Property investors looking for relatively undervalued properties need not look much farther than neighbouring Malaysia, as developer Eric Lai discovered recently.

The chairman of Wise Asset Group was touring Phuket and Krabi to located land for development after successful sales of his Jomtien project - La Royale - when he stumbled on an opportunity in Pulau Langkawi, the biggest island off the northern Malaysian state of Kedah.

While most Thais may know Kedah was part of the Siamese kingdom in past centuries, the commercial building of Langkawi started quite late, at about the same time as Pattaya in the early Seventies.

Later, Kedah-born Mahathir Mohamad, the former prime minister, decided to make Langkawi a top destination, triggering a mini-boom a decade back.

As timing would have it, Lai discovered the 15-rai resort property at Perdana earlier this year. He decided to buy it with other investors, himself putting up the lion's share, seeing much potential for property prices to appreciate at the site.

"I found the Malaysian government's incentives to lure overseas investors included the waiving of capital gains tax and that Langkawi had the special status of a free port."

Lai, a veteran property player who set up base in Thailand in the Eighties, has a knack for identifying opportunities before others find them.

"Of course, the key is timing," he says. "That eventually determines the degree of success one has with an investment."

Lai believes Langkawi's time to boom again is coming soon. It is uncanny in that shortly after he bought the site, much positive news emerged.

Just this week, Malaysian Prime Minister Abdullah Badawi said he was injecting Bt80 billion into the economy by raising the wages of state workers by between 7.5 per cent and 35 per cent. Meanwhile, the ringgit rose to a six-year high against the US dollar - at 3.4 to the greenback.

"Even before our launch of Perdana Beach Residences, we have reaped a small windfall," he says with a laugh.

The feeling is almost deja vu, he says, comparing the energy of Malaysia today with that of Thailand in the late Eighties when Thai economic policies and a dynamic business climate gelled to make the country the most spectacular among Asia's "new tiger economies".

"I have a strong feeling that's happening in Malaysia today. Hopefully that will rub off on Thai destinations like Phuket and Krabi, that are linked to Langkawi as sister ports for the global yachting community," he adds.

Upon visiting Perdana for the first time, he was surprised because the site had all the qualities that can make it a prime residential site. It was clean, had good infrastructure and possessed a beachfront running more than 200 metres.

Constructed seven years ago, Perdana's three tower blocks rise five storeys and overlook a pristine, serene seafront. The project contains 126 freehold apartments and has many recreational facilities, such as a swimming pool, spa, restaurant, shops and vast walkways and gardens.

"Malaysia is embracing a progressive investment programme that is friendly to foreigners. It allows an unlimited foreign ownership quota of condominium properties such as Perdana. Foreign buyers who are 50 or older will obtain a 10-year visa when they buy property.

"These are reasons why I bought Perdana," he says. While property prices in the capital of Kuala Lumpur and major towns have appreciated, Langkawi lags behind. "But it is only a matter of time before the spill-over from the positive economic indicators fuel demand for undervalued real estate there."

Lai expects to refit all 126 units in the next 12 months. He is offering a two-bedroom apartment, with sizes starting from 100 square metres, for Bt5 million - or Bt50,000 a square metre.

The island has a good airport and is served by carriers such as Malaysia Airlines System and AirAsia. Another factor reinforcing Lai's confidence is the booming Kuala Lumpur stock market, where share prices have hit new highs.

These financial gains are bound to spill over onto real estate, while the boosting of state workers' income is also almost certain to pump a great deal of liquidity into the investment scene.

Langkawi already has three quality marinas and world-class hotels such as the Four Seasons, Westin, Sheraton and Dat Thai, he says. Like Phuket, it has beautiful beaches, but without the overcrowding.

"Sure, every investment carries risks," Lai says. "In the case of Langkawi, you need not be a genius to sense there's greater upside than downside."

Itthi C Tan

The Nation