• Buying Commercial Property in Malaysia: A Complete Guide

    Posted on 11 Comments


    Do you plan to buy property in Malaysia?
    Click here to get in touch with an experienced agent

    I’ve already written a complete article about how you can buy residential property in Malaysia as a foreigner.

    Buying commercial property is less spoken about, especially in the media, but it can bring you great returns and yields.

    The regulations differ a bit from buying residential property. There are also some key considerations you need to understand before buying, for example, the difference in the importance of location.

    In this article, I explain how it works when buying commercial property in Malaysia, one of the most developed countries in Southeast Asia.

    Can foreigners buy commercial property in Malaysia?

    Malaysia is famous for being one of the most foreign friendly countries when it comes to buying property in Asia.

    You have no particular restrictions to buy residential property and commercial property, you only need to deal with some minimum investment requirements. Not to forget, there are also some land types that are reserved for Bumiputera only.

    When it comes to buying commercial property, the minimum investment requirements don’t apply to the whole of the country, but in places where the buying pressure is slightly higher, like in Kuala Lumpur.

    Even if foreigners generally can’t get hold of Bumiputera reserved land or agricultural land, you have a number of other land types available.

    What kind of commercial property can I buy in Malaysia?

    As explained in my article about buying commercial property in Hong Kong, you can normally buy commercial property in any of the following categories:

    • Office
    • Retail
    • Industrial

    Let’s have a look at each one of them.

    Buying office space in Malaysia

    You have two different options when buying office in Malaysia: Going for a strata-titled property, or a property with an individual title.

    The first option is generally a bit cheaper.

    You can find a number of interesting units in places like KL, a city that continues to expand and grow economically. Being a top tier city worldwide, prices are still significantly lower, something we’ve seen for residential property as well.

    Office prices in the prime areas go for almost as little as 10% (!) compared to Hong Kong, and where rentals are also significantly cheaper.

    Deciding whether to buy or lease office space depends highly on your goals. Maybe you’re an investor who simply looks for capital gains, or a business owner who’s been renting for a couple of years and want to buy.

    Below I’ve included some pros & cons when buying and leasing.

    Pros of buying an office instead of leasing
    • You can enjoy the capital appreciation
    • You can deduct costs for maintenance and taxes
    • You can rent out the office space and earn rental incomes
    • As mentioned, office spaces are cheap in Malaysia
    • Higher rental income
    • Longer lease period
    Cons of buying an office instead of leasing
    • Relies heavily on the economic climate
    • Not very liquid
    • Higher interest rates
    • The problems of moving to a new office quickly, if your company outgrows the old office
    Interesting areas to buy office space in Kuala Lumpur

    Kuala Lumpur is the financial heart of Malaysia and where most commercial activity is going on. Not surprisingly, it’s also growing the fastest in the country. Therefore, many investors find this place the most interesting.

    Some areas you should have a look at in KL include:

    • KL Sentral
    • KLCC
    • Bukit Bintang
    • Mid Valley City
    • Tun Razak Exchange (TRX)

    Johor Bahru also grows fast and will be increasingly interesting. Both KL and Johor Bahru will be directly connected with Singapore within a short future. Just keep in mind that prices might fall, as there’s been an outspoken oversupply, especially in Johor.

    Buying retail property in Malaysia

    Buying a retail property is significantly different compared to buying residential property. The same as it goes with office spaces, retail property is highly relying on the economic climate.

    A downturn in the economy might result in lost income, forcing you to leave.

    Also, in comparison to buying a residential property, you normally want to buy in locations where there’s many people in circulation. Congested areas might not necessarily be an issue when buying retail property, but something you want to avoid when buying residential property.

    The same as it goes with office spaces, there’s currently an oversupply of retail property, at least in the major cities. The growing e-commerce industry should be taken into consideration if you decide to sell retail products in physical stores.

    Buying industrial property in Malaysia

    Buying industrial property has become a new trend in Malaysia, especially among wealthier investors. There a numbers of reasons:

    • Industrial activity is increasing. With the weak ringgit, the demand for exports increase. The local population will also increase much the coming decades, driving up the demand for local products
    • The competition for industrial property is lower, as prices are generally higher
    • Tenants are often serious and determined to lease industrial property for a longer time period. It’s not strange, as there’s not a small amount of time, money and work needed to set up the facilities and inventories
    • Industrial property is scare in comparison with other property types
    The importance of location when buying industrial property

    The same as it goes with retail property, the location is of high importance when buying industrial property. A key consideration is to buy close to harbors or airports to reduce hauling costs.

    These costs are determined based on the distance to your premises, from the airport or harbor. The height from the floor to the ceiling and the space of the facility should also be studied well in advance.

    Getting a loan when buying commercial property in Malaysia

    It’s possible to get a loan for commercial property, but the requirements and down payments are generally tougher. The scrutiny is more thorough and will highly impact the bank’s decision whether to give you a loan or not.

    Some items that banks take into consideration before lending for commercial property include:

    • What type of property you plan to buy
    • Why you want to buy (business purpose)
    • The location of the property
    • The floor which the property is located on
    • Others

    Worth mentioning is that it’s significantly easier to get a home loan in case you have the so called MM2H visa or work and reside in Malaysia. The following steps are included when applying for a loan as a foreigner:

    Do your research and find a handful of banks who are willing to offer you a loan. Compare the different options and what suits you best (including repayment period, interest rates, just to mention a few).

