Malaysia's high net worth individuals (HNWIs), those with US$30 million (RM93 million) or more in net assets, are expected to continue investing in properties abroad over the next decade.
London, Sydney and Melbourne will remain the favourite investment destinations for this group, which is growing in number despite the economic headwinds last year, says global property consultant Knight Frank LLP.
It also expects the number of Malaysian HNWIs to increase by 51 per cent to 1,294 over the next 10 years.
If traditionally they were more inclined to buy residential properties, the focus is now shifting to commercial properties for better yields and capital growth, the consultant said.
Knight Frank head of research for Asia Pacific Nicholas Holt said while the Kuala Lumpur market had been fairly subdued last year with only 1.0 per cent growth in prime values, the Malaysian HNWIs still have a strong appetite for real estate investments and are looking abroad for opportunities.
Knight Frank, which was founded in London in 1896, released its Wealth Creation Report here yesterday.
Locally, the company partnered with CIMB Preferred to conduct the Knight Frank's 2013 Attitude Survey. Among others, the survey revealed that the most popular investment portfolio among CIMB's clients last year was properties, followed by cash and equities.
Knight Frank Malaysia managing director Sarkunan Subramaniam said Malaysians' active investment in properties in London and Australia is mainly driven by their familiarity with these places, either having been educated there or their children are studying in the respective cities.
"Last year alone, Malaysians represented five per cent of foreign property purchasers in London and we can expect this to continue in the years to come," he said in a panel discussion, chaired by Holt.
He said London is the top choice because of its currency, which is at its lowest and investors are anticipating the pound sterling to appreciate in the near future.
Sarkunan said the trend among Malaysian HNWIs now is buying into commercial properties as these have better yields and low risks.
CIMB Investment head of research Terence Wong said Malaysian HNWIs have no hesitation in investing in London properties that are being developed by trusted Malaysian companies.
"Like the recent SP Setia Bhd's launch of the Battersea project. Of the 850 apartment units, 400 reserved for Malaysians were all taken up and with prices starting from STG1 million (RM4.6 million). This could easily get them a bungalow in prime KL areas," he noted.
On the outlook for the local property market, Sarkunan said in the next 12 months, he expects Iskandar Malaysia to continue to attract investments, especially from Singapore investors.
"We can expect more activities from them after the elections," he said.
Asked by a member of the audience if these Singaporean investments are actually "recycled Malaysian money", Wong said the investments are "genuinely from Singaporeans and not like some conspiracy theory Malaysian equities are usually associated with".
"UEM Land has for many years been trying to lure investors from Singapore and it was not easy. Only after Legoland, interest from Singapore came in and with THE rising cost of living in Singapore, Iskandar has a lot to offer for them," he said.
Speaking to reporters later, Wong said he is upbeat about the country's property sector this year, especially in Iskandar Malaysia, the Klang Valley and Penang.
He said the rise in property prices in the last three to four years have been fair considering that the market was quite depressed prior to that.