WHILE developers, contractors and consultants have benefited from the boom in Iskandar Malaysia, wage earners are concerned about the rise in property prices practically happening around them, CB Richard Ellis (Johor) Sdn Bhd director Wee Soon Chit says.
Wee says the “phenomenon” is happening in Johor Baru city centre, Nusajaya and Kulaijaya locality.
“Only newly launched properties have been recording steep increase in prices. One can still acquire a standard single-storey terraced house from the secondary market at about RM130,000 to RM150,000 in Pasir Gudang and Kulai,” he says.
Wee says that while the coming general election will have some bearing on the property market, he is reluctant to make conjectures but expects foreign interest to increase, a fact which has not escaped the locals.
Singapore-based Jones Lang LaSalle head of residential project sales David Neubronner says the situation in Iskandar is akin to everybody wanting a bit of the action as people who bought earlier made money.
Issues like security, the delivery of quality finishes and potential oversupply continue to be of concern for prospective investors. With so many schemes rolling out, there is a real fear of an oversupply, particularly of condominium units and its impact on resale and rental values, says Neubronner.
He advises buying from reputable developers with good track record.
“Land and landed properties are also better investment options. Land is a scarce commodity and hence values will be more resilient.”
Investors should also consider key unique features when buying a home in Iskandar, like waterfront homes which are exclusive only to developments along the coast.
“Although they cost more, the premium is worth paying as they have a global appeal. They also command higher rental and resale values as they are highly sought after and supply is limited,” he says.
Other issues brought up by investors include inconsistencies, lack of transparency and bureaucracy.
“There are trade offs in terms of the value proposition,” he says.
On the number of high-end condominiums being planned, or in the midst of being developed, Neubronner says the local demand from the state will not be able to match the supply entering the market in the years ahead.
“Oversupply is a potential problem and if not properly managed, will have serious repercussions on the scheme. The long-term success of Iskandar hinges on both Malaysians and Singaporeans,” he says.
Neubronner says Singaporeans have taken the lead in buying interest due to the proximity and value proposition and he is seeing buying interest from other Malaysian states, particularly from Kuala Lumpur. There is also the potential of buying interest from overseas markets like China, Japan and the Indian subcontinent.
The entry of major Chinese developers in Danga Bay is seen as a prelude to more Chinese investing and living there. Many Japanese are owner-occupiers in golf course theme developments.
“With things shaping up so rapidly, there is a real regional, if not global, appeal and potential. The time is ripe for developers to take their developments to the regional markets like Jakarta, Hong Kong and China. With strong economic growth in the region, liberal ownership laws and the attractive value proposition in Iskandar, the regional potential is excellent,” he says.
Commenting on the Business Times article calling on Singapore investors to look beyond the slew of positive news emitting from the economic corridor, Neubronner says the unpredictability and lack of transparency is a major distraction for Singapore businesses looking to invest in Iskandar.
“This is not an unusual situation when Singaporeans venture outside Singapore and out of their comfort' zone. The federal and state governments are committed to attract foreign investors to make the Iskandar scheme a success.
“The conditions there have improved over the past year and will only get better moving ahead. To benefit from the opportunities, Singapore businesses must be patient, persistent and, more importantly, resourceful in dealing with local officials and consultants. As Singapore gets more congested and expensive, Iskandar is a real long-term option for the republic,” says Neubronner. - The Star
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