Understanding Land Costs in Malaysia: What to Expect？

If you are an investor, homebuyer or business owner, finding the cheapest land costs in Malaysia can be exciting. Whether you are planning to invest in Malaysia or not, you need to understand land costs, particularly the economic potential in Malaysia with its diverse landscape. In this article, we’ll take a look at which states have the cheapest land for sale within our cohort of micro-electric vehicle founding states, by looking at pricing trends, type of land available, hidden fees, legal factors and financing options.

Overview of Land Pricing Trends

The prices of land in Malaysia are extremely divergent depending on where you are, economic activities at play and infrastructure development. Over the years, several trends have emerged:

• Urban vs. Rural

Now demand and availability are limited, caused by the higher cost of land in urban centres such as Kuala Lumpur and Penang. However, the land in the rural areas is much cheaper.

• Economic Zones

Land prices in States with thriving industrial or commercial zones usually creak upwards. For instance if you are in Johor, the price fluctuates because it is close to Singapore.

• Government Policies

Land prices in targeted areas are impacted by policies that give impetus for affordable housing and infrastructure development, such as the East Coast Economic Region (ECER).

• Foreign Investment

Land prices in areas that attract foreign investors like Iskandar Malaysia have shot up because of the international demand.

Costs by Land Types: Residential, Agricultural, Industrial

Different types of land serve distinct purposes, and their costs vary accordingly:

• Residential Land

1. 1. • Urban Centers: The country has some of its most expensive residential plots in areas like Kuala Lumpur and its neighboring state of Selangor where the prices start at RM300 to RM1,000 per square foot.
      • Affordable States: In states such as Kelantan, Pahang and Perlis the price for residential land in suburban or rural areas is as low as RM10 to RM50 per square foot.

• Agricultural Land

1. 1. • Pricing: Prices in rural states such as Terengganu and Sabah are generally cheaper for agricultural land that starts from RM5 per square foot. The price is affected by fertility, accessibility and proximity to the market.
      • Uses: Plantations, livestock and eco-tourism projects.

• Industrial Land

1. • Hotspots: Because their economic importance, premium price is commanded by industrial areas in Johor, Selangor and Penang.
   • Cheaper Options: Negeri Sembilan and Kedah’s industrial plots are more affordable, from RM20 per square foot to RM50 per square foot.

Hidden Fees in Land Purchases

When you buy land in Malaysia you will be hit with unexpected hidden fees. Here are some common expenses to anticipate:

• Legal Fees

Conducting a title search is a usual process of drafting Sale and Purchase Agreements (SPA) and it normally costs around 1–2 per cent of land value and back for legal services.

• Stamp Duty

This government tax is subject to a tiered calculation.

• 1% on the first RM100,000
• 2% on the next RM500,000
• a 3% on sums exceeding RM600,000

• Surveying Costs

Additional costs are charged if the land doesn’t have to be surveyed or subdivided.

• Infrastructure Costs

Expenses associated with utilities such as roads, electricity and water can be as large as bringing in utility services to an undeveloped plot.

• Zoning Changes

Rezoning fees and compliance costs are frequent when agricultural land is being changed to residential or industrial use.

Land Costs in Response to Legal Factors

Land purchase in Malaysia involves complexity which have got to do with the law. Understanding these factors is crucial:

• Land Titles

1. • Freehold: Perpetual freehold land ownership is more expensive.
   • Leasehold: But leasehold land, sometimes at a lower price, has to be renewed at the end of 99 years (or less) and can incur additional costs.
2. Bumiputera Reserve Land

But some plots remain for Bumiputera buyers only, limiting resale options while increasing competition.

• Land Use and Zoning

The zoning of the land needs to match what you want to use it for. It’s not guaranteed, and fees.

• Encumbrances

Check that the land is dispute free, caveated or has an unpaid quit rent to escape out of any legal issues.

• Environmental Regulations

The compliance with environmental laws may drive development costs for agricultural and rural land.

Land Buyers Financing Options

It may not be possible for everyone to buy land in a straight away. Fortunately, Malaysia offers several financing options:

• Bank Loans

As in land sales, the purchase of land will be mainly financed by most major banks offering land financing for up to 70% of the purchase price of the residential land. Borrower’s profile and bank’s policies determines which interest rates the bank will gladly offer you.

• Government Schemes

• Affordable Housing Schemes: These schemes sometimes involve land financing and are targeted at first time buyers.
• Agricultural Grants: Farmers can borrow money to buy agricultural land by means of grants, or subsidized loans.

• Developer Financing

In addition, some developers who build residential projects do offer in house financing as well with their own competitive terms.

• Private Loans

Loans are offered by private financiers or by cooperative societies, but usually at higher interest rates.

• Joint Ventures

But getting on the land can be more affordable through partnership with the investor, or even pooling funds from family members.

Conclusion

To navigate the Malaysian land market one has to first understand the pricing trend, what type of land it is, the Hidden Fees, Legal considerations and Financing options. Kelantan, Perlis and Pahang have some of the most affordable residential and agricultural plots, and Johor, Negeri Sembilan and Kedah present cheaper industrial land.

Buyers who stay in the know on the real estate market, as well as in other businesses for seeking professional advice, will be able to purchase a good lot for a good dream house, or for starting a business or setting up an agricultural project. The price of land is just the tip of the iceberg of land; think about its value as a potential, where it is located, and what other benefits you will have in the long run. Enjoy land hunting with our website by Chanel Agent for Aczeon Properties!