10 reasons why you should invest in Iskandar Malaysia

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Aerial view of Senibong Cove with the Straits of Johor and Sembawang Shipyard at the backdrop. Photo: Khalil Adis Consultancy.

There are many opportunities to be sought in Iskandar Malaysia in 2016. We list our top 10 here.

By Khalil Adis

Check the masterplan. Caption - Aerial view of Iskandar Puteri in Iskandar Malaysia. Iskandar Puteri is one example of a well masterplanned township development

Aerial view of Iskandar Puteri. Photo: Khalil Adis Consultancy

Reason 1: Iskandar Malaysia is the top performing economic corridor in Malaysia.

Due to its close proximity to Singapore, Iskandar Malaysia is the most successful out of the five economic corridors in Malaysia. Latest figures from Iskandar Regional Development Authority (IRDA) showed that Singapore is the top foreign investor followed by China, the United States of America, Spain and Japan. The total cumulative investment from 2006 to October 2015 is now RM78.53 billion with the manufacturing sector leading the way at RM50.82 billion.

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Murals on shophouses at the heritage area of Johor Bahru old town. Photo: Khalil Adis Consultancy.

Reason 2: Tourism boost
With Singapore being an international hub and the closest to the Malaysian state of Johor, government officials are setting its sight to get more Singaporeans and international travellers to cross the border.

Figures from Johor Immigration Department showed that Singaporeans were the top visitors to the state in 2011 and 2012 with 13,448,062 and 17.192.742 visitor arrivals respectively. This was an increase of 27.8 per cent. Meanwhile, according to figures from the Singapore Tourism Board (STB), the Lion City recorded 1.72 million tourist arrivals from China and 940,000 from India in 2014. In the same year, 620,000 and 290,000 Chinese and Indian tourists respectively visited Johor.

With many using Singapore as a transit point, the aim for 2016 is to attract around five million tourists from China, India, Indonesia and the Middle East. Excluding visitors from Singapore, the figures could hit beyond the five million mark.

With so many things to look forward to by the end of this year, like taking a stroll along Sungei Segget and exploring the many rich cultural gems that Johor Bahru has to offer, 2016 could well be a busy year for the tourism industry and its related sector like retail and food & beverage.

View land reclamations at the causeway from Johor Bahru going in to Singapore. Since Iskandar Malaysia's inception in 2006, the property market in Johor had witnessed a remarkable turnaround thanks to the spi

View of causeway from Woodlands to Johor Bahru. Photo: Khalil Adis Consultancy.

 

Reason 3: Enhanced connectivity to Singapore
Bukit Chagar in Johor Bahru and Woodlands North in Singapore are set to be the next property hotspots once the planned cross-border rail service linking Johor’s Rapid Transit System (RTS) and Singapore’s MRT system is completed in 2018 to 2019.

First announced by Singapore Prime Minister Lee Hsien Loong and Malaysian Prime Minister Dato’ Sri Najib Tun Abdul Razak at the Leader’s Retreat in May 2010, the cross-border rail service will enhance cross-border travel and bring about a positive impact on property prices on both sides of the causeway.

Already, the project is making good progress with a joint feasibility study completed.  Bukit Chagar has been announced as the final site.

Flagship A of Iskandar Malaysia includes Johor Bahru CBD and Danga Bay

A dedicated bus lane will serve the BRT lines in Iskandar Malaysia. Photo: Khalil Adis Consultancy.

Reason 4: BRT Lines
In addition, the Bus Rapid Transit (BRT) lines are expected to commence their services soon with the interchange station at Bukit Chagar. It will feature a dedicated bus lane with three lines. Therefore, this will increase the desirability for properties that are located along the lines. BRT Line 1 will span from Bukit Chagar to Tebrau, BRT Line 2 from Bukit Chagar to Senai and finally, BRT Line 3  from Bukit Chagar to Nusajaya.

Bukit Bintang Monorail Station which will be connected to the KVMRT line as part of the Economic Transformation Programme. Gen Ys should research and study new economic drivers and look for affordable propert.JPG

Monorail in Bukit Bintang. The entire train system will be connected to the High Speed Rail Station in Bandar Malaysia. Photo credit: Khalil Adis Consultancy.

Reason 5: High Speed Rail Project
The Johor stop for the High Speed Rail project will be in the vicinity of Gerbang Nusajaya, not to far away from East Ledang and Motorsports City. This will be the final leg of the Malaysian station before it enters Singapore, terminating at Jurong East.  While the station in Nusajaya has not yet been announced, government officials have indicated that it will be located close to Motorsports City near East Ledang.

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Towering office buildings in KLCC. Photo credit: Khalil Adis Consultancy.

Reason 6: A new CBD in Gerbang Nusajaya
In April 2015, Nusajaya’s master developer UEM Sunrise Berhad further revealed its comprehensive development plans for Gerbang Nusajaya which will have its own CBD similar to Jurong Lake District.

Spread across 4,551 acres of land, this second phase of Nusajaya’s development will be designed with catalytic industries similar to the various economic drivers in Nusajaya and Medini.Both these areas are home to tourism, logistics, finance, information communication technology and creative industry establishments just to name a few.

In anticipation for the HSR terminus in Gerbang Nusajaya, a number of catalytic developments have been planned. They include Nusajaya Tech Park, a 519-acre integrated eco-friendly tech park and FASTrack Iskandar which is a 300-acre ‘motorsports city’. This is the closest hint we can get on the possibility of the Nusajaya HSR station being located here. With a gross development value of RM42 billion,property values for existing homes in Nusajaya and Medini will enjoy a boost from the economic spillover.

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RM18 billion boost for the Pengerang RAPID Project. Photo credit: Khalil Adis Consultancy.

Reason 7: RM18 billion boost for Pengerang RAPID project
Outlined as one of the key areas under Malaysia’s Economic Transformation Plan (ETP), the Pengerang RAPID project aims to raise the quality of life, create jobs and income levels in eastern Johor.

Launched in 2013 with an initial investment of US$20 billion, this massive oil and gas project has already created jobs for some 50, 000 construction workers and 400 engineers. So far, the first phase, which comprises a RM9 billion Pengerang Independent Deep Water Petroleum Terminal, has already been completed in 2014. The first phase of its petroleum storage facility will have the capacity to store up to 1.3 million cubic metres of petroleum products. By end 2016, a further 4, 000 jobs will be created for trained technical staff once the project comes progressively on-stream.

Once the refinery is completed, the Pengerang RAPID project will have the capacity to produce 300, 000 barrels per day of higher grade fuels meeting European specifications and other byproducts for the different industries. RM18 billion has been allocated here as part of Budget 2016.

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A lonely stretch of road in Desaru. Photo credit: Khalil Adis Consultancy.

Reason 8: The Eastern Gate is the next growth centre
Deemed as an ‘ulu’ area, homes in Pasir Gudang are currently averaging between RM300 to RM400 per sq ft. However, this is an up and coming area as the Eastern Gate is the only zone that has received budget allocation from Budget 2016.

