Firstly, to our knowledge, no studies have specifically explored the location patterns and determinants of FIRP in Malaysia's real estate market.
Section 5 provides the theoretical understanding of foreign real estate investments (FREI) location and proposes various factors which could determine FIRP.
The following factors (based predominantly on the OLI theory, portfolio theory and following the client hypothesis) have been chosen as describing a model of the determinants of FIRP in Malaysia: infrastructure, foreign investments in other sectors, property prices, tourism, well-being of local people, religious diversity and minimum property purchase price.
It should be noted that the relationships between infrastructure, well-being of local people, and religious diversity, tourism agglomeration and FIRP are explained by locational perspective of OLI theory.
The FIRP data are from the Valuation and Property ServiceDepartment, Malaysia's Ministry of Finance.
Given the above, we expect a relationship between the level of infrastructure and FIRP.
Another hypothesis to be tested is the relationship between foreign investment in other sectors and FIRP.
Another determinant that is likely to have an impact on FIRP is the property prices.
We hypothesize that tourism agglomeration (learning about the host location) has a positive effect on FIRP.
Given above, it is expected that greater amount of FIRP are attracted to locations that have a higher level of well-being of local people.
Another important factor that would affect the locational patterns of FIRP in Malaysia is religious diversity.