The historic city of Malacca was declared a UNESCO World Heritage Site in 2008.
Malacca’s fast-growing property market and tourism boom have seen real estate values shoot up by more than 400 percent over the past few years.
By Romesh Navaratnarajah
While many Singaporeans prefer the hustle and bustle of Kuala Lumpur, or the casual and relaxed environment of Penang, there are a growing number of investors looking for properties closer to home, such as in the historic city of Malacca.
Located just 2.5 hours by car from Singapore, its proximity makes it easier for Singaporeans to drive across the causeway to inspect their investment properties, said a spokesperson for Malacca-based property developer Hatten Group. Historically low crime rates are another plus point.
Meanwhile, the tourism market continues to boom. Between 2008 and 2015, the city saw more than a 200 percent jump in tourist arrivals, thanks to its status as a UNESCO World Heritage Site.
As a result, “owners of commercial and residential properties in easy-to-access locations stand to benefit immensely”, said the spokesperson.
Whopping price rise
In fact, residential property prices have shot up by a whopping 440 percent from RM250 psf (S$84 psf) in 2008 to RM1,100 psf (S$369) last year, the spokesperson told PropertyGuru.
She added that during the same period, commercial property values in Malacca surged by 250 percent to RM3,800 psf (S$1,274 psf).
Her advice to commercial property investors looking to capitalise on the spike in tourism is to invest in individual hotel rooms or retail units. “Malacca has a shortage of hotel rooms, so hotel businesses in the right locations will be extremely profitable,” she said.
Similarly, investing in centrally-located retail spaces can make you “a fortune from rental yields and capital appreciation”.
Due to the willingness of business owners to pay higher rent to secure retail outlets in strategic locations with high footfall, rental yields are currently hovering at a healthy six to eight percent, revealed the spokesperson.
Less rigid rules
So far, restrictions on foreign property ownership in Malacca are not as rigid as other Malaysian cities. Foreigners only need to make a minimum investment of RM500,000 (S$168,000), versus RM1 million (S$335,000) in KL and Penang’s RM1 million to RM2 million (S$335,000 to S$670,000).
At the same time, Malacca’s status as an emerging market compared to its more developed neighbours means that “investors have the opportunity to invest in properties in strategic locations for a much lower (cash) outlay compared with mature markets, where such properties typically come at a premium and are hard to come by”, said the spokesperson.
Malacca Gateway
In terms of where to buy, she feels investors should look at the UNESCO heritage area, around the Portuguese Settlement, or Pulau Malacca, a man-made island off the coast that is set to benefit from the future Malacca Gateway project.
The 609-acre project includes three artificial islands with residential and commercial properties, a theme park and RM600 million (S$200 million) deep sea cruise terminal, the largest in Asia, which can handle three cruise liners at a time.
With a slew of new developments underway, the spokesperson warned that property prices in the city will rise even further, which makes a strong case for Singaporean investors to get in as early as possible.
“The earlier you get involved, the higher your odds of securing a property in a strategic location, such as a sea-facing condo or a retail lot on the first floor in an area with high human traffic,” she said.
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