The Pengerang RAPID project is expected to have a spillover impact in Pasir Gudang. In addition, the budget had also allocated for a new public hospital in Pasir Gudang to cater to its growing population. With this, the Eastern Gate is poised to be the next growth centre in Iskandar Malaysia. If we study the history of Nusajaya and Johor Bahru, homes in these areas have seen almost 50 per cent increase in their values. History could repeat itself in the Eastern Gate.

The state and federal government had allocated spending for public infrastructure. These include the upgrading of the Pasir Gudang Highway and a new hospital.

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Petronas Twin Towers in KLCC. More jobs are expected to be created in Pengerang. Photo credit: Khalil Adis Consultancy.

Reason 9: More jobs to be created
With phase one of Iskandar Malaysia successfully launched in Nusajaya in 2006 and phase two currently taking place in Johor Bahru, the Eastern Gate is what many perceive as phase three of Iskandar Malaysia’s economic development.

With the Pengerang RAPID projects and a new business park in Pasir Gudang as the major economic drivers, these are expected to create job opportunities for Johoreans.

The business park for instance is anticipated to create around 12,100 jobs in the sectors of food and beverage production, garment manufacturer, printing and packaging industries, electronics, storage and warehousing, services, information technology, machinery spare parts, carpentry and furniture production and automotive workshops

Meanwhile, the Pengerang RAPID RM70 billion project spanning 2,000 hectares, has already created 40,000 jobs in the construction industry, 400 jobs for engineers and a further 4,000 jobs for trained technical staff. With the further allocation of RM18 billion, more jobs will be created.

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Hershey’s is the leading North American manufacturer of quality chocolate and non-chocolate confectionery and chocolate-related grocery products. The company also is a leader in the gum and mint category. Photo credit: The Hershey’s Company.

Reason 10: Senai and the chocolate factory
Senai and Skudai comprises agricultural, industrial and pockets of residential and commercial areas.  There are two small towns located here – Senai and Skudai.. Over the years, Senai and Skudai has developed as a hub for food & agro processing and retail tourism. In 2013, it scored a major coup when Hershey’s opened its chocolate factory here just opposite Senai Hi Tech Park.

With an investment of RM816 million, this will be Hershey’s second largest plant in the world and is expected to create 400 jobs Johoreans. It will have the capacity to produce tens of millions of Hershey’s Kisses, Reese’s Peanut Butter Cups and Hershey’s Bars every day.

What’s in store for us in 2016

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Petronas Twin Towers in KLCC. 2016 will be a tough year for the Malaysian property market. Photo: Khalil Adis Consultancy

 

The brew of the weakening Ringgit, oversupply in the property market and political climate could impact buying sentiments for this year.

By Khalil Adis

Malaysia faces a delicate balancing act in 2016 in providing affordable homes for locals while trying to lure foreign investors to its property market. The announcements of Budget 2016 clearly dictate that the mass market segment will drive its property market ahead.

However, there have been no revisions to the Real Property Gains Tax (RPGT), minimum purchase price and state levies in popular states like Johor and Kuala Lumpur.

This would make it even more challenging to attract foreign buyers despite the falling Ringgit.

In addition, negative sentiments from the political developments in the country and the perceived oversupply in the market may have spooked potential investors and could result in a “wait-and-see” situation.

With developers marketing high-end projects, they are faced with a difficult situation of finding the right group of buyers in an already small and niche market.

With the pressure to move their existing stocks, they may offer further discounts and other attractive packages.

This would certainly spell good news for buyers with plenty of good deals to be found in the market.

The secondary market will be especially attractive in 2016 as there will be those who are desperate to sell, especially with so much supply in the market.

With this in mind, bargain hunters looking for already completed properties will be spoilt for choice.

Household debts across Malaysia are also on the rise.

This, combined with the increased cost of living, will mean some cannot service their mortgages and will have their homes repossessed.

Therefore, auction properties are expected to rise accordingly, presenting very good buying opportunities for savvy investors.

Here’s a breakdown of the outlook for 2016 by the different popular markets.

Iskandar Malaysia

Iskandar Malaysia received very little interest in Budget 2016 with the exception of the Eastern Gate – in the corridors of Pasir Gudang and Pengerang.

In all, RM18 billion has been allocated for the massive oil and gas Pengerang RAPID project that is expected to have a spillover impact in Pasir Gudang.

In addition, the Budget had also allocated for a new public hospital in Pasir Gudang to cater to its growing population.

While analysts and market watchers are feeling somewhat disappointed with the allocation of budget for Iskandar Malaysia, it also confirms what many have been saying – the Eastern Gate is poised to be the next growth centre in Iskandar Malaysia.

As more jobs are being created, this will fuel demand for homes in and around the Eastern Gate.

The great thing is property prices here are still relatively affordable for locals averaging around RM300 toRM400 per sq ft.

In addition, the state and federal government had allocated spending for public infrastructure.

These include the upgrading of the Pasir Gudang Highway.

In fact, Dato’ Mohamed Khaled Nordin, Chief Minister of Johor had announced that 865 units of affordable housing will be built here by 2018.

Therefore, Johoreans hunting for their first home should target this area.

As for foreign buyers, although they are far and few between, I would say this is the best time to buy a property in Iskandar Malaysia as some developers are desperate.

It is best to get a home for your own stay rather than for investment.

If you are buying for investment, hotel suites are a good choice especially those in JB Sentral and Nusajaya.

Kuala Lumpur

Despite the falling Ringgit, the property market in Kuala Lumpur is admittedly quiet.

Foreign investors are few and far between, while locals feel that they are priced out of the market.

PR1MA homes that are planned around transport hubs and train stations, is a good opportunity for locals to start their property hunts.

A total of 5,000 units of PR1MA and PPA1M houses will be built in the vicinity of LRT and monorail stations in 10 locations, including Pandan Jaya, Sentul and Titiwangsa.

In my opinion, Bangsar is a “to-go-to” location as it has an affluent neighbourhood with plenty of amenities, trendy cafes and shopping malls.

While rentals in Bangsar have remained relatively flat since 2014 remaining at RM3.35 up to the first quarter of 2015, in the secondary market, the capital values based on transacted price has strengthened to RM898 per sq ft.

Thus the secondary market is where all the good deals are.

Selangor

Government linked companies (GLCs) are planning to build 800 affordable homes near MRT lines.

With the Ampang LRT Extension Line now open from Sri Petaling all the way to Putra Heights, plus future extensions along the Kelana Jaya Line, locals should look for housing projects in and around the vicinity.

Kwasa Damansara is also a hot area to watch ou他 for as it will contain two stations within the township.

Penang

The RM27 billion Penang Transport Master plan will drive the property market on the island.

The LRT line will comprise a 17.5km elevated line stretching from Penang International Airport all the way to Menara KOMTAR.

Penangites buying their first homes should look to the Bayan Lepas and Gelugor area near the LRT station.

Those who are priced out from the island should look to Seberang Prai.

