Buying property overseas? Here's help
Report by ZUL OTHMAN
The recent changes in property rules in Malaysia have got the market buzzing.
Yesterday, it was reported that foreigners buying properties in Johor from next January must pay higher processing fees instead of the current RM10.000 (S$3,900).
A Johor state official said that foreign buyers will have to pay 4 to 5 per cent of the sales price of the properties.
So are there more perks or pitfalls when investing in overseas properties?
The New Paper spoke to Mr Johnny Chng (below), head of international projects at property consultancy OrangeTee - one of the four panellists who will be speaking at the STProperty Seminar on Oct 27 - to find out more.
1 Why are overseas properties popular with investors at the moment?
With the property curbs in Singapore, more investors are turning their eyes across the Causeway.
Overseas markets have become an alternative investments destination for them to park their money because of the potential capital gains, strong Singapore dollar, lower entry barriers and easy access to credit.
Current hot spots are Malaysia, Australia and Britain's London. Some investors are also buying properties in the Philippine capital Manila. In all cases, buyers are attracted by returns and potential capital appreciation.
Some purchases are needs driven (for example, retirement plans in Johor's Iskandar region) or involve providing accommodation for children studying overseas (Australia and England in particular).
In all cases, the strengthening of the Singapore dollar makes overseas properties look relatively "cheap".
2 What do In need to know about the overseas market before jumping in?
Know your risk appetite and financial means, and determine which market suits your investment needs.
Also, be updated with new rules and regulations that have been or are going to be implemented, such as the revised processing fee in Johor. In this case, be aware of the implications.
Finally, have an exit plan.
3 With the overseas market looking hot, is it too late to get in? Also, could a bubble be forming in these markets?
If you look at price movements since the global financial crisis, there is no doubt that prices at most of these markets have reached new highs.
However, different people have different investment objectives and horizons.
In some markets, rental yields could be around 6 per cent even when property prices are not rising much, so they meet the investors' needs.
Over the longer term, property prices should go up if the demand is supported by fundamental drivers such as population growth, wealth creation and occupancy rates.
As long as the investors know what they are investing in and manage their risks properly, their investment may eventually bear fruit.
News, The New Paper, Thursday, October 10 2013, Pg 11