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Crash&Carry

Overseas (Malaysia) friend's tale

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I lived in Malaysia for a few years (relatively recently), and was fortunate enough due to decent housing allowances from my employer (plus the ridiculously cheap rents by UK standards) to live among some v wealthy native Malaysians (majority Chinese rather than Malays). Many of them had invested in UK new build property at inflated prices. One chap who became a friend,  scared of the souring political environment in KL plus the depreciating ringgit had invested  his family wealth and leveraged heavily into London property, buying 4 off plan flats down in Battersea / Nine Elms . He like so many international investors saw London as a no risk safe haven for their cash and have fully swallowed the mantra that prices will go up evermore.  I doubt he did any proper research. Funnily enough - when I spoke to him over the last month - he is now openly admitting that the investment was not a good one and there's no chance in the foreseeable future of being able to get out evens let alone ahead if he needed the money back. There must be many like him who have brought PCL over the last few years who are now sitting on a loss. Many of these guys are of course v wealthy but nowhere near insulated from life. They need their investments in the not too distant future to pay for US college fees for their kids, ridiculously over spec weddings, caring for their parents in old age, over priced country club fees etc..They are different from the british homegrown BTL brigade but if PCL keeps dropping then some of these guys are going to take their losses and run and create a stampede which will increase the domino effect.

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7 hours ago, Crash&Carry said:

 One chap who became a friend,  scared of the souring political environment in KL plus the depreciating ringgit had invested  his family wealth and leveraged heavily into London property, buying 4 off plan flats down in Battersea / Nine Elms . He like so many international investors saw London as a no risk safe haven for their cash and have fully swallowed the mantra that prices will go up evermore. 

When did he do it? Souring political environment and depreciating currency seems to have applied to the UK for ages.

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10 hours ago, Crash&Carry said:

had invested  his family wealth and leveraged heavily into London property

Thank you for the insight here. I guess what strikes me is (if I'm reading this correctly), he borrowed in order to make this investment. Whatever the source of the money really was, that will, I think, appear as a "cash purchase" from a British perspective.

Do you have any idea whether leveraged investment from Malaysia (as opposed to investing actual cash) is very prevalent? Also, who is lending money to pay for overseas property, and on what terms?

If the intention is to diversify out of a local political risk, then putting your hand into a Malaysian financial vise (rather than secreting away money you already have) doesn't sound the most sensible choice.

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I too have some Malaysian connections and it is surreal to see adverts for london property over there.  It's not a currency exposure I'd be keen to put myself on the hook for.  I vaguely considered investing the other way a few years back as a retirement bolthole, but the price of houses compared to local salaries seemed nearly as insane as over here. 

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Can't say I have any sympathy for the OPs friend. He is depriving UK citizens of buying those homes.

Malaysia is a beautiful place - and if you are wealthy it's a great place to live. It also offers great affordable retirement programmes for UK citizens post Brexit - one of the few nations which drive on the left and where English is relatively widely spoken that does.

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