EVENT 1: For 18 years, real estate agent Reapfield Properties Sdn Bhd concentrated on the local market. Four years ago, it created an international department “because there were requests from clients.”
Today, that department contributes between 10 per cent and 15 per cent to group revenue, says chief executive officer T.L. Lau, with most of the deals cut in Auckland, New Zealand and Melbourne, Australia. He declines to say how much the group revenue is.
Event 2: About a year ago, managing director of Frontier PDI Sdn Bhd Ng Swee Kian had his own set-up to tap the market.
From the exterior, both agencies are similar in the sense that they are catering to Malaysians’ interest in New Zealand and Australian properties. Both prefer to work with developers directly rather than just be a local representative of the foreign agent, unlike Global Link Realty.
Although one is a larger set-up, the other smaller, the two events seem to indicate one thing – the economic crisis has not made us poor, just more cautious.
“People buy overseas properties to diversify their portfolio,” says Reapfield’s Lau, who works with about six to eight real estate negitiators and Frontier’s Ng, about 30.
Ng lives about three months of a year in Melbourne to check his selection and network with developers. At other times, he travels the region to market the projects.
“Unlike short-term investors, when Malaysians invest for the long term, they are particular about who they buy from. So I scrutinise the properties before I promote them here. I check the developer’s track record, their location, the rentability of these projects and area before I actually bring them in,” says Ng.
Although Ng set up his own business about a year ago, he has been marketing overseas properties in Canada, the US, Australia and New Zealand for more than 5 years.
“Each country has its own uniqueness, its own rules which may work for or against the foreign investor. Check these rules and regulations out.
“In terms of price, in any big city, there are high-end areas and cheaper areas. Check with the agent what area you are buying into. That helps to determine rentability,” he says.
An overseas property purchase does not stop at location, however. By virtual of the fact that it is located abroad, after-sales-service is very important.
Ng says there are agents who just wrap up a deal and call it a day without giving after sales services.
“This is one big area that a number of agents do not look at. Buyers should be concerned about after-sales-service, whether the development is going as planned and at what stage is it.
“Some developers will inform the overseas purchasers about the progress of their property, some do not. This is where the local agent comes in, to play that intermediary role,” says Ng. He says he helps investors get bank loans from Australia, get the property rented out or arrange for a resale.
Reapfield’s Lau says after-sales-service is important because the laws differ between countries.
“Here in Malaysia, if you don’t cut your grass, you don’t get fined. Over in Australia, you do. We have investors who call us to get the grass cutters to fix that. We go down to that level.
“I always tell the people I work with over in Australia that 90 per cent of my business is Malaysian-based, so I need to keep my reputation,” says Lau.
He says both Australia and New Zealand properties are popular because the countries are fairly stable, and their laws are fairly pro-foreign investors.
In addition, the initial downpayment is kept in a trust account in the purchaser’s name – 10 per cent in Australia, or 20 per cent in New Zealand – which earns interest for the buyer of about 4 per cent in Australia and 5 per cent in New Zealand.
“If the development does not come up, they get their money back. These make overseas property investment highly attractive, although if one were to buy Australian properties, they have to sell back to Australian or those with permanent resident status. In New Zealand, there is no such law. And unlike in investing in Malaysian properties, there is no risk of progressive payments,” says Lau.
Lau says when Malaysians buy overseas, they have to change their mindset and think like an Australian or Kiwi. Forget about feng shui. For another, a foreign developer does not build 300 to 500 units a year, but 6 to 7 units.
“Invest in that property with business in mind, if you are not going to stay there, not whether you like it or not. Ask yourself whether the locals like this place, not whether you like it or not,” says Reapfield’s senior operations manager Ang Kim Hong.
Look before you leap, would be an excellent rationale.