Capturing cross-border property markets
Laura Lee 
Developers and real estate agents have to do more than just market a property based on affordability and proximity to the Kuala Lumpur City Centre

MANY real estate practitioners have looked beyond our borders to cross-sell properties in other markets, especially to neighbours such as Indonesia.

However, they often fall short as they are unaware of the different marketing strategies and skill sets which are required to be successful overseas.

It also calls for a change in the mindset of Malaysian developers and real estate agents who have mainly been marketing their properties locally.

Rusmin Lawin, vice-president of Fiabci, the International Real Estate Federation’s Indonesian Chapter, and vice-president of Real Estate Indonesia (foreign affairs), says Malaysian developers and real estate agents must employ new methods to woo its biggest Asean neighbour.

“[They cannot use the] ‘come and buy in Malaysia as properties are cheap and in good locations such as the Kuala Lumpur City Centre (KLCC)’ tactic,” he says.


Right message

Rusmin says such methods will not work for Indonesians. “You have to send the [right] message to your Indonesian customers and not just tell them to buy properties in the KLCC area alone.

“This involves packaging your marketing campaign more effectively to show that you have properties in other parts of the country which are [also] attractive to invest in,” he says.

Geh says the marketing methods employed by the real estate industry in Singapore and Thailand are far ahead

Agreeing with him, Fiabci Malaysian Chapter vice-president Michael Geh believes it is time for “corporate Malaysia, especially developers who think they are big, to wake up”.

Developers and those involved in real estate have to restrategise how to market properties internationally, he says,

Geh says the marketing methods employed by the real estate industry in Singapore and Thailand are far ahead of those used in the country.

This included airport pick-ups and well-serviced junket tours to the properties for sale and their surrounding amenities, he says.

At the recent Asean Real Estate Network Alliance Convention & Exhibition 2017 in Kuala Lumpur, Deputy Finance Minister Datuk Lee Chee Leong urged real estate agents to look at both regional inbound and outbound real estate investments to help grow the economy.

He also encouraged them to reengineer and improve so that they will be on par with international standards.

Thai Appraisal Foundation president Dr Sopon Pornchockchai says good ethics and standards are required to conduct cross-border selling.

“[Only then can we] build our Asean standards to better our professionalism.”

Since the market in Indonesia is quite big, Rusmin, who is also secretary-general of Kuala Lumpur-based Fiabci Asia Pacific Regional Secretariat, says agencies should explore other potential prospects.

Acheh, Makassar in South Sulawesi, Bandung, Balikpapan and Surabaya where budget carrier AirAsia has direct flights to Kuala Lumpur are possibilities, he says.


Understanding Indonesians

“Culturally, Indonesians understand Malaysia very well,” he says, pointing out that the majority buy properties in the country for investment, and not to stay.

“The three reasons Indonesians come to Malaysia are for medical, education and investment,” he says.

Rusmin says the Malaysian real estate fraternity does not know how to promote and package its properties to his countrymen who are looking for investment opportunities.

“It is a pity”, he says, considering that the Indonesian market has an estimated growing middle-class population of around 80 million and an age group of 19 to 49 years with the capacity to buy or invest in Malaysian properties.

To capture this market, Rusmin says, it is important to understand Indonesians’ mindset and culture.

He says buying or renting a property in KLCC is not that expensive for the high net worth Indonesians as some areas in Jakarta cost far more.

For real estate agents who are marketing Penang properties, Ruswin encourages them to look at Sumatrans and try to extend their promotion and marketing reach to places such as Acheh, Medan, Padang, Riau and even Lampung.

“Immigration data says about 400,000 Indonesians go to Penang annually for medical tourism.

“Even those from Sulawesi now fly to Penang, bypassing Singapore because you have world-class doctors and equipment,” he says.

He says they frequent specialist hospitals in Kuala Lumpur and Penang such as Prince Court Medical Centre, Pantai Hospital and Institut Jantung Negara.

Where education is concerned, he says there are about 100,000 Indonesian students in the Kuala Lumpur area.

They study in tertiary educational centres such as KDU University College, Help University, and Limkokwing University, and stay in the surrounding areas.”


Clear strategy

Out of the over a million Indonesians working legally in Malaysia, Rusmin says about 200,000 are professionals.

“Some of them have their own businesses while others have children studying here.

“With Indonesians eyeing properties in Malaysia as an investment, those offering guaranteed rental returns and offer free stays of two to three weeks a year are most appealing,” he says.

Considering that Indonesian customers can be “very spoilt”, he suggests that Malaysian real estate agents not just try to understand the market better but also arm themselves with a consistent marketing strategy.

With 70% of multinational companies located in Kuala Lumpur, and given the city’s improved connectivity and ongoing infrastructural developments within the country, Rusmin believes the capital city is now much better positioned to compete with Singapore for foreign property purchases.

The Economist’s Intelligence Unit’s twice-yearly Worldwide Cost of Living survey says Singapore remains the world’s most expensive city to live in.

Rusmin asks, “What kind of properties can you buy for S$1 mil (RM3.1 mil) in Singapore today?”

In Malaysia, on the other hand, he says, “you can be ‘king’ in KLCC and even get to buy a condominium unit on the higher floors.”

And adding to the appeal for Malaysian properties is the ringgit falling to 3,197 rupiah this year, he says.

However, Malaysian developers and real estate agents have yet to capture the hearts and mind of Indonesian buyers and investors, and that is a key challenge.

Outdone by China’s aggressive marketing

INDONESIANS who are purchasing properties in Johor’s capital are generally buying into Country Garden Holdings’ Forest City flagship project.

Rusmin Lawin, vice-president of Fiabci, the International Real Estate Federation’s Indonesian Chapter, and vice-president of Real Estate Indonesia (foreign affairs), says it is due to the company’s aggressive marketing in Indonesia.

Many Malaysian developers also have good projects in Johor but Indonesian buyers are unaware of them, says Rusmin

“Once you touch down at Jakarta airport, you are confronted by their billboards. Every week they have a target to invite 100 people for the weekend where they treat their prospects to a meal before the sales pitch.

“They have a budget for this and their marketing efforts pay off,” he says.

In contrast, Rusmin observes that many other Malaysian developers also have good projects in Johor but Indonesian buyers are unaware of them.

“Indonesians still buy properties from Country Garden Holdings because when they compare the property prices to those in Singapore, they are still relatively cheaper.

“As far as they are concerned, they are only buying a holiday home here,” he says.

Rusmin feels Malaysian developers should know how to package their products with other amenities as foreign investors are not just buying a property but looking at the surrounding environment and lifestyle offerings.

Citing Iskandar Malaysia, he says, “You have Pinewood Studios, Legoland Malaysia, Puteri Harbour and Gleneagles Medini Hospital but many Indonesians are unaware of them.”

As the property investment scenario becomes more borderless, particularly in Asean and the Asia Pacific where cities compete against one another, Rusmin feels that adapting quickly to the changing environment is all the more crucial.

This article first appeared in Focus Malaysia Issue 256.