Investment property in Malaysia comes in many different forms. There are residential, commercial, retail, industrial, and REITs. Read more to understand the different types of investment property in Malaysia before investing.

1.0 Residential Investments

Residential investments are among the most popular type of investment property in Malaysia. Residential properties are usually rented out to tenants and thus provide a steady stream of rental income. They also benefit from capital appreciation when you sell them off in the future.

The rental income from residential properties is usually stable and predictable, and the existence of the Housing Development Act Malaysia (HDA) that protects buyers makes investing in them less risky than other types of investment properties such as commercial or industrial properties. You can read here for some helpful tips before investing into this type of property.

We classify residential properties into 5 types: Terrace houses, Apartments, Condominiums, Bungalows, and Townhouses.

Terrace House
Terrace houses can be built as low-rise (1-storey) or high-rise (2-storey) and are situated on a terrace or flat platform. The term terrace house is usually used to describe homes built in rows of two or more storeys.
Apartments
They are usually located in high-rise buildings and consist of smaller units with a shared kitchen and bathroom. They may come with a balcony or a terrace, depending on your budget and the building's amenities.
Condominiums
Condominiums (condos) are residential units that have been divided into separate properties but share certain common areas like swimming pools, fitness centers, and parking lots. Condos are often marketed as luxury homes that offer better facilities than apartments.
Bungalows
Bungalows have large verandas or porches and are usually built as detached units on large plots of land.
Townhouses
A townhouse is a multi-level dwelling typically attached to other townhouses on either side. This concept offers the privacy of a single-family home with an apartment complex's amenities and social aspects.

2.0 Commercial Investments

Commercial properties, including retail stores and office space, are used for business purposes. These properties with a commercial land title are usually leased out to companies or small business owners and often have long-term leases. This can lead to a more stable cash flow, even when market rental rates decline.

When investing in commercial properties, it is essential to consider the higher upfront capital outlays. Unlike residential properties, commercial properties usually have a lower margin of financing, at 70% to 80%.

Commercial property investments typically require a more substantial holding power, as commercial units are highly dependent on the occupancy rates of the building/shop lots, the surrounding township, public transportation efficiency, and the quality of building maintenance. The highlight of commercial investments is that tenants typically bear the costs of utilities and management fees. Tenants are also generally responsible for any defects or maintenance issues within the property.

In this list, we categorise the following as commercial investment property:

Office buildings
SOVO: Small office versatile office
SOFO: Small office flexible office
SOLO: Small office lease office
SOSO: Small office smart office

3.0 Retail Investments

Retail property investments are similar to commercial property investments but with different mechanics and prime locations. Retail properties are shop lots usually located in malls or other retail storefronts.

In some cases, landlords receive a percentage of profits from tenants and base rent to keep the property in top condition. This investment is a combination of property and business investments.

4.0 Industrial Investments

Industrial investment property refers to real estate used for industrial purposes, including warehouses, distribution centres, storage units, and other specialised properties. These investments usually offer a higher income level than residential or commercial properties, but they also come with more risk.

For this reason, working with a specialised professional is essential when considering an industrial real estate investment.

5.0 Real Estate Investment Trusts (REITs)

REITs are a type of property investment that allows you to invest in real estate without having to buy or manage the property yourself. REITs are bought and sold similar to the stock market and are a popular investment for many people. There are many variations of REITs, which can be a great way to invest in real estate.

For example, you have the option to invest in hotel REITs if you want to own hotels.

The disadvantage is that you do not actually own the said property and have little or no decision-making power in how the whole piece of property is to be run or managed. Hence, getting financing or bank loans is often tricky as it is viewed just like a typical common stock.

The type of investment property in Malaysia varies depending on the investor's goals. Whatever the goal, there is an investment property in Malaysia that can fit the bill. Read more to learn how to invest in properties here.