For foreigners, avoid the Gurney and Batu Ferringhi area as a massive project being planned will result in massive traffic congestions.

Instead look to properties along the LRT line. I particularly like the Georgetown area due to the heritage sites and abundance of delicious local food there.

Malacca

Hotel suites is a good product to consider in Malacca due to the shortage of quality hotel rooms.

Due to the increasing number of visitors to Malacca, hotels and shopping centres have benefitted immensely from the spill over in the tourism industry.

There is strong pent-up demand among tourists for 4 to 5-star hotels in the city centre due to its convenience and easy access to tourism hot spots like the UNESCO World Heritage Site, Jonker Street and shopping belt.

When investing in hotel suites, make sure to go for mixed-use development with hotels, shopping centres and residential components.

This will ensure good traffic to maximise on your return of investment.

 

This story was first published in the January 2016 issue of iProperty.com Malaysia.

Jurong East and Nusajaya

Property values around Jurong Lake Distict and Gerbang Nusajaya are expected to rise thanks to the iconic High Speed Rail (HSR) project.

 Jurong Lake District is fast taking shape as a decentralised CBD with almost 500,000 sq m of office space plus 200,000 sq m of retail, food & beverage and entertainment space called Jurong Gateway with plans for 2,800 hotel rooms. Photo: Courtesy of the Urban Redevelopment Authority (URA)

Jurong Lake District is fast taking shape as a decentralised CBD with almost 500,000 sq m of office space plus 200,000 sq m of retail, food & beverage and entertainment space called Jurong Gateway with plans for 2,800 hotel rooms. Photo: Courtesy of the Urban Redevelopment Authority (URA)

By Khalil Adis

Jurong East in Singapore and Gerbang Nusajaya are set to enjoy further growth as they become new regional centres thanks to the iconic High Speed Rail (HSR) between Singapore and Malaysia although there will be a delay by two years to 2022 for that to fully materialise.

First announced in 2010, the project is the first of its kind in the region which will cut travel time from Singapore to Kuala Lumpur to a mere 90 minutes.

This is expected to spur cross-border investments on both sides of the causeway and enhance property values at the eight HSR stops spanning from Sungei Besi in Kuala Lumpur all the way to Jurong East in Singapore.

At the recent Leaders’ Retreat in Singapore, Singaporean Prime Minister Lee Hsien Loong revealed that Jurong East has been chosen as the site for the Singapore terminus which will tie in with the government’s overall plans to transform the area into the country’s second Central Business District (CBD).

Noting that the project has received great attention both domestically and internationally, Lee and Malaysian Prime Minister Datuk Seri Najib Tun Abdul Razak said the HSR project will be a game-changer.

“Both Leaders were encouraged by the support and attention from the global community and looked forward to further progress on this game-changing iconic project which will boost connectivity, facilitate travel between Kuala Lumpur and Singapore, enhance business linkages and improve people-to-people ties,” read a statement from the Prime Minister’s Office (PMO).

Singapore’s new gem in the making

Back in 2008, the Urban Redevelopment Authority (URA) had announced the Draft Master Plan for Jurong Lake District which comprised a new CBD and commercial hub along with retail malls and hotels.

The area is fast taking shape as a decentralised CBD with almost 500,000 sq m of office space plus 200,000 sq m of retail, F&B and entertainment space called Jurong Gateway with plans for 2,800 hotel rooms.

Once a sleepy neighbourhood blessed with a lake, Jurong East is now buzzing with life and currently home to a Grade ‘A’ office tower. Called Westgate, this is where CapitaLand, one of Asia’s largest real estate companies, now calls home. Meanwhile, Genting Hotel became the first hotel to make its mark in the district in April 2015.
This growth is set to receive a further boost from tourists and business travellers from Malaysia once the HSR project is completed as it will enhance the area’s desirability.

A property values booster
With the announcement of the HSR station within the area, property values are set to rise even more especially in the current bearish market.

If we follow historical trends in Singapore, properties which are located within close proximity of transportation hubs such as MRT stations tend to appreciate between 5 to 10 per cent over a long period of time.

Further boosting the property market in the vicinity is the demand to live in and around Jurong Lake District, thus leading to higher asking prices.

Homes near the terminus such as those in the neighbourhoods of Jurong East, Lakeside and Taman Jurong are already reporting a 1 per cent increase in asking prices despite the weakening market which is the result of the various cooling measures in place.

These neighbourhoods are 5 minutes away from Jurong Country Club which has been identified as the site for the terminus location

A matching CBD in Nusajaya

Gerbang Nusajaya's press conference. This township will serve as the gateway to Malaysia with a HSR station and mixed-use development. Photo: Courtesy of UEM Sunrise.

Gerbang Nusajaya’s press conference. This township will serve as the gateway to Malaysia with a HSR station and mixed-use development. Photo: Courtesy of UEM Sunrise.

While the station in Nusajaya has not yet been announced, government officials have indicated that it will be located close to Motorsports City near East Ledang.

In April 2015, Nusajaya’s master developer UEM Sunrise Berhad further revealed its comprehensive development plans for Gerbang Nusajaya which will have its own CBD similar to Jurong Lake District.

“Gerbang Nusajaya is the gateway to Iskandar Malaysia and will serve as the commercial and business engine for Nusajaya,” said the company in a statement.

Spread across 4,551 acres of land, this second phase of Nusajaya’s development will be designed with catalytic industries similar to the various economic drivers in Nusajaya and Medini.

Both these areas are home to tourism, logistics, finance, information communication technology and creative industry establishments just to name a few.

In anticipation for the HSR terminus in Gerbang Nusajaya, a number of catalytic developments have been planned.

They include Nusajaya Tech Park, a 519-acre integrated eco-friendly tech park and FASTrack Iskandar which is a 300-acre ‘motorsports city’.

This is the closest hint we can get on the possibility of the Nusajaya HSR station being located here.

With a gross development value of RM42 billion, property values for existing homes in Nusajaya and Medini will enjoy a boost from the economic spillover.

As it stands, condominium prices here range from RM800 to RM1,000 per sq ft.

In the near future, it could possibly increase by 5 to 10 per cent as the area will be developed over a period of 25 years.

An estimated 76,000 direct job offerings and 137,000 indirect job offerings are expected to be created as a result.

UEM anticipates Gerbang Nusajaya to have an estimated 220,000 population upon its completion, tying it nicely with its site for Nusajaya’s HSR terminus.

This article was first published by iProperty.com in its June 2015 issue.

Are there still affordable homes for Johoreans?

Yes there is. However, first time home owners should target for homes near to new growth corridors in and around Iskandar Malaysia and near to transport hubs.

Country Garden in Danga Bay. Photo: Khalil Adis Consultancy.

Country Garden in Danga Bay. Photo: Khalil Adis Consultancy.

By Khalil Adis

Take a drive from Nusajaya all the way to Tanjung Puteri and you can’t help but notice the many housing projects marketed as “luxurious” by developers in Iskandar Malaysia.

