Economic uncertainty and the availability of Islamic finance is driving Middle Eastern real estate investors to look East to markets such as Malaysia, it is claimed.
Middle Eastern investment into Malaysian real estate projects has risen 11.4% in the third quarter of 2011 compared with the same period in 2010, according to figures from IP Global, , a property investment company which specialises in emerging and recovering markets.
Malaysia’s well regulated real estate market has grown 5.3% and Kuala Lumpur is the country’s hotspot with a property house index growth of 11.4% year on year, it says in its latest report.
Malaysia has been providing Shariah compliant financial services for over 25 years and this is one factor that makes it increasingly attractive to buyers from the Middle East.
The enduring legacy of 2011 will be one of uncertainty in the Middle Eastern investment community, as the effects of the Arab Spring on a regional level, and both the Eurozone crisis and downgrading of America’s economy make themselves felt in markets around the world, according to the report.
As a result, IP Global notes that Middle East investors have reacted by turning their sights toward the more stable investment markets, such as those of Malaysian real estate.
According to internal research, IP Global has seen a marked rise of United Arab Emirate and this trend is most evident at IP Global’s latest real estate project, ‘The Richmond’ in Kuala Lumpur, where Middle Eastern investment has risen 14% over the last 12 months.
According ‘Malaysia is a sensible market and tends to perform more steadily than the rest of Asia. The property market is well regulated, such that speculators cannot buy and sell quickly, so it doesn't tend to create a boom and bust scenario,’ said Tim Murphy, IP Global's founder and managing director.
‘That is why we have seen 5.3% growth in the past 19 years,’ he explained. He added that Kuala Lumpur, the Malaysian capital is leading the way as a property hotspot within the region experiencing a greater growth rate than the national average over the past four quarters.
Coupled with diversifying into non US dollar asset markets, Middle East investors are benefiting from their familiarity with the principles of Islamic Finance, that have proven to provide more security than conventional finance methods.
Kuala Lumpur in particular is already seeing strong links being forged between Saudi Arabian, UAE and Kuwaiti banks. A positive Malaysian economic outlook, with the Malaysian Ringgit (formerly Malaysian Dollar) growing in strength against the US Dollar, the country is providing its investors with huge potential.
Malaysia’s transport links and infrastructure is rapidly gaining pace across many of its cities, and with tourism continuing to rise, real estate investment is predicted to yield great returns for the astute property investor.