Investors must beware of these 3 growth risks in Iskandar, Malaysia

Will the Malaysian government tighten foreign investments?

According to UOB Kay Hian, the Iskandar Malaysia (IM) theme is exepcted to gain further momentum, driven by robust foreign and local participation. However, UOB also outlined some possible risks that could obstruct IM's growth.

Here's more:

Entry of more speculators may raise concerns. It is only natural for a property boom to attract strong participation from speculators. In IM’s case, the speculators are mostly from Singapore (the buyer mix for IM properties is now slanting towards 50:50 between Malaysians and foreigners) given the currency advantage over the ringgit.

However, speculators who buy high-end properties usually have the ability to hold on to their property investments. At this juncture, we notice the high-end segment has cooled off compared with two years ago. 

Political risk exists but minimal. The fear of change in administration in Malaysia remains a risk and could impede IM’s growth. However, we reckon the risk is minimal as we believe the growth of IM remains the key priority of any government administration, as track record shows strong committed FDIs in IM. 

More tightening policies from Bank Negara. Further tightening policies would dampen buying interest, which could lead to a fall in asset prices.  

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