With an average pricing of RM1, 000 per sq ft for condominiums in Nusajaya and around RM900 for condominiums in Johor Bahru, a studio unit would range from RM450, 000 to RM500, 000.

Is this something that locals can afford?

Let’s do the maths.

Assuming a loan of 80 per cent with a current interest rate of 4.45 per cent (Base Lending Rate of 6.85 per cent minus 2.4 per cent) for a RM 450,000 property, the monthly mortgage would work out to around RM1, 813.

With an average income of RM3, 000 per month, these homes are by no means affordable for Johoreans and are more geared towards the Singapore and overseas markets.

Additionally, let us look at statistics that will help give us an idea of what affordability means to Malaysians.

According to iProperty.com Malaysia’s Asia Property Market Sentiment Survey for the second half of 2014, majority of Malaysians (49 per cent) have an annual income of RM30, 001 to RM90, 000

This means their monthly income would range from RM2, 500 to RM7, 500

Of the 5,295 respondents surveyed, 5 per cent are from Johor, while the majority is from Selangor (48 per cent) and Kuala Lumpur (31 per cent).

Majority (53 per cent) of the respondents have a budget of less than RM500, 000 for their homes.

If we take a median income of RM5, 000 across Malaysia servicing a mortgage for an RM450, 000 home, this will leave them with around RM3, 200 for other expenses.

For Johoreans, however, we have to adjust this downwards to RM3, 000 as this is the average income for most graduates here.

Thus, this will leave them around RM1, 200 – perhaps just enough to get by.

Hence, affordability will be a major issue for fresh graduates and first time home owners.

The next question is then, “are there still affordable homes for Johoreans?”

The answer is yes.

Affordable homes will drive the market in 2015

With a general slow down in property transactions in Iskandar Malaysia from Singaporeans and overseas buyers, developers are already bracing for a tough time ahead.

Data from the National Property and Information Centre (NAPIC) showed that property transactions in Johor saw a steep decline of 33 per cent quarter-on-quarter in the fourth quarter of 2014.

While this will mean a challenging time for the medium to high-end market segments, this will spell good news for local buyers as affordable homes will be the focus for this year.

Already the state government has put on hold approvals for serviced apartments in Iskandar Malaysia while developers are shifting their focus to the local market.

New hot spots

The eastern corridor of Iskandar Malaysia where the Pengerang RAPID project is located at is the next area of growth. Photo: Khalil Adis Consultancy,

The eastern corridor of Iskandar Malaysia where the Pengerang RAPID project is located at is the next area of growth. Photo: Khalil Adis Consultancy,

For those of you who are thinking of buying your first home, you might be wondering, “where are the affordable homes and which areas should I target for?”

If you have missed out on Nusajaya’s and Johor Bahru’s transformations, fret not.

There are other areas where the federal government is focusing on for the next phase of Iskandar Malaysia’s economic development – the corridors of Pasir Gudang and Pengerang.

In fact, Pasir Gudang and Masai are poised to be the new hot spots as it will enjoy the economic spillover from Malaysia’s largest oil and gas hub in Pengerang.

First announced in March 2012 by Datuk Sri Najib Tun Abdul Razak, this RM70 billion project spanning 2,000 hectares has already created 40,000 jobs in the construction industry, 400 jobs for engineers and a further 4,000 jobs for trained technical staff.

This has fueled demand for homes in and around the area.

To gear up for the economic spillover from this Economic Transformation Programme (ETP), a new mixed-used development will be coming up in Pasir Gudang that is expected to create some 12,100 jobs with 865 units of affordable housing to be built by 2018.

Developed by UM Land, the project called Taman Seri Albion will comprise an industrial park targeting Malaysian and Singapore small manufacturing enterprise (SMEs) including food and beverage production, garment manufacturer, printing and packaging industries, electronics, storage and warehousing, services, information technology, machinery spare parts, carpentry and furniture production and automotive workshops.

This will not only create businesses and jobs for locals but also enhance the desirability of homes in Iskandar Malaysia’s next growth corridor.

Chief Minister of Johor Dato’ Mohamed Khaled Nordin, who was the guest-of-honour at the event, had noted that this project will add to 37,000 affordable housing that will be coming on-stream by 2018 in Johor.

“The township will change the investment landscape here. It is a step in the right direction considering it is a mixed use development with affordable housing for Johoreans,” he said.

He also noted that this project is different from the federal-launched PR1MA housing project as the highest quantum price here will be capped at RM150, 000 with high-speed internet connection.

PR1MA homes

Speaking of PR1MA homes. there are four projects of choices for bumiputeras spanning from Tebrau to Pasir Gudang..

The starting prices for the projects in Tebrau and Pasir Gudang start from RM180, 000 to RM185, 000 respectively onwards.

There is no indicative pricing yet for the projects in Masai and Pulai.

Transport hubs

The Bus Rapid Transit (BRT) lines are expected to commence their services this year.

Therefore, this will increase the desirability for properties that are located along the lines.

Areas that are worth looking into include BRT Line 1 spanning from Bukit Chagar to Tebrau, BRT Line 2 spanning from Bukit Chagar to Senai and finally, BRT Line 3 spanning from Bukit Chagar to Nusajaya.

This article was first published by iProperty.com Malaysia in its June 2015 issue.

A Singaporean in Iskandar Malaysia

Living across the causeway has its advantages and disadvantages. Take it from a fellow Singaporean who now calls Iskandar Malaysia home.

The expansive view of Nusajaya from Wayne Wong's apartment in Ujana. Wong now considers Iskandar Malaysia home. Photo: Courtesy of Wayne Wong.

The expansive view of Nusajaya from Wayne Wong’s apartment in Ujana. Wong now considers Iskandar Malaysia home. Photo: Courtesy of Wayne Wong.

By Khalil Adis

Back in 2009 when Nusajaya was still very much an undeveloped green field, one Singaporean braved his way there by purchasing the very first condominium to be launched there – Ujana by UEM Sunrise.

Wayne Wong, a retiree, was among the few Singaporeans who saw the potential of Iskandar Malaysia and wanted a simpler life.

“I bought the property because the location was the nearest to my residence in Clementi where it is very easy to travel to and fro by car, bus and motorbike. I also needed a retirement home because Singapore has become really too crowded and expensive for a then-working-class person,” said Wayne Wong, a retiree.

At a time when many were still wary about the potential for Iskandar Malaysia, Wong’s bold move has paid dividends.

Being a pioneer, Wong was among the few who witnessed his property value appreciate.

Asking prices for units at Ujana are now around RM700 per sq ft thanks to improved infrastructure such as the Coastal Highway and the many federal launched projects spanning from EduCity to Legoland Theme Park.

“It was affordable back then. I paid for it in cash from savings that I had accumulated, from my car-use budget. I had decided not to use my car for daily work-commute and the funds saved over a few years allowed me to afford Ujana,” said Wong.

The push factors from Singapore to Iskandar Malaysia were many.

Among them – the high population density as well as the many rules and regulations, just to name a few.

