Country houses for sale

Property Blog: Ethical Investment

So I was distractedly flicking through the property pages of the Evening Standard last weekend when their lead headline really caught my eye. ‘Beach candy,’ it said. ‘Brits can now buy in exotic Borneo.’

This is about the fourth or fifth piece I have seen on Borneo, the large, orang-utan peppered island split between Malaysia, Indonesia and Brunei, over the last month.

Malaysian Borneo?which occupies most of the north of the island and falls into the states of Sarawak, to the west, and Sabah to the east?clearly is all the rage these days. This is partly because it is a beautiful region within a fairly established economy, partly because the Federal Malaysian government is actively trying to attract foreign owners with their Malaysia: My Second Home initiative, and partly because two well-marketed developments?Nexus Residence and the Kudat Riviera, both in Sabah?have recently brought it to the spotlight.

I have always had a thing for Borneo, ever since reading The Pirates of Malaysia series by Emilio Salgari, an Italian turn-of-the-century writer, who fictionalised the story of Sir James Brooke’s rule in Sarawak and his fight with local pirates (who were the good guys in Salgari’s books). My mind is full of its blood-red dawns, the mountains of water glittering under a lightning-ravaged sky, the monkeys squawking high up in the rainforest.

Nevertheless, my gut reaction was: Borneo? Are you insane? I’d have ethical nightmares at blowing more money on a Borneo house than the local families earn in a lifetime.

But then I reconsidered. Whoever has this kind of capital will invest it anyway, whether in Borneo property or elsewhere. What’s the advantage to the Borneans if international investors avoid buying Borneo on ethical grounds, and buy in France instead? Wouldn’t it be more beneficial if some of that investment money actually found its way into the Borneo economy?

There should be some regulations, of course. International efforts should go towards ensuring that developing countries (and developed ones!) introduce sound property laws to prevent locals being priced out of the market and tie new developments to respecting local landscape and environment.

Malaysia, as it happens, does have this kind of law?foreigners must open a fixed deposit account in a local Malaysian bank, and can only buy up to two properties, which can’t cost less than RM 150,000 (about £21,700) each, with the minimum price going up to £26,100 in Penang, Malacca and Johor, and £50,600 in certain areas of Sarawak. And some local developments, such as the Kudat Riviera, have shown a degree of eco-sensitivity.

Ethical buyers looking at developing countries can also vote with their wallet, choosing environment-friendly developments that are committed to creating sustainable communities by building much-needed infrastructure and employing local workforce at decent wages. And once they own a second home, they can patronise local businesses and spend their money on local products.

Although other problems remain open?chief among all, those of empty beds, where communities that are popular with second home buyers, particularly far-flung ones, can sometimes turn into ghost towns during the low season?this applies to second home ownership everywhere, whether in Borneo or Canada, or to Americans buying in Britain, France and Italy. It can be contained through adequate taxation, which brings fresh revenue to local governments, and suitable property laws limiting the number of second homes in a given community.

The more I think of it, the less I can find a reason to eschew Borneo but buy in, say, Italy or France. It does save rubbing everyone’s nose in the staggering difference in wealth between developed and developing countries, but it doesn’t help the developing countries in the same way as an influx of fresh foreign cash would.

Now I suspect this makes me?a one-time leftie?worryingly pro-global?