Personal, telephone and email interviews with property consultants in Kuala Lumpur, Johor and Singapore say most of the foreigners who buy into Iskandar Malaysia are Singaporeans, which developers in Johor confirm.
Singapore-based Jones Lang LaSalle head of residential project sales David Neubronner says the physical proximity to the city state is a huge attraction, when compared with buying properties in Kuala Lumpur city or Penang. A drive to Kuala Lumpur will take between four to five hours and to Penang island another three to four hours.
“It is a case of picking at the low hanging fruits as there is the perception that the growth corridor, which is about an hour’s drive away, and relatively cheap to enter, is a new horizon with vast potential and opportunities. There is the perception that over time, values will multiply,” says Neubronner.
They have heard how the pioneer investors in Horizon Hills and Leisure Farm, who made their investments five to six years ago, have reaped hefty profit and enjoyed price appreciation in the property.
Johor-based KGV International Property Consultants (M) Sdn Bhd director Samuel Tan Wee Cheng says the yield factor is not a major criteria for them.
“It’s capital appreciation they are after as that project is a 20-year plan.”
Location matters a lot and properties located at Nusajaya with their contemporary designs have generated a lot of attention. The same goes for waterfront projects.
“The higher cost of living in Singapore has resulted in some Singaporeans relocating to Johor. The common cultural and language platforms between the two countries have also played an important role,” says Tan.
Among the Japanese, Malaysia, which is free from natural disasters like earthquakes and typhoons, is a great attraction.
Tropical Resort Lifestyle (MM2H) Sdn Bhd managing director Ishihara Shotaro says Japanese interest has been particularly good after the March 2011 earthquake and tsunami, especially for those below 40 years old as Iskandar Malaysia has a 10- to 15-year timeframe to be developed.
Shotaro promotes Malaysian properties among the Japanese and is also involved in the Malaysia My Second Home (MM2H) programme.
Most of the major highways are operational. Among them are the Southern Link, Senai-Desaru Highway, EDL and Western Coastal Highway. There are also many interchanges and flyovers constructed to ease traffic flow within Johor Baru. Among them are those at Jalan Yahya Awal, at Jalan Abu Bakar, at Ulu Tiram town and soon at the Senai Airport junction. All these work towards improving connectivity within Iskandar. These new highways open new frontiers into regions which were not popular – or accessible – in the past.
“Since these highways and expressways have become operational, we noticed that property prices have shot up. Examples of these places are those near Nusajaya and along the Southern Link,” says Tan.
At the state government level, he says the local authorities have also worked to improve relationships.
“There must also be an atmosphere of welcome by the authorities which means there is a need for consistent and friendly foreign property ownership policies,” says Tan.
The marketing efforts and promotional campaigns by the stake holders (developers who are offering their projects there as well as those involved in promoting the growth corridor) have been rather effective with more reputable developers entering Johor’s property development sector.
Nevertheless, there are still concerns and perceptions which are also difficult to shake off. Among the main concerns is security followed by connectivity. Other important factors are proximity and availability of good and hygienic food and beverage outlets and other amenities.
Security has always been an issue with Johor and despite the assurances by the government at federal level that overall security has improved for the country, that concern remains.
Other concerns by investors are the quality of the workmanship of their purchases as most of these projects are purchased off plan. They are also concerned about delivery.
“With so much land and construction, demand may not meet supply,” says Neubronner.
“Potential for capital growth may also be constrained,” he says.
These, he says, are the negative issues. But while there are challenges, he is quick to add the challenges facing the Iskandar scheme do not seem as daunting as before.
“There seems to be more confidence on the delivery of the promise,” he says, adding that these issues can be overcome with better public relations with the market, which the Malaysian authorities at various levels are working hard on.
The entry of more reputable players into the fold has also boosted the confidence of investors, both local and foreign. Some of the big names in Malaysia’s property development who have interest there include Bandaraya Developments Bhd, which is known for its KLCC project The Troika, Cap Square and One Menerung in Bangsar, Kuala Lumpur and the SP Setia Group. The latest reputable developer to enter the Iskandar scheme is niche lifestyle developer Eastern & Oriental group wich is known for its Penang’s Tanjung Sri Pinang.
“They have some success with the Japanese in places like Horizon Hills. But the MM2H scheme has a lot of work ahead,” he says.
Singaporean and Japanese investors are generally comfortable with properties priced at about RM1mil or under S$500,000 – what they term “bite size” – between 600 sq ft and 1,000 sq ft. Investors prefer to buy multiple compact units in a few developments rather than to buy a single luxury apartment in the capital.
He says while the Iskandar scheme is quickly soaking up buying interest from Singaporeans, other locations of interest to them include London, Melbourne, Sydney and Kuala Lumpur.
By The Star
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