“Firstly, despite the better living standards in Singapore, I feel that our intrinsic living quality has dropped. Secondly, Singapore has become over-regulated and over-enforced, over the smallest issues. One example is my motorcycle’s In-Vehicle Unit (IU) device. To live in Singapore, I need to remember about 200 different rules, procedures, thus adding to the mental stress,” said Wong. “In comparison, when live in Malaysia, and all I have to remember is to be observant to the surroundings, respectful and to be friendly to everyone”.

Indeed, the laid back lifestyle and the slower pace of life that Iskandar Malaysia offers can be seen as a sort of an “escape valve” for stressed out Singaporeans crammed within a tiny city-state of 5.4 million population on a 714 sq km island.

Money can’t buy happiness

Singapore, a city with a population of 5.4 million crammed into 714 sq km.

Singapore, a city with a population of 5.4 million crammed into 714 sq km. Photo: Shutterstock.

Despite not having natural resources, Singapore has overcome the odds and is considered one of the richest nations in the world.

According to Forbes, in 2012, Singapore is the third richest country in the world behind Qatar and Luxembourg.

Using available data from the International Monetary Fund (IMF), Forbes cited Singapore as having a GDP (PPP) per capita of nearly US$56,700.

In contrast, however, in 2011, international pollster Gallup’s survey showed that Singaporeans were the unhappiest and most emotionless people in the world.

Gallup ran a survey based on some 150,000 individual surveyed worldwide conducted in 2011.

In 2014, a survey by Randstad, an international recruitment and human resource service provider, concluded that employees in Singapore are the unhappiest in the Asia Pacific.

Randstad 2013/2014 World of Work Report showed that 64 per cent of employees planned to leave their jobs in the next 12 months.

In fact, try saying “hello” or “good morning” to a stranger in Singapore and you will most likely get an odd stare in return.

On the other side of the straits, however, people seemed a little bit warmer.

“Malaysians generally are easier-going people, compared to overly-prejudiced Singaporeans,” said Wong, who has been to many road trips across the Malay peninsular and made friends with locals along the way.

Wide open spaces

View of EduCity from Wong's apartment. Photo: Khalil Adis.

View of EduCity from Wong’s apartment. Photo: Khalil Adis.

With a land size of 2,217 sq km and a population of 1.6 million, Iskandar Malaysia is three times the size of Singapore and less densely populated, giving Wong ample space to breathe and surround himself with nature.

“One of the more immediate advantages when living in Nusajaya is the wide open spaces and much fresher air – intangible things you cannot get in Singapore. There’s also a heightened awareness that I have towards nature. From my apartment, I see Gunung Pulai on my left and the Straits of Johor on my right,” said Wong.

When Wong gets restless, he would take his Malaysian car for a road trip with his wife as they brace for the adventures that lie ahead, be it in Desaru or various small towns in, Kota Bahru, Kelantan.

“Here, I have the ability to simply visit the many rustic towns, beaches and waterfalls anytime,” said Wong who purchased his Perodua Viva for RM27,600.

The lower costs of living here mean Wong can keep his car for life and wifi is readily available here at many establishments.

Indeed, take a drive through any regular coffee shops in Johor and you can immediately log onto their network.

The cost? Well, buy a teh tarik and a roti canai or two, at least, to keep the shop owner happy.

“Almost every F&B establishment, including the Indian Muslim coffee shops have free wifi. In my opinion, this is a more practical internet ecosystem, compared to Singapore, whereby one has to follow more procedures and pay more costs,” said Wong.

While at first glance, Iskandar Malaysia offers a much needed breathing space, Wong admits, the grass is not always greener on the other side.

“There are some inherent cultural differences and things work at a much slower pace here,” said Wong.

Not a bed of roses

One example is the language barrier.

Wong does not speak Bahasa Malaysia.

However, he has picked up a smattering of the language over time.

“The living experience gets better once you can speak the language,” he said.

Another is the slow response time from management staff at the condominium.

“The developer was and still is extremely slow, to attend to my queries and feedback. I have to persistently push the developer to get things done,” said Wong who has to be tactful so as not too be seen as too aggressive.

According to him, the committee’s focus is to make money rather than ensuring a better living environment,

There’s also a sense of loneliness amid the slower pace of life.

“As the place that I am staying in is an expat enclave, many residents exhibit the pretentious behaviour of being well-to-do or “keeping up with the Joneses”, which is not really genuine. There’s also less social activities here compared to Singapore,” said Wong.

And while you can take the Singaporean out of Singapore, one bad habit still remains – kiasuism (being afraid to lose).

This is something Wong had encountered with fellow Singaporeans living in Ujana.

“Some Singaporean neighbours exhibit the “kiasu” mentality of wanting only to take something from me, but not helping me in any other way,” he laments.

Others disadvantages include the peak hour traffic jams at the Second Link and the banning of bicycles from crossing the causeway.

Undeterred by negative press

The Singapore government has recently issued warning to its citizens warning of an oversupply situation in Iskandar Malaysia.

This has been picked up by both press from across the pond and shared widely on social media.

Still, Wong who considers himself a traditional investor is undeterred.

“Yes, it is a short term concern because of the frequent noises that the media makes. Such “noises” affect the sentiment. Sadly, most people fail to think independently and simply follow the herd,” he said.

According to the latest investment figures from Iskandar Regional Development Authority (IRDA), despite the negative press, Singapore remains the top foreign investor in Iskandar Malaysia.

“We continue to see strong support from Singapore, China, the United States of America, Spain and Japan. However, it is the domestic investments which truly reflects the confidence our local society have in the region’s development,” said Dato’ Mohamed Khaled, chief minister of Johor and Iskandar Regional Development Authority (IRDA) co-chairman.

Majority of the investments are in the manufacturing sector which accounts for 31 per cent of RM50.82 billion of the total investment.

While oversupply is a valid concern, it will only affect those who are buying for investment or to flip their properties.

“I bought my property for my own use and not as a speculator. Being old-fashioned, I bought with cash, and am therefore not exposed to any lending interest rates risks,” he said. “The problem may be exacerbated by the many property speculators, who buy multiple properties, all based on banking loans.  This creates a false sense of “market success”. However, what happens if the installments are not serviced? These loan defaults will damage the market in a disproportionate way,” he said.

Tips for Singaporeans

Wong’s advice for fellow Singaporeans is to be conservative in their investment which is to buy for your own use, buy with cash, or with minimum loan and to not be greedy.

“Johor welcomes legitimate investors who enter to contribute to the betterment of the place and hopefully uplifting society. The over-emphasis on “making money” using easy methods of leverage – is an immoral, opportunistic act that distorts the market,” he cautions.

In addition, the way the property market works in Malaysia is very different from Singapore.

While in Singapore, investors may be able to find a tenant after the project is completed, it is not the same in Iskandar Malaysia where the population is much less compared to Singapore.

“Malaysian properties are for own long-term use. The business model of rental income between Singapore, and Johor, really is very, very different,” said Wong.

