In a recent Equity Beat report on the Johor property sector, the research house noted that most key developers continued to have a strong presence in the state with gross development value ranging from RM400mil to RM5bil.
It identified the state’s land availability and close proximity to Singapore as the two main contributing factors, adding that demand for residential properties in Johor could continue to stay healthy in the immediate term.
However, the report also cautioned the downside risk would be steeper than expected in view of the hike in interest rate and a hiccup in the recovery of both Malaysia and Singapore’s economy.
“Actually, there is a combination of several factors and the key one is Iskandar Malaysia which is a big boost for Johor’s property sector,” SP Setia Bhd executive vice-president (property division – northern and southern region) Chang Khim Wah told StarBiz.
Chang Khim Wah ... ‘Iskandar Malaysia is a big boost for Johor’s property sector.’
He said Iskandar Malaysia was gaining momentum with an influx of local and foreign investors since its launch on Nov 4, 2006.
It had received RM55.56bil in cumulative investments up to end-2009, of which 60% were foreign direct investments.
Some investors had already commenced work on the ground and created some 44,000 jobs.
Chang said Iskandar benefitted the property sector as it raised the standard of residential properties and property developers had to deliver quality products.
He said house buyers in Johor Baru now demanded well designed homes with quality finishing.
“Property developers here cater for both locals and foreign buyers (Singaporeans) and must be able to meet their expectations,” said Chang.
He said economic recovery on both sides of the Causeway offered good opportunities for developers here as demand for properties normally grew in tandem with the economic growth.
Chang said SP Setia’s four ongoing projects in Johor – Bukit Indah I & II, Setia Indah, Setia Tropika and Setia Eco Gardens – would keep the company busy for eight years.
Samuel Tan Wee Cheng ... ‘The Federal Government should review the new ruling.’
Meanwhile, KGV-Lambert Smith Hampton director Samuel Tan Wee Cheng said developers had not really taken advantage of Johor’s close proximity to Singapore.
He said developers should look at Singapore’s permanent residents and expatriates based there as their potential buyers.
“It is a well-known fact that Singapore’s cost of living is among the highest in Asia and private properties are beyond the reach of average Singaporeans,” said Tan.
He said the opening of Singapore’s integrated resort in Sentosa last month and Marina Sands Resorts next month would contribute to the escalating living costs in the republic.
Tan said most Singaporeans wanted to upgrade from the Housing Development Board flats to private properties especially landed ones but could not afford to do so, as such properties were extremely expensive.
He said developers should take this opportunity to attract these Singaporeans to buy properties in Johor Baru and with the strong Singapore dollar, they could get their dream houses here without burning holes in their pockets.
Tan said thousands of Johoreans and locals from other states who worked in Singapore but stayed in Johor Baru also offered market potential for developers.
However, he said frequent changes in the state’s housing policies from the RM100,000 levy imposed on foreigners and only allowing foreigners to buy properties worth RM250,000 onwards had dampened growth in the property market here.
Tan said the recent ruling doubling the price of property from RM250,000 to RM500,000 for foreign buyers would further depress the Johor property market after almost two years of slowdown.
“The Federal Government should review the new ruling. It is okay to impose that for properties in the Klang Valley but not outside it,” he said.
Tan shared Chang’s view, saying that Iskandar helped boost demand for high-end residential properties in the Johor Baru district, especially in Nusajaya.
He said the ongoing Legoland Theme Park, Indoor Theme Park, EduCity and BioXCell Biotechnology Park in Nusajaya would also create demand for houses here.
Tan said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway, Senai-Pasir Gudang-Desaru Expressway would improve travel time and connectivity in the southernmost part of Johor.
He said with improvement in connectivity, buyers would be looking for houses in Mount Austin, Tebrau, Skudai, Senai and Kulai areas.
KSL Holdings Bhd executive director Ku Hwa Seng said the Johor government should play a more active role in promoting the state as the preferred investment destination.
Ku Hwa Seng ... ‘We are looking for more land especially in Iskandar for future development
He said even though property development was driven by the private sector, developers needed commitment from the government agencies and departments for growth.
Ku said the state government could open up more land for industrial activities to attract more Singapore-based companies, especially the small and medium enterprises, to relocate their operations to Johor, where land prices and cost of doing business were lower.
He said although land prices in Johor were becoming more expensive, this would not stop developers including those from the Klang Valley from coming here.
“We are looking for more land especially in Iskandar for future development,” said Ku.
KSL’s four ongoing projects in Iskandar – Taman Nusa Bestari, Taman Bestari Indah Ulu Tiram, Taman Kempas Indah and KSL City – will keep the company busy for the next eight years.
By The Star
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