Johor second half outlook positive

Sweetener: Johor Baru’s close proximity with Singapore has attracted buyers to properties in Iskandar Malaysia.

The outlook for the Johor property market is likely to remain positive in the second half of the year based on the number of property transactions taking place in the state.

Johor Real Estate and Housing Developers Association (Rehda) branch chairman Simon Heng says its members who took part in the Malaysia Property Expo (Mapex) events recorded a 15% increase in sales.

Some 33 developers who participated in the four-day event held in last November raked in RM331mil in sales over a one-month period and the figure jumped to about RM384mil in Mapex held in May 2011.

“Our members reported better sales in the first half of the year and expect the momentum to continue in the second half of 2011,'' Heng says in an interview with StarBizWeek.

The 30-day period starting from the first day of Mapex is the benchmark used by Rehda to determine the value of sales by participating developers. There were several contributing factors that drove demand for properties in the Johor property market this year especially in the Johor Baru district.

As the pulse of the state, the Johor Baru district has the highest concentration of Johor-based and non-Johor-based developers compared with other districts such as Batu Pahat, Kluang, Muar and Segamat.

Price uptrend

“Many property buyers in Johor Baru are anticipating prices of properties will rise and have decided to make their purchase before the prices escalate again,'' says Heng.

He says the economic recovery meant that consumer confidence was returning after a two-year low period following the global recession sparked off by the US subprime crisis and European financial woes in 2008 and 2009.

Iskandar Malaysia, Heng says, is another main factor that contributed to the positive growth in the Johor Baru property market as it helps to boost demand for houses in the area.

Prior to the inception of Iskandar Malaysia in November 2006, demand for high-end residential properties was best described as lacklustre, but now demand for such properties is on the uptrend. It is common to see developers with projects in Iskandar Malaysia selling their double-storey link-house from RM350,000 up to RM450,000 each. The units are selling like hot cakes.

“Shophouses are also selling well and reports from our members show that a lot of buyers from Kuala Lumpur are buying the shophouses as investment,'' he says.


Heng: ‘Shophouses are also selling well.’

Heng says many of the buyers consider prices of shophouses in Johor Baru are much lower than those in Kuala Lumpur and that they would make good investments in view of the development taking place within Iskandar Malaysia.

Iskandar Malaysia covers 2,219 sq km located in the southernmost part of Johor and divided into five flagship development zones the Johor Baru City Centre, Nusajaya, Eastern Gate Development, Western Gate Development and Senai-Kulai.

Heng says even prices of properties in the Senai-Kulai area, on the northern part of the Johor Baru district which was one described as “hulu” or remote, are going up due to better accessibility and connectivity. A single-storey terrace house at Bandar Putra Kulai by IOI Properties Bhd launched in June 2010 was priced RM130,000 each and sold for RM200,000 in June this year. The two-storey link house in the same housing scheme which was sold at RM189,00 a unit in June last year, was going for RM269,000 each in June this year.

“Iskandar Malaysia is now gaining momentum with many ongoing projects by both the public and the private sectors at several stages of development,'' says Heng.

He says the completion of the New Coastal Highway, the Eastern Dispersal Link Expressway and the Southern Link next year would improve accessibility and connectivity within Iskandar Malaysia; hence help to push demand for properties.

The Kempas-Tebrau, Mount Austin, Nusajaya and Kulaijaya areas are expected to be the property hot spots with several projects to be launched within the next one to two years.

Investment boost

Meanwhile, KGV International Property Consultants (M) Sdn Bhd director Samuel Tan Wee Cheng says the property sector constitutes 30% of the total committed investments while the manufacturing sector makes up about 40%.

He says although the Iskandar Regional Development Authority (Irda) wants the services sector to be the forefront, the manufacturing and the property sectors are still the main contributors to the cumulative investments in Iskandar Malaysia.

Irda chief executive officer Ismail Ibrahim says that as of June 2011, Iskandar Malaysia has received about RM95bil in committed investments, up from RM73bil in the first quarter of the year.

He says that while Iskandar Malaysia is a main factor that pushed demand for high-end properties, the stakeholders must ensure that buyers who could not afford them are not left out.

“It is good for developers to be able to sell high-end properties especially to foreigners but we need to have a balanced approach to ensure locals are not sidelined in the name of progress,'' says Tan.

Rising demand

He says demand for properties in Johor Baru was up in the first half of the year as many prospective buyers missed the opportunity to buy the properties at lower prices due to the 1998 and 2009 economic recession.

Typically, buying a property would be the last option most people would consider committing to during economic uncertainties given concerns over job security.

“The moment the economy starts to show signs of recovery, those who missed the boat earlier will invest in properties as properties are always a good hedge,'' he says.

Tan says confidence in Johor is now at all time high especially with the progress made by Iskandar Malaysia since its inception five years ago, although many are sceptical in the early days on whether it would take off successfully.


Tan says the property sector constitutes 30% of total committed investments.

He says that as the Government-backed economic growth corridor in the country, Iskandar Malaysia has strong backing from the Government in terms of funding for infrastructure development projects.

“Road upgrading and new road projects within Iskandar Malaysia will improve accessibility and connectivity and buyers will look at other locations which were previously unpopular,'' says Tan.

For instance, Rawang and Shah Alam in Selangor used to be out of the radar among property buyers in the Klang Valley but now, buyers are flocking there as better infrastructure has turned them into preferred locations.

Tan says foreign investors, who were largely interested in Singapore and the Klang Valley, are also gradually turning their gaze to Iskandar Malaysia. A definite sweetener is Johor Baru's close proximity with Singapore which has attracted buyers especially Singaporeans to properties in Iskandar Malaysia. “Like it or not as close neighbours, Johor and Singapore complement each other in economic activities due to a long history of economic interdependence,'' says Tan.

With the republic's investment arm Temasek Holdings showing its serious commitment to invest in Iskandar Malaysia, more Singapore property players such as Mapletree and CapitaLand would likely invest in the property sector here.

Tan hopes that the Government will take a proactive step to correct the misconception that Iskandar Malaysia is Nusajaya as there are other areas that need equal attention in terms of infrastructure projects and investment flows.

By The Star