He also advised Singaporeans to buy when sentiment is bad as there are many good deals in the market.

“The media reported many good news in 2012 to 2013, and as a result, many people bought properties priced at the peak. When we buy or invest into such items, we have to take a really long-term view,” he said.

From an oil palm plantation to an exciting new city

View of East Ledang from Ujana. Photo: Khalil Adis.

View of East Ledang from Ujana. Photo: Khalil Adis.

 

Indeed, when Singaporeans stayed away from Iskandar Malaysia in 2008, the following years saw property price appreciate for Horizon Hills from a launch price RM288, 000 to asking prices ranging from RM800, 000 to RM1.2 million for a landed terrace home.

Wong, who now considers Iskandar Malaysia home, is here for the long-term.

“Here, you get that “once in a lifetime experience” of witnessing the birth of a fast rising, new city which is more well master planned,” said Wong who had witnessed for himself the price appreciation due to the improved infrastructure in Nusajaya as well as the various economic drivers such as in tourism, education and logistics, just to name a few.

Now that Nusajaya is fairly developed, Wong is now looking to sell his unit at Ujana below the market price of RM700 per sq ft.

“I am selling it at this price in order to allow the prospective buyer a better chance to enjoy capital gains in the future,” said Wong who has a landed home nearby at Eco Botanic and do not need the additional space.

Indeed, come 2022, Nusajaya is set to be a buzzing satellite city, much like Jurong Lake District in Singapore with an exciting new CBD called Gerbang Nusajaya

Comprising 4,551 acres, this second phase of Nusajaya’s development will be designed with catalytic industries, similar to the various economic drivers in Nusajaya and Medini.

The highly anticipated High Speed Rail station is expected to be located here.

With a gross development value (GDV) of RM42 billion, property values for existing homes in Nusajaya and Medini are set to rise further as the area becomes highly accessible in the near future.

Gerbang Nusajaya’s master developer, UEM Sunrise, anticipates it to have an estimated 220,000 population, tying it nicely with its site for Nusajaya’s HSR terminus.

“In order for Iskandar Malaysia’s success to be realised faster, we need to forge a community of like-minded individuals who can genuinely collaborate in the same direction,” he said.

Any takers?

If you are interested to view his unit, email investorsclub@khaliladis.com

Can Iskandar Malaysia succeed without Singapore?

With waning interests from Singaporeans, will it be boom or bust for the special economic zone?

View of the Woodlands Causeway from Johor Bahru. Photo: Khalil Adis

View of the Woodlands Causeway from Johor Bahru. Photo: Khalil Adis

By Khalil Adis

The history between Singapore and Johor is a long and interesting one spanning centuries and one that is often intertwined.

With a history spanning back since the 14th century when Singapore was once the seat of governance for the Johor Sultanate to the signing of the treaty with the British in 18th century, our history and economy are often inextricably linked although we are now a sovereign state.

What changed the course of history was the signing of a treaty that Sultan Ali had signed in 1855 with the British to transfer his power in Johor to Temenggung Daeng Ibrahim.

Temenggung Daeng Ibrahim subsequently moved his seat of governance from its old capital in Teluk Blangah in Singapore to Tanjung Puteri which is now known as Johor Bahru.

While the imposing palace in Singapore still remains today, it has been converted to a mosque housing the Johor Royal Mosouleum and where members of the royal household are laid to rest at a nearby cemetery – a reminder of its glorious past.

Over the other side of the causeway, however, is where Johor’s exciting future lies – Iskandar Malaysia.

Home to the current Sultan of Johor, it appears our history is set to intertwine yet again with Iskandar Malaysia as a sort of hinterland for Singapore, as the Sultan admits.

“The future is in Johor because Singaporeans, not just Chinese, will be buying homes in Johor. Homes are already beyond the reach of ordinary Singaporeans over there. It is a political issue when the middle-class find themselves squeezed,” Sultan Ibrahim Ibni Almarhum Sultan Iskandar told a paper recently

From sceptism to optimism – the Singapore factor

When Iskandar Malaysia was first mooted in 2006 by former Malaysian Prime Minister Abdullah Badawi, Singaporeans were very skeptical about it.

It was only after the land swop deal was concluded in 2010, did sentiment turned positive.

Led by both the Singapore and Malaysian government, both countries had agreed to jointly develop two iconic projects in Medini via Temasek Holdings and Khazanah Nasional.

Subsequently, Temasek Hodings via CapitaLand entered into a joint-venture agreement with Iskandar Watefront Holdings to develop a land parcel at A2 Danga Island.

These factors gave Iskandar Malaysia the much needed confidence booster among Singaporeans to snap up properties just across the causeway.

At the peak of the market in 2013, almost 74 per cent of non-Malaysian property buyers were from Singapore, according to data from UEM Sunrise.

Figures from Iskandar Regional Development Authority (IRDA) also showed that Iskandar Malaysia has secured RM24.87billion in new investments from January 2014 to October 2014.

From 2006 to October 2014, Iskandar Malaysia has recorded RM156.51 billion in total cumulative committed investments.

Of this total, 51 per cent or RM79.17 billion represent investments that have been realised.

Singapore remains the top foreign investor.

Has Iskandar Malaysia lost its appeal among Singaporeans?

Site visit to Iskandar Malaysia. Photo: Khalil Adis.

Site visit to Iskandar Malaysia. Photo: Khalil Adis.

While Singaporeans will still look to Iskandar Malaysia to buy a property, buying activity is admittedly, not as robust as before.

Anecdotal evidence on the ground shows some developers are having problems moving units while property launches are not as well-received as before.

Various factors such as property cooling measures announced during Budget 2014, the flurry of project launches by Chinese developers and the recent toll hikes on both sides of the causeway are causing some to stay away.

One Singapore-based investor who has a home in Iskandar Malaysia said the toll hikes in particular will impact investment sentiment.

“This news will be good and bad news to different people. It will be good news to real business owners (such as factory owners) as it will mean faster travelling time even with the higher tolls, as those business owners value their time more than the toll paid. However, it will be bad news for regular visitors to petrol kiosks, cheap car washing facilities and so on,” said William Liong.

With Singapore as the top foreign investors, will this spell the end for Iskandar Malaysia?

Singapore investments include Ascott Somerset Puteri Harbour, Puteri Cove, Motorsports City and Vantage Bay, just to name a few.

Already, AsiaOne Business is reporting that CapitaLand’s investment in Danga Bay as well as other developers had hit a snag.

CapitaLand has said it is “waiting for the relevant regulatory approval for (its) Danga Bay project’s masterplan”.

Iskandar Malaysia too big to fail

The Urban Redevelopment Authority (URA) masterplan for the new Woodlands Regional Centre include a cross border rail link service linking Woodlands North MRT Station to the RTS station in Johor Bahru. Photo: Khalil Adis.

The Urban Redevelopment Authority (URA) masterplan for the new Woodlands Regional Centre include a cross border rail link service linking Woodlands North MRT Station to the RTS station in Johor Bahru. The RTS-MRT project will be the game changer for Iskandar Malaysia. Photo: Khalil Adis.

