The future of the property development industry in Malaysia's expanding tourism industry in the post-pandemic era looks bright.
Before the epidemic, the tourist sector in 2019 employed over 3.5 million people and provided RM240.2 billion, or 15.9% of the nation's GDP.
Once the country's borders were reopened on April 1, 2022, Malaysia welcomed 10.1 million foreign visitors, bringing in RM28.2 billion in revenue in 2022.
16.1 million foreign visitors are expected to visit Malaysia this year, according to the Ministry of Tourism, Arts, and Culture (MOTAC), which could result in RM49.2 billion in tourism-related earnings.
The tourism infrastructure, including hotels, resorts, and entertainment venues, will need to be increased, according to minister Datuk Sri Tiong King Sing, to meet the rising number of visitors.
"Malaysia boasts a wide variety of tourism destinations, such as beaches, historical locations, and natural wonders like mountains and jungles. Building hotels, resorts, and apartments that provide various forms of lodging and facilities will enable real estate developers to appeal to the many visitor segments that each of these attractions can draw.
"The construction of upscale resorts on the island of Langkawi is another illustration. These resorts target affluent travelers who are prepared to pay more for opulent lodging and first-rate amenities. There is still opportunity for expansion in this industry, and building luxury resorts can offer property developers a sizable return on their investment.
According to Tiong, real estate developers might potentially consider building theme parks and other types of entertainment.
Many top-notch theme parks, like Sunway Lagoon, Genting SkyWorlds Theme Park, and Legoland Malaysia, are located in Malaysia and draw countless tourists there each year.
According to Tiong, the developers might take advantage of this development by building new amusement parks and theme parks that provide visitors with fascinating and distinctive experiences.
He said that the government provides tax advantages for brand-new tourism initiatives including 1-3-star hotels, theme parks, conference centers, and recreational parks, with businesses earning 70% of statutory revenue for five years, to entice investors.
A 60% investment tax deduction is offered on qualified capital expenses paid within five years for projects that are being extended, modernized, or renovated. This deduction can be utilized to offset 70% of statutory income.
He stated this in his speech at the 2023 Malaysian Housing and Property Summit, which was read by Datuk Mohd Zamri Mat Zain, deputy secretary general (tourism) at MOTAC. "These measures make it easier for property developers to invest in Malaysia's tourism sector, making it a lucrative opportunity," he said.
Tiong claimed that the Malaysia My Second Home (MM2H) Program has made a substantial impact on the real estate sector.
A 2020 MOTAC study found that between 2002 and 2019, the program attracted over 64,000 participants, who contributed a total of RM11.41 billion and created about 29,000 jobs in the real estate industry.
The study also found that participants' average monthly rent is between RM2,000 and RM4,000, with this amount expected to rise to between RM4,000 and RM6,000 in the future. The average property purchase price ranges between RM1 million and RM2 million, with top purchase locations in Kuala Lumpur, Penang, Johor, and Selangor.
According to Tiong, investing in or leasing a property under MM2H will be advantageous for the real estate industry as well as the economy as a whole.
The creation of upscale homes is one of the options for real estate developers, he said.
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