. It was a welcome move, essentially widening the pool of eligible applicants by lowering the minimum age to 30 and the fixed deposit amount from RM1 million(US$215,053) to RM500,000 (US$107,526) for the Silver tier.
Malaysia’s Minister of Tourism, Arts and Culture Tiong King Sing positioned the MM2H revamp as a special gift to mark the 50th anniversary of diplomatic relations between Malaysia and China in 2024.
“The Malaysian property market, with its relative affordability compared to Chinese cities, is likely to witness increased demand and activity, opening up new opportunities for property investors and contributing to the growth of the real estate sector,” Lee explained. Indeed, properties in Malaysia are generally cheaper than even its third-tier counterparts in a Chinese city.
2. Visa-free travel between Malaysia and China
For a year from December 1, 2023, China will grant ordinary Malaysian passport holders visa-free travel to the country for a maximum of 15 days. While this was a unilateral move, China’s show of goodwill was quickly reciprocated. The Malaysian government announced its own visa exemption for Chinese citizens for stays of up to 30 days.
In fact, China has consistently been Malaysia’s largest source of tourists outside of ASEAN. Now that it is more hassle-free for them to visit Malaysia, potential Chinese buyers might also find it easier to fly in at their own convenience to view properties, indirectly contributing to higher demand and activity in the Malaysian real estate scene.
3. Enhanced Flight Connectivity
The expected travel surge could increase the Chinese occupancy rate by 30 per cent or more. To meet this projected demand and complement both nations’ visa-free policies, Malaysia-China aviation will receive a significant boost.
Shanghai Airlines and China Eastern Airlines are set to increase the frequency of their flights to a minimum of 62 weekly flights between the two countries, as well as introduce new routes. For instance, China Eastern Airlines will introduce a new route from Nanjing to Sarawak in June 2024, the first direct flight between the two locations in recent years.
Both airlines will also offer three new destinations (Kuching, Kota Kinabalu and Penang) and five additional departure locations (Beijing, Xi’an, Urumqi, Nanjing and Kunming). Of these, Xi’an and Urumqi will function as the main strategic hubs to catch the Chinese Muslim market.
"In light of the enhanced connection between China and Malaysia, the real estate landscape in Malaysia is poised for a significant boost,” Lee weighed in. While Johor Bahru, Kuala Lumpur and Selangor are the usual top choices for Chinese commercial property investors, the enhanced flight connectivity can expose them to a wider range of destinations and help them diversify their investment horizons beyond traditional hotspots.
As Malaysia and China seek to strengthen their diplomatic relations and foundation of win-win cooperation, a host of opportunities await property investors. These will translate into positive ripple effects on the larger Malaysian real estate landscape.