While the Singapore factor may have given Iskandar Malaysia a boost on the international stage due to Singapore being a global city, it is unlikely Iskandar Malaysia will fail.

Here’s why.

While Singapore may be the top foreign investor, majority of the investment are still driven by the domestic market.

Data from IRDA showed that RM99 billion or 63 per cent of the total cumulative investment were from Malaysia while the rest – RM57.5 billion (or 37 per cent) – were contributed by foreign investors.

In addition, the residential property sector forms only RM38.59 billion of the total cumulative investments.

Majority of the investments were driven by the manufacturing sector at RM50.97 billion.

This includes investment from the sectors of Electrical & Electronics, Petrochemical & Oleo-chemical and Food- & Agro-processing.

Perhaps the biggest catalyst will be the cross-border rail link service linking Singapore’s MRT to Johor Bahru’s RTS system.

Once completed in 2019, it will result in more investments in Iskandar Malaysia and this is something the current Sultan of Johor had noted.

“Once the links are in place, it will become the norm for Singaporeans to live in Johor and work in Singapore. That is the future,” he told a paper.

Likewise, investors are looking forward to the link.

“The RTS will impact my investment decision, but only within Johor Bahru or Zone A of Iskandar Malaysia,” said Liong

This has spurred him to look at other developments which are within a one km radius area from the RTS station.

Like siblings, blood is thicker than water and is what best describes the relationship between Singapore and Johor.

Both has had its fair of ups and downs with its history of rivalry and on-and-off close relationship.

As the RTS-MRT link shows, even as we brace towards the future, our history and economies remain inextricably intertwined.

Like it or not, Singapore still needs Iskandar Malaysia as much as it needs Singapore.

This article was first published by iProperty.com Malaysia in its May 2015 issue.

Malaysia property outlook 2015

2015 is expected to be a challenging year ahead for the Malaysian property market. Still, there are opportunities to be sought by both locals and foreign investors.

Petronas Twin Towers in Kuala Lumpur. Photo by Khalil Adis.

Petronas Twin Towers in Kuala Lumpur. Photo by Khalil Adis.

By Khalil Adis

The mass market and mid range property sector will continue to drive the domestic market this year due to the loan curbs imposed by the Malaysian government in 2014 for multiple property owners.

In a recent survey, iProperty.com, citing statistics from Bank Negara, said there was a decline of 4 per cent from a peak of 15.8 per cent in “credit-fuelled speculative purchases of residential properties from borrowers with three or more outstanding housing loans.”

They now make up for only 3 per cent of housing loan borrowers.

As such, the market will favour first timers as they are able to get up to 90 per cent loan and are considered as genuine home owners.

In addition, major urban centres across the country are expected to see strong demand for affordable homes due to the federal initiated PR1MA scheme.

Under this scheme, individuals or households earning between RM2, 500 to RM10, 000 can qualify for homes ranging from RM100, 000 to RM400, 000 that spans from Johor all the way to Penang and even Sabah and Sarawak.

“Malaysia’s relatively young population and labour force, increasing urbanisation, and general inclination to own a house, are factors that are expected to sustain strong demand for affordable residential properties in major urban centres, likely outstripping supply over the near and medium-term,” said iProperty.com in its second half of 2014 survey.

Kuala Lumpur

Most homes in the Klang Valley area are already out of reach for first time homeowners averaging more than RM600, 000.

Therefore, this market will primarily be driven by middle income and well-to-do locals as well as foreign investors.

Properties in prime areas are priced from RM2, 000 per sq ft onwards.

Last year, Kuala Lumpur’s prime areas witnessed a flurry of high-end condominium launches last year in Bukit Bintang and KLCC like Harrod’s and Banyan Tree averaging at RM3, 000 per sq ft.

Despite the prestige of such brand names, many locals tend to shy away from such projects due to overall quantum price.

However, high net worth Malaysians may still snap up such projects as these are considered “trophy properties”.

Even so, they are not likely to live in the area, preferring to rent it out or use it as their holiday homes.

For foreigners, these projects will be very popular due to the increase in minimum purchase price and their location right smack in the city centre.

On 1 March 2014, the minimum purchase price for foreigners buying properties in Kuala Lumpur was increased from RM500, 000 to RM1 million.

Hence, if we use RM2, 500 per sq ft as a price gauge, a studio apartment of 500 sq ft can easily fetch RM1.25 million.

Supply

According to DTZ Research, the third quarter of 2014 saw a healthy amount of new supply with the completion of another five high-end residential projects adding a total of 574 units to the market.

For the first three quarters of 2014, a total of 1,892 units have been completed.

The new completions in the third quarter were mostly located in the city centre, namely Brunsfield Residence@U-Thant (93 units), Madge Mansions (52 units), One@Bukit Ceylon (354 units) and an unnamed high-end residential development at UThant by Bandar Park Sdn Bhd (12 units).

Only one development, Kenny Hills Residence (63 units) is located outside the city centre.

Data from DTZ Research also shows that another 4,604 high-end residential units are expected to enter the market by the end of 2014.

Amongst the major developments expected to be completed in the fourth quarter of 2014 are The Elements (1,040 units) by Elite Forward, Sky Residence-Phase 2: Celesta & Divina (450 units) by SP Setia and Icon Residence (260 units) by Mah Sing Group.

For locals who are thinking of buying a home in the Klang Valley area, it is best to get small units like a studio as they can be easily rented out and sold to both locals and foreigners as their quantum price will be within the range for both locals and foreigners.

In addition, such units are limited in supply making them a rare find.

According to DTZ Research, the high-end residential market in Kuala Lumpur saw marginal growth in the rental values.

Average rents increased 0.7 per cent quarter-on-quarter, from RM3.59 per sq ft per month in the second quarter to RM3.61 per sq ft per month in the third quarter,

Moving forward, average rents are expected to fall due to the almost 6, 000 supply of new units will be coming on-stream in city centre from 2016 onwards.

Also, data from National Property and Information Centre (NAPIC), showed that Kuala Lumpur has an existing stock of 427,231 units with an incoming supply of 51,104 units.

All these factors will put pressure on rental yields.

For those who are thinking of renting out their properties, it is best to take a long-term investment horizon by focusing on capital appreciation.

The luxury sector also saw marginal growth in capital values.

According to DTZ Research, average capital values increased 0.7 per cent quarter-on-quarter, from RM758 per sq ft in the second quarter of 2014 to RM763 per sq ft in the third quarter.

This is expected to increase marginally, barring any economic crisis.

Selangor

Areas near the MRT extension, spanning from Sungei Buloh to Kajang Line are expected to be popular among locals as it will ease their commute time to Klang Valley, where many jobs are located at.

In addition, there are still affordable properties that can be found here from below RM600, 000 – well within the affordability price range for locals.

For locals, buying a property near the upcoming MRT stations will increase the overall desirability, rentability and capital values of your property as they will be in demand once the MRT line is completed in 2017.

