KUALA LUMPUR, Nov 15 — Malaysia is among countries with the fewest barriers against the increasingly voracious foreign appetite for property in the region, according to a report by property consultant Knight Frank.

In its Global Development Insight for the third quarter of 2013 released yesterday, Knight Frank noted Malaysia’s “minimal restrictions” to foreign ownership of property even as Asian nations heightened defences against the expected rise in demand for prime residential real estate, especially in the new-build sector.

“As governments across Asia-Pacific introduce a number of restrictions for non-resident foreign purchasers of residential property, they are trying to strike a balance between giving domestic citizens an affordable stake in their country while still attracting high value international investment,” the property consultant said in a statement accompanying the report.

In its analysis of restrictions put up by Asian countries, Malaysia, Singapore and Hong Kong were identified as the least restrictive, with no restrictions other than price limits or higher duties; Malaysia only sets a RM500,000 price floor on foreign purchasers.

This contrasted with other countries that either set limitations on foreign ownership such as Cambodia and Thailand, or completely prohibited non-residents from owning residential property as is the case in both Indonesia and China.

China’s buyers were also identified by the research as the most influential buyer nationality in the prime new-build sector, which took into account the buying habits of high net worth individuals (HNWI) around the world.

“As well as being the top purchasers of new-build residential property in Sydney and Hong Kong, Chinese buyers are active in both Kuala Lumpur and Bangkok’s prime new-build markets,” said the report.

Second to the Chinese were Singaporean investors, who together with Russian, British and American counterparts rounded out the top five, according to Knight Frank’s estimation; neighbouring Indonesia was seventh in the list.

Last week, US daily Wall Street Journal also reported that Chinese investors were increasingly setting their sights on property in Malaysia and other “second-tier” areas as they went in search of bargains, after having cut their teeth on prime locations such as London, UK.

“Middle-class Chinese are now going to second-tier cities... These places offer higher growth opportunities because more people are doing that now,” Thomas Lam, head of research for Greater China at Knight Frank, was quoted by the WSJ as saying.

In the Global Development Insight, the property firm noted that Malaysia was the second-preferred target for Singaporean and Indonesian investors, with the latter specifically favouring Kuala Lumpur residences.

When tabling Budget 2014 last month, Prime Minister Datuk Seri Najib Razak proposed the doubling of the Real Property Gains Tax (RPGT) to 30 per cent for real estate sold within three years from purchase and an increase in the minimum price of property open to foreigners from the current RM500,000 to RM1 million.

Late last month, Knight Frank Malaysia noted that increasing the floor price for foreigners may discourage speculators, leaving only genuine foreign investors buying properties in Malaysia.

But it also said the doubling of the threshold to foreign investors was unlikely to slow the growing appetite for Malaysian property.

“Raising it from RM500,000 to RM1 million, however, is not a big issue... What they buy is easily above RM1 million,” said Sarkunan Subramaniam, managing director of the firm’s Malaysian branch.

Foreigners are among the factors blamed for spiralling property prices in Malaysia that have left homes increasingly beyond the reach of average wage earners and leading to fears of a possible “homeless generation”.

Rising home prices have also forced Putrajaya to take steps to address public complaints and commit to building more “affordable homes” to cater to low and medium-income households.