The falling ringgit is making Malaysian properties a big bargain now
if you have an appetite for emerging market properties.
Text by Jan Yong
At the time of writing, crude oil price has climbed to a 3-week high, up 7% to USD34 a barrel on speculation that OPEC and Russia may finally decide to cut output. Around the same time, the revised Malaysian Budget 2016 was announced and although it didn’t cause much excitement, when combined with the rest of the news, had lifted sentiment causing the Malaysian Ringgit to appreciate after eight weeks of downtrend. At last look, the ringgit was trading at RM4.21 against the USD. Why are all these information important to the real estate investor?
It’s crucial because it affects the timing of when you want to enter a particular country’s market or whether you want to invest in the country at all. With so many countries now competing for investment dollars, you as the investor with funds, are spoilt for choice. There are so many rich pickings out there that it really seems like the Christmas/Boxing Day sale is still on (or in Asia’s case, the Chinese New Year sale).
Countries in Asia like India, Vietnam, the Philippines and even South Korea are improving their laws and tweaking them to attract more investors into their property market. Within Asia, Japan, Hong Kong and Singapore’s markets are the most matured with great infrastructure and proper laws in place making it very easy for the investor. The only problem is the price level of properties there are beyond many.
Coming up closely behind in terms of transparent property laws and great infrastructure is Malaysia, a country that had started off on similar footing with Singapore back in 1965 but has since these last 50 years diverged greatly on practically all fronts. As a result, the Malaysian economic and human resource development have lagged behind that of Singapore. The Singapore dollar (S$) and the Malaysian ringgit (RM) started out at 1:1 (equal footing) but have diverged to the point that the S$ is now worth three times more than the Ringgit.