Malaysians debate new taxes

Australian commercial real estate real estate agents from Knight Frank Australia and Malaysia held a roadshow recently to present a range of properties to potential investors.

Despite massive interest in the Australian market, the thing on everyone’s mind was the potential impact of changes to Australian property taxes on Malaysian investments.

Knight Frank Australia’s team conducted the formal seminars in Kuala Lumpur and Penang alongside Sarkunan Subramaniam, Knight Frank’s Managing Director for Malaysia and James Buckley, Executive Director for Capital Markets, Malaysia.

The team held many one-on-one client briefings as part of an Australian Property Forum Malaysia Roadshow.

According to Knight Frank’s Head of Commercial Sales Paul Henley, :“Australia is of much interest to Malaysian investors due to its strong underlying economic fundamentals, including a record-low interest-rate environment.

“With interest rates having dropped to their lowest ever, and a stable political scene with the Federal election result, combined with an ever-growing population, Australian commercial real estate is well-positioned for offshore investors.

“Malaysia’s SP Setia purchased 288 Exhibition Street, Melbourne for AUD 101 million, one example of the growing interest from Malaysia in the Australia’s commercial property sector.”

Knight Frank’s Head of Research and Consulting, Australia, Matt Whitby, said Brexit is expected to accentuate the capital flows into Australia commercial real estate.

“I expect Australia will benefit from Brexit and other global uncertainty, as it remains a safe-haven for investors. With volumes slowing over the past quarter, mainly on the back of limited supply of assets.

“I expect Brexit will accentuate the capital flows into Australian commercial real estate and volumes will pick up in the second half of 2016,” he said.

“Australia’s economy is the envy of the developed world, growing at 3.1 percent as at the March 2016 quarter. Sydney and Melbourne are driving performance, while our population is strong, with a growth average of 1.5 percent across the country.

“Sydney alone accounted for AUD$ 19 billion over the past two years, predominantly from Asia.”

Total Malaysian overseas investment into real estate globally was steadily increasing; however fell back in relative terms over the last financial year.

Strong interest continues

Malaysian investment in Australian commercial real estate has averaged AUD$ 750 million over the past six years however deal flows have not been as prevalent over the past year.”

Henley said it remains to be seen in coming weeks how much the latest Australian taxation laws will impact Malaysian buyers in this market.

“Despite the recent stamp duty changes imposed on foreigners purchasing residential property, interest from Malaysian investors is remarkably strong.

“We expect many commercial, hotel and retail assets transactions from Malaysian investors over the next year.

“These types of assets are not impacted by the tax changes, and some residential specialists will still show interest at the right pricing metrics to build scale,” said Henley.

According to Sarkunan Subramaniam, Australia is a key destination for Malaysians.

“Some 77 percent of Malaysia’s ultra-high net worth individuals expect to send their children abroad for university next year.

“This has created a significant connection between Australia and Malaysia over time.”

Pictured is one of the properties being marketed by Knight Frank Malaysia in Melbourne.