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Brazil or Malaysia? Which and why?

Discussion in 'Buying Overseas Property' started by ExpatNick, Jul 21, 2008.

  1. ExpatNick

    ExpatNick New Member

    If there was a choice, and you could only afford one and not both, which would you all prefer to invest in, Malaysia or Brazil, and why?
     
  2. andyk2

    andyk2 New Member

    Are you looking for a balanced opinion?

    Hi Nick,

    I´m not suggesting you will get one from me, but you are asking this question on a forum that has 10.000 agents with an interest in selling property in Brazil and none from Malaysia.

    Two years ago, I would have said Brazil was the best option despite the lack of finance, lack of knowledge that we have now thanks to forums like these, and hints of corruption.

    Now, I couldn´t touch it with your money.

    The value has gone, everything that is being offered has "potential" capital growth and rental yields and we know a) how difficult it is to get your money out of Brazil and b) there definately is more than a hint of corruption.

    I could bark all day about GNG and The Banana Club, but what good would it do? There are probably a couple of investment options that are still worth considering, but when the market picks up again, will they still be there?

    Malaysia, and particularly Kuala Lumpur has the cheapest property like-for-like in SE Asia. Rental yields are proven as is capital growth. There is a strong domestic market (which is why you never see new releases advertised internationally - the developers don´t need to) and money is pouring in from Korea, Singapore, India and Pakistan. There is also an element from Dubai and The Middle East who are looking to take their profits out of the Emirates while they can.

    Just to clarify, I´m not talking about the Banyan Curves and Gold Coast Palms (all though there is nothing wrong with these), I´m looking at mid-high end serviced apartments in KLCC, Johor and Penang.

    The reason you probably won´t get a balanced view on this thread is that property in Brazil offers commission to agents of up 20% (that´s the highest I´ve been offered anyway), whereas commission in Malaysia is capped at 2% and most new developments won´t offer more than 1%.

    So, IMHO, Malaysia because there is an established (domestic) market, you can get in and out without restrictions, no CGT, and finance up to 80% if required.

    Interested to see the Brazilian agents views of my arguements!

    Suerte,

    Andy
     
  3. OPH

    OPH New Member

    + and - for both

    It is not a like for like comparison even trying to compare Malaysia and Brazil. They are both at different stages in the property market cycle and both offer something completely different.

    If you are a pure investor and all as you are looking for is little input and maximum profit, then of course malaysia is your best option for you.

    If you are looking for something that will see steady growth over a period of time, generate some rental income (but not enough to cover costs) and of course something you can also use yourself for lifestyle enhancement, the Brazil is a great choice.

    Property prices have risen dramatically in Brazil over the least 2 years but as most "agents" have learnt not everything is quite as it seems. It is difficult to do business in brazil, it is difficult to actually build in brazil (especially NE) and its is very difficult should you actually get the apartment that you have paid for, to get any money out of Brazil thus making the exit strategy limited. This will change though over time with more and more foreign investment.

    As for malaysia, it is a strong market, good prices, finance options and rental yields that can cover costs (if care is taken in the finance option taken). The ringett is good for foreign buyers at the moment and returns on investment are excellent. this si not a lifestyle enhancement though, unless you are from Singapore or KLCC and wnat a local weekend retreat.

    So pluses and minuses for both options...............it really depends what you want!!!

    Thanks

    OPH
     
  4. Investy

    Investy Senior Member

    Malaysia without doubt.

    Both were on my list before I settled on Mediterreanean Morocco. I actualy reserved on the Palm near Kuala Lumpa, but pulled out.

    Brazil I looked at fairly in depth but I felt there would be masses of supply and too much opaquness for my investor tastes.
    A very good freind of mine invested in an appartment in KL and has been well looked after, however, even he says there are plenty of sharks and pitfalls even there. He actuall also invested in Morcco with me in the same development!

    If you want South East asia I'm hearing from probably the most succesful knowlegable investor I've ever come accross - he predicted the credit crunch and named it so back in 2004 on housepricecrash - (he's called Dr Bubb on there) that Singapor is a real goer just now, and tenmds to be a safe investment.
     
  5. hazri

    hazri New Member

    Malaysia

    And the best place is in Johor, at Nusajaya...I could give you more details about it...just send me a private message...hope to hear from you soon
     
  6. JMBroad

    JMBroad New Member

    Funnily enough I'm not surprised at all that you prefer Malaysia Andy (although I don't agree I can understand why you feel that way). Traditionally the type of property which has been on offer in Brazil has always been the "holiday home in the sun" type of property.

    Not only because it's a "holiday home type destination" but also because, as you have compared it to Malaysia, the product for the local market sells out too fast to make it worthwhile for Brazilian developers to sell to overseas investors.

    As the only developments which were offered to the overseas investor market were holiday homes, (with prices much much higher than product for the local market) the agents offering them for sale could afford to give 20% sales commission however if you found agents that are offering commissions that high then I can only assume they have added them on to the sales price. In Malaysia I was offered much more commission per sale than 1% of sales price so just so that you know, you can get a lot more from quite a few developers if you negotiate with the developer.

    My first time in Brazil (I came to Natal) I contacted every developer in Natal and asked for a meeting - two of them answered me, one was a Brazilian company whose sales manager was Portuguese and the other was a Portuguese developer. Every other developer who graced me with an answer basically said "we don't need foreigners so thanks anyway".

