KUALA LUMPUR: Malaysia is becoming more appealing to Chinese investors looking for high-quality investment class assets such as commercial real estate that give consistent long-term income that is uncorrelated with the Chinese economic cycle.
Chinese investors are increasingly interested in exploring investment opportunities in Malaysia, according to Juwai IQI co-founder and group chief executive officer Kashif Ansari.
Kashif said that Chinese investors find Malaysian commercial property appealing since economic links with China are strengthening.
According to him, property is a top investment class for Chinese investors because it has universal foundations that are easily understood across borders.
"In this era of higher interest rates, Chinese investors with access to ready capital are able to make compelling offers to vendors," Kashif said.
He also said that Malaysia's robust economy offers opportunities in developable land, tourism amenities, industrial parks, data centres, and industrial and logistical infrastructure.
"It is also relatively easy for Chinese investors to obtain approval for investment in Malaysia compared to North America or Europe," he said.
Chinese investments garnered at over US$38 billion potentially make up 10 per cent of Malaysia's gross domestic product (GDP) of US$373 billion in 2021.
Malaysia secured a record RM170 billion in Chinese investment in April 2023, with 19 memorandums of understanding inked. Prime Minister Datuk Seri Anwar Ibrahim said among the highlights is the development of a high-technology automotive valley in Tanjung Malim, focusing on new energy vehicles.
According to new research published by Juwai IQI, Malaysia is benefiting from developments in Chinese international commercial real estate investment to re-establish itself as a top-five destination for Chinese commercial property investors.
Malaysia was named a top-five destination for Chinese commercial property investors for the first time in 2022.
Kashif said that earning the third-ranked position this year is unprecedented.
"There have been two big changes over the past 12 months. Chinese outbound commercial real estate investment has declined significantly, and investment has markedly shifted towards Malaysia and other Southeast Asian countries, especially Indonesia and Thailand," he said.
According to the report, the United States and, to a lesser extent, Australia have lost investment.
Kashif said the top destinations in Malaysia for Chinese commercial property investors are Johor, Kuala Lumpur, and Selangor.
Johor has a relatively developed economy and proximity to Singapore. The Johor Bahru-Singapore Rapid Transit System (RTS Link), which will connect Johor Bahru and Singapore, is currently under construction.
"Together with its neighbour, Johor is part of a transnational metropolitan area of about six million people. We expect increasing investment in Johor as the rail link to Singapore approaches its 2026 completion," he said.
"We see that Johor's Singapore links are already the basis for much Chinese investment in the state, and this investment will increase. The rail link (the RTS) will lead to more spillover investment from Singapore and will attract additional Singaporeans and Chinese seeking the higher returns, lifestyle, and affordability that Johor offers," he said.
Juwai IQI forecasts 50,000 additional residents could be living cross-border lifestyles by 2030, which would provide a significant uplift to demand for commercial real estate.
Following Johor, the most popular Chinese commercial property investment destinations are Kuala Lumpur and Selangor, Malaysia's main urban and business hubs.
According to Kashif, Juwai IQI believes that global economic uncertainty will not discourage Malaysia from meeting its GDP growth target of 4.7 per cent in 2023.
After Singapore, China is Malaysia's second largest export market, accounting for RM16.7 billion in March 2023. This accounts for around 13 per cent of total exports.
Malaysia also imports the most from China of any market. In March, China accounted for 20.5 percent of total exports worth RM21.2 billion.
"Malaysia will increasingly attract more investment. "Its initiatives to reduce red tape and grow the economy will support this trend," Kashif said.
Kashif said that Southeast Asia would profit from China's rebound, even if it happens more slowly than projected earlier in the year.
He anticipates a rapid increase in travel, tourism, agricultural goods, and production outsourcing.