    Process when applying for commercial property loans in Malaysia

    • Prepare the documents needed, usually involving proof of identity (passport), proof of your residential and legal status in Malaysia, financial proofs and more
    • Get an approval in principle, which will make sure that you have your finances covered. The last thing you want to do is to bid on a property without being backed financially
    • Prepare the initial deposit, usually set to 2-3%. This will be used as evidence to the bank that you want to proceed with your purchase
    • Continue the payment of the instalments and be prepared to pay an additional 7-10% of the sales amount before signing the Sales & Purchasing Agreement (SPA)
    • Finalize the mortgage and the remaining payments within 3 months

    Commercial property loan calculators in Malaysia

    Many people seek convenience and look for so called loan calculators online. These tools can easily calculate different rates from banks with just the click of a button.

    Some websites that offer this kind of online tool include:

    • Realproperty.my
    • Calculator.com.my
    • Propertyguru.com.my

    You can try to use the tools on each website and see what’s best for you.

    Commercial property taxes in Malaysia

    The same as it goes with residential property, you need to pay a number of taxes when buying, holding or selling commercial property. The taxes are very similar, even if the rates might differ. Below I’ve listed property taxes you need to pay.

    Stamp duty

    The stamp duty increases progressively as follows:

    RM 0 – 100.000 = 1%
    RM 100.001 – 500.000 = 2%
    > RM 500.001 = 3%

    You normally need to add a legal fee as well, ranging between 0.4-1%.

    GST (Goods and Services Tax) for commercial property

    The same as it goes for commercial property in Singapore, Malaysia has a so called Goods and Services Tax (GST). You need to pay GST in case you fall under any of the below descriptions:

    • You have more than 2 commercial properties
    • You have more than one acre of land
    • The market value of your properties exceed RM 2 million (around USD 500.000)


    Your taxable supply exceeds RM 500,000 during the actual month and the following eleven months.

    Quit rent

    Quit rent is only charged to landowners once a year, but the amount is negligible and around USD 10-20 USD/year for residential property. The rate is USD 20 – 50 for commercial property.

    Assessment tax

    I’ve already explained about assessment tax in my separate article about buying residential property. The assessment tax is similar to property tax and paid annually. The rate is 4% for residential property and around 10% for commercial property.

    Real Property Gain Tax (RPGT) for commercial property

    Capital gains tax is referred to as RPGT in Malaysia and differs depending on your holding period and whether you buy residential or commercial property. Your residential status will also affect the rates that apply.

    RPGT increases progressively as follows for commercial property:

    • If sold within 3 years: 30%
    • If sold before 4 years: 20%
    • If sold before 5 years: 15%
    • If sold after 6 years: 5%

    How can I find commercial property in Malaysia?

    You have a number of real estate agencies and listing sites to choose among if you want to buy commercial property. Some of the most popular listing sites include:

    • iProperty
    • Commercialguru
    • Knightfrank
    • Edgeprop
    • JLL


    You have a number of advantages when buying commercial property. Neither is the market as competitive as the residential ditto, capital appreciations and rental incomes are also generally higher.

    But the market is also more volatile, relying more heavily on the economic climate. A downturn in the economy might result in difficulties to keep the property. This is something banks understand, a reason why it’s generally more difficult to get mortgages for commercial property.

    You need to pay similar taxes, the only main difference is the GST, which applies to commercial property. The tax rates also differ, for example the stamp duty.

    Most commercial activity is in Kuala Lumpur, Johor Bahru, Penang, but not excluding, Melaka and upcomers like Ipoh and Kota Kinabalu, where commercial activity increases steadily.

    If you want to know more about buying commercial property in Malaysia, I recommend you to read the whole article.

    Want to buy property in Malaysia?

    Fill out the form to get in touch with a real estate agent

    11 Responses to “Buying Commercial Property in Malaysia: A Complete Guide

    1. Emily Yap at 4:12 am

      Can individual name foreigner buy commercial office in Kl ?

      1. Marcus Sohlberg at 4:59 am

        Hi Emily,

        I’m not sure if i understood this question correctly. Do you want to know whether foreigners can buy commercial office in KL?

        If that’s the case then the answer is yes.

        1. Ms Jasmine at 8:16 am

          Hi, good day.

          Can foreigner buy commercial property (3 Storey Shop Office) under strata title in Malaysia?

      2. GraceWong at 4:54 am

        Hi Emily, i believe your question is whether an individual can buy a commercial property under his/her personal name , right? answer is yes.

    2. Ryan Pasupathy at 12:42 am

      Cool guide, was looking for some information on financing as well actually. Do you know what the financing is like from banks for buying commercial properties?

      1. Marcus Sohlberg at 4:54 am

        Hi Ryan,

        I’ve written a couple of articles about financing in Malaysia some time ago. But these articles focused on property loans available to foreigners buying in Malaysia, and overseas property loans for Malaysians buying overseas.


        1. Ryan Pasupathy at 3:33 pm

          Thanks Marcus! Appreciate the links!

    3. Stephanie Wong Hui Suen at 2:02 am

      I was told that Foreigner(S’porean) can only purchase 3 storey shoplot in Malaysia?

      1. Marcus Sohlberg at 3:51 am

        Hi Stephanie,

        Interesting. Do you have a link/source? I assume this is only valid for shop lots?

    4. abit at 2:59 pm

      This is probably a scam by msians to con Sgpn.
      There is no such rule as far as I know.

      1. Cotek at 3:34 pm

        Checked, not allowed and have price floor.
        It is stupid to invest in this country.
        Don’t get conned.

    Leave a Reply

    Your email address will not be published. Required fields are marked *