In recent years, Malaysia has been in the spotlight due to a significant Chinese investment, estimated at 170 billion ringgit (US$35.9 billion). This influx was expected to transform the Malaysian property market, enticing more Chinese nationals through the Malaysia My Second Home (MM2H) program. As of January of the reporting year, Chinese nationals accounted for 44% of the more than 56,000 active MM2H pass holders, a substantial increase from 16,000 in 2019.
However, the anticipated economic boost to Malaysia’s property sector from these investments has been underwhelming. Siva Shanker, CEO of the estate agency at property consultant Rahim & Co., notes the lack of concrete data on foreign property ownership in Malaysia makes it challenging to accurately assess the impact of Chinese investment. While there is a visible presence of Chinese property buyers, it isn’t as significant as some might expect, akin to the level of interest from buyers like the British.
This tepid response could be attributed to China’s broader strategy of enhancing its influence in Southeast Asia amid trade tensions with the United States and its own economic recovery challenges post-pandemic. The MM2H program, despite its potential, faces criticism for its stringent requirements, which could be stifling greater uptake.
Malaysia’s property market had previously experienced a surge in Chinese interest around the mid-2000s, notably with the development of the Forest City in Johor. This $100 billion project was expected to evolve into a thriving hi-tech city but has since become a ghost town after stringent capital controls in China deterred potential buyers and impacted the developer’s operations.
Despite these setbacks, there remains a positive outlook among some experts for Chinese investments in Malaysia. Paul Khong, Group Managing Director of Savills Malaysia, suggests that upcoming projects like the Johor-Singapore Special Economic Zone could rejuvenate interest and attract more Chinese buyers.
Beyond property, tourism and education are sectors where Chinese interest in Malaysia is markedly strong. In the first five months of 2024, nearly 1.2 million Chinese tourists visited Malaysia, contributing significantly to local revenue. The educational sector also sees robust demand, with a substantial number of Chinese students choosing Malaysian universities over traditional favorites like the UK, US, or Australia due to advantages such as proximity, affordability, and quality of education.
In conclusion, while the property sector’s expectations from Chinese investments haven’t fully materialized as anticipated, other sectors like tourism and education continue to benefit from the strengthening ties between China and Malaysia.