    However the potential in Brazil (and which is only really starting now) isn't holiday homes - it's primary residences geared towards the local market.

    While Malaysia has the mm2h (Malaysia My Second Home) which is the government plan aimed at attracting foreigners to come and live in Malaysia, Brazil has the MCMV (Minha Casa Minha Vida) which is the government plan aimed at enabling local Brazilian families to buy their own house.

    Comparing the two incentive plans to end users, mm2h offers many incentives to foreigners who decide they want a holiday home in Malaysia by giving them easily attainable visas, facilities in bringing in their cars and other personal belongings. It's goal is to make the transition for holiday makers smooth and easy. However (and this is important) it does not allow the purchase of residential units reserved for the Bumiputra quota and there is a limit on how much the house can cost (as far as I remember it was RM 250.000 when I was researching the market)... so the cheapest unit you can purchase under the plan will cost you US$ 73.000,00 - if you want something cheaper then you have to get the approval of the Foreign Investment Comittee (FIC).. a long and drawn out (and somewhat complicated) process. The catch 22 that I was confronted with was the exit strategy: Once you have decided to terminate your investment, if you have bought a property through the MM2H plan; unless you want to go through the same process of consulting the FIC you can only sell to the local market.

    So the above leaves me with some questions with regards to pure investments:
    How strong is the malaysian domestic market?
    Would they buy something geared towards foreigners at foreigners prices?
    Why would they buy a house from you rather than directly from a developer?
    How are you going to contact that end user to get him to buy your property?

    On the other hand, Brazil does not facilitate visas for foreigners (although they aren't really that hard to get as long as you don't have a criminal record). Importing a car and your other personal belongings is very expensive. They certainly don't make the transition smooth and easy. However for a foreigner to invest in Brazil it is very easy and a very simple process. Their stimulus plan (MCMV) is geared towards the local market, not foreigners. They are making it possible (for the first time ever) for low and medium-low income brazilian families to purchase their own homes. Now everyone knows that Brazil has one of the largest populations in the world and that many of these are in the low to medium income. There is a huge housing deficit and therefore a huge market to cater to. The demand is unequivocally there, making the exit strategy very simple as long as you've invested in a product for the local market. There is no restriction on the amount you can pay for a house - so you could just as easily purchase an apartment for a medium income family for US$ 73.000,00 as you could purchase a townhouse for low income Brazilian families for US$ 43.000,00 or even less.

    The vast difference between the two is that Malaysia is actively promoting the purchase of residential units by foreigners whereas Brazil is actively promoting the purchase of residential units by the locals.

    So in answer to the question posed and to Andy2k (you did ask for someone from Brazil to counter your opinion) ...

    If you are looking for a holiday home in the sun - Malaysia will make things easier for you to move over there and bring all your personal items (albeit it may be harder for a western investor to adapt to the mentality and customs of an asian country than to Brazil). However if you are looking for a cheap property to then resell to the local market, it won't be quite so easy as the FIC have to approve the purchase.

    On the other hand if you are looking for an investment opportunity it is very easy to buy in Brazil once you have found the right property... And buying investment property in Brazil is so much more attractive as your exit strategy makes sense and is so much easier to resell, as long as you are buying something where the end user is the local market and at the right price.
     
  7. Dan Yurdiga

    Dan Yurdiga New Member

    Malaysia. This is a good place. A tropical country. Nice places to live on.
     
  8. hazri

    hazri New Member

    Malaysia...and especially Johor...that is where the next Asian gold mine is...with the fast development here, low taxes,benefits and full support from the government, huge and specious land for you to choose from, clean environment, friendly local people...and most importantly,,enormous business opportunity..what could be much better than this?
     
  9. JMBroad

    JMBroad New Member

    But where is the demand coming from - who are all these houses being built for? Why is the demand so high, is it going to remain high and why and how do you know you'll be able to sell on your property when it has been built?

    This is the crucial step which has been forgotten in many bubble markets. Assuming you can answer these questions then by all means Malaysia may well be a good market to invest in however when I was researching it although there was a high demand from Bumiputra investors are not allowed to buy and then resell to Bumiputra as each development had to have a portion of the units set aside specifically to be sold only to Bumiputra so who do investors sell on to? Other investors?

    Until someone can explain where the demand for Malaysian property is coming from I don't see the enormous business opportunity.

    Once again I say If we are talking about holiday homes, I think Malaysia may even offer buyers more facilities to move there than Brazil. So you just need to decide which country and cultures suit you best - each is very unique but totally different one to another.

    I have family who work for the Malaysian government and I hope to get out there and visit them soon but I haven't been personally yet but from what I hear it's a fantastic country and I'm sure many people would love to live or have a holiday home there.

    But until there is a sustainable, realistic demand for housing which is increasing the value of property as an investment destination, I don't see how it can be compared.
     
  10. hazri

    hazri New Member

    Malaysia is a big country...there's plenty of places that could be considered to invest in...Johor is such an example..there's a program by the government that targets international investor's..Johor is only 20 minutes from Singapore..and nowadays,many singaporean bought houses and even land in Johor..this is due to the currency..so, the demand in real estate are more likely from the Singaporean..People in Singapore had choices whether they wanted to live in a condo, or a big houses with the same or even less amount of money
     
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