By Joseph Wong

As a wave of protectionism sweeps across the globe, with many countries closing their doors to foreign home buyers, Malaysia is emerging as a compelling counter-narrative. While nations from North America to Asia impose bans and high taxes to curb foreign property ownership, Malaysia's strategic open-door policy is yielding significant economic benefits. 

A new analysis reveals that the country is not only defying this global trend but is actively thriving, with foreign buyer inquiries surging by 52.5% this year alone. This remarkable growth is a testament to Malaysia's competitive edge, driven by a welcoming stance that is attracting a diverse stream of foreign residents whose contributions now exceed RM84.2bil annually.

In recent years, governments worldwide have adopted increasingly restrictive policies on foreign property ownership, often to address domestic housing affordability crises. These measures, however, risk hurting their economies by sending a message of unwelcoming hostility to global investors.

Canada has implemented a two-year ban on foreign home purchases, a policy it has since extended to 2027. Australia maintains strict regulations that prohibit foreigners from buying existing homes, limiting them to new-build properties. Singapore, a major regional competitor, imposes a prohibitive 60% stamp duty on foreign purchasers, effectively making property ownership for non-citizens prohibitively expensive.

In the United States, several states have passed laws that restrict certain foreign buyers, particularly targeting individuals from countries with whom the US has geopolitical tensions. Even in Asia, South Korea has become the latest country to impose a foreign buyer ban.

These policies create a global market where an open, inclusive approach is becoming a powerful competitive advantage. Juwai IQI co-founder and group chief executive officier Kashif Ansari underscores this point, stating, "From Vancouver to Seoul, governments are closing doors on foreign property buyers and that’s hurting their economies... Malaysia is winning in this global market."

Economic payoff of openness

Malaysia's strategic decision to remain open is paying off handsomely, not just in property transactions but across its entire economy. Beyond the direct surge in foreign buyer inquiries, the country's welcoming stance is attracting a growing number of international residents whose economic contributions are both substantial and diverse.

The data paints a clear picture of this financial windfall. The number of foreign expats and students living in Malaysia is soaring and the country’s Malaysia My Second Home (MM2H) golden visa programme is reaching new highs in participation.

• Students: The population of Chinese students in Malaysia has nearly doubled in just three years, reaching as many as 200,000. These students are more than just temporary visitors; they are economic participants. On average, each foreign student contributes approximately RM46,000 to the local economy every year, which translates to a total yearly contribution of RM9.2bil from this group alone. This spending supports local businesses, from food and retail to transport and services.
• Expatriates: The skilled professional workforce from overseas has soared to 120,183 by the fourth quarter of 2024. This segment brings high-income spending and invaluable expertise to the local market. According to the Malaysia Productivity Corporation, expats contribute a staggering RM75bil or 4.8% of Malaysia's total GDP and pay an additional RM100mil in annual income tax.
• MM2H Holders: The MM2H programme now boasts more than 58,000 active visa holders, a number that has increased sharply in recent years. While they contribute to the luxury property market, their impact extends further through spending on healthcare, travel  and lifestyle services. Between 2002 and 2019, MM2H holders contributed RM11.9bil to the economy.

When the contributions from students and expatriates are combined, the total economic impact from foreign residents stands at a staggering RM84.2bil annually. This is a powerful demonstration of how an open policy can translate into tangible economic growth and a stronger, more resilient economy.

Geographic hotspots 

While the overall trend is nationwide, foreign buyer interest is concentrated in a few key locations, each with a unique value proposition.

Kuala Lumpur: It leads the pack, accounting for 44% of all foreign buyer inquiries. As Malaysia's commercial and cultural hub, the capital offers a dynamic urban lifestyle, world-class healthcare and international education options. Its most compelling selling point, however, is the affordability of its luxury condominiums compared to regional rivals like Singapore and Hong Kong.

Sabah: It is the second most popular destination, attracting 22% of inquiries. Its appeal lies in its stunning natural beauty, including pristine beaches, lush rainforests and the iconic Mount Kinabalu. This makes it a sought-after lifestyle and retirement destination for eco-conscious buyers.

Johor: The third most popular, draws its strength from its strategic proximity to Singapore. Many buyers choose Johor to take advantage of Malaysia’s lower property costs and relaxed lifestyle while maintaining convenient access to Singapore’s robust economy. The ongoing development of the Johor–Singapore Special Economic Zone and the upcoming RTS cross-border rail link are further solidifying its appeal, promising faster commutes and new economic opportunities.

Selangor and Penang: These two states round out the top five. Selangor, part of the Greater Kuala Lumpur area, appeals to professionals and families with its modern suburbs, technology hubs like Cyberjaya and high-quality educational institutions. Penang, on the other hand, attracts retirees and investors with its unique blend of island lifestyle, rich heritage, a thriving FDI-driven economy and a reputation as a leading destination for medical tourism.

Malaysia's bet on inclusiveness may be its greatest competitive edge. By staying open and making it easy for foreigners to invest, study and work, the country is not only attracting capital but is also creating jobs and boosting its economy in a way that other, more protectionist nations are not. The data suggests that this strategy is paying significant dividends, reinforcing Malaysia's position as a truly global and welcoming destination.

This article was first published in StarBiz 7.

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