For foreigners, they might skip Selangor altogether,

This is because there seems to be some sort of anomaly in Selangor’s property market as the minimum purchase price for foreigners has been increased to RM2 million effective 1 September 2014 in Zones 1 and 2.

The two zones include the Petaling, Gombak, Hulu Langat, Sepang, Klang, Kuala Selangor and Kuala Langat districts.

This is rather odd as the entry price in these areas are well below RM1 million.

As Selangor is located outside the Klang Valley area, the minimum purchase price here should follow Kuala Lumpur’s as not many foreigners will need a big space just to qualify for the RM2 million ruling.

In view of this, foreigners may be better off buying a property in Kuala Lumpur instead where the entry price is around RM1 million.

Supply

OLYMPUS DIGITAL CAMERA

According to data from NAPIC, Selangor will have the largest incoming supply for new homes in Malaysia as at the second quarter of 2014 bringing it to a total of 156, 296 units.

Those who are thinking of renting out their units will face great competition once these units come on-stream in 2016 to 2017.

Therefore, properties that are located close to the MRT lines will be very much in demand and can command higher asking price.

Properties near to upcoming MRT stations with interchange stations such as Kwasa Damansara in Kota Damansara, Sungei Buloh and Kajang will be highly sought after.

Kwasa Land Sdn Bhd is currently building a township in Kwasa Damansara for bumiputeras measuring 2,330 acres.

The township will be served by two MRT stations and four expressways – NKVE, Guthrie, NSE and the proposed Dash Highway.

In Kajang, a PR1MA housing project near the Kajang KTM and MRT stations are in the supply pipeline to be launched in the future starting from around RM158, 000.

Properties near to MRT stations generally command a five to 10 per cent premium in pricing compared to others.

Penang

Charming shophouses with Peranakan influences in Georgetown, Penang. Photo: Khalil Adis.

Charming shophouses with Peranakan influences in Georgetown, Penang. Photo: Khalil Adis.

Penang will continue to be popular among locals and foreigners as it is a major tourism destination with plenty of good food and old world charms unique only to the island.

In January, Penang scored a major feat when Britain’s respected newspaper, The Guardian listed the island as number 8 in the Top 40 global destinations.

This, in addition to Georgetown listed as an important UNESCO World Heritage Site, has resulted in increasing tourist arrivals and a popular destination for retirement.

According to media reports, citing Chief Minister Lim Guan Eng, Penang saw international and domestic arrivals increasing by 8 and 33 per cent respectively in 2014.

This is expected to have a positive impact on its property sector, particularly under the Malaysia My Second Home (MM2H) programme.

Penang is one of the top retirement destinations under this scheme.

Since March 2013, more than 21, 000 applicants have been approved and Penang has always come out top.

Due to its booming tourism industry and island effects, Penang has the second highest price index in Malaysia after Kuala Lumpur according to data from NAPIC,

For locals who find property prices here too expensive but still want to live on the island, fret not.

PR1MA homes in the pipeline include one in Bayan Lepas, not far from the airport and another in Bukit Gelugor.

In fact, Bayan Lepas is the next hot spot as it is close to the second bridge, free trade industrial zone and the airport.

However, the federal government has yet to announce their indicative prices for the PR1MA housing projects.

Other new hot spots where developers have been acquiring land parcels include those near the second bridge on the mainland.

Since the announcement of the second bridge in 2006, land prices have grown by leaps and bounds.

Data from Henry Butcher showed that land prices were around RM8 per sq ft in 2006 but has since moved up significantly to RM50 per sq ft.

EcoWorld and Mah Sing Group are developing projects at Batu Kawan and Seberang Prai respectively, not far from the second bridge.

The traditional prime areas of Gurney Drive, Georgetown, Tanjung Tokong, Tanjung Bungah and Batu Ferringhi will still be popular among foreign investors.

However, expect traffic congestions from Gurney Drive all the way to Batu Ferringhi in the future due to new projects that have been approved and future land reclamations for Eastern & Oriental Berhad’s project at Tanjung Tokong.

Supply

According to data from NAPIC, Penang has an existing stock and incoming supply of 383,017 and 64,224 residential units respectively.

Majority of the incoming supply will be on the northern part of the island where future land reclamations for Eastern & Oriental Berhad’s project is located at.

In addition, almost 1,500 residential units will be coming up in Batu Ferringhi

According to media reports, the Penang government recently approved an increase in density for an upcoming development here from 15 units per acre to 30 units in January.

Traffic congestion has always been a problem in Penang, particularly from Gurney Drive to Batu Ferringhi.

Previously, it was a one way road but the state government has since changed that so that vehicles can ply both ways.

Still, traffic congestion remains a problem, especially during public holidays and weekends.

The next mixed use development overlooking Ferringhi Park will dwarf other developments in the area and will add to the notorious traffic jams.

The area is popular among foreigners and there will be a high likelihood of vacant units as most foreigners view their investment here as holiday homes.

This will put pressure on rental yields.

In view of this, the property market will be challenging for investors.

Affordable to medium priced homes will see transactions in the resale and rental markets as they are geared towards locals.

High-end homes will be better off for your own stay and capital appreciation.

On the overall, the “island effect” will continue to see capital appreciation on Penang as majority of the areas that can be developed on the island are located in the coastal areas.

However, the incoming huge supply, especially in northern Penang will be a cause for concern.

Iskandar Malaysia

Named after the Sultan of Johor, Kota Iskandar is the administrative capital of Iskandar Malaysia. Photo: Courtesy of Iskandar Regional Development Authority (IRDA)..

Named after the Sultan of Johor, Kota Iskandar is the administrative capital of Iskandar Malaysia. Photo: Courtesy of Iskandar Regional Development Authority (IRDA)..

The residential property sector will be challenging and primarily driven by local buyers.

There are four projects of choices for bumiputeras spanning from Tebrau to Pasir Gudang with

The starting prices for the projects in Tebrau and Pasir Gudang start from RM180, 000 to RM185, 000 respectively onwards.

There is no indicative pricing yet for the projects in Masai and Pulai.

Pasir Gudang and Masai will be the new hot spot as it will enjoy the economic spillover from the largest oil and gas hub in Pengerang.

In addition, a new mixed-use development that will be coming up in Taman Seri Albion by UM Land is expected to create some 12, 000 jobs.

In other developments, the Bus Rapid Transit (BRT) line is expected to commence their service this year.

Therefore, areas along the BRT lines spanning from Bukit Chagar to Tebrau, to Senai and Nusajaya are worth looking into.

Foreigners will still look to Medini and Nusajaya as the latter is exempted from the minimum purchase price and Real Property Gains Tax (RPGT) while Nusajaya has better infrastructure and is well-planned.

JB Sentral is also expected to be popular as it will serve as a gateway to Singapore once the cross border rail service connecting Johor Bahru’s Rapid Transit System (RTS) connects to Singapore’s MRT by 2018 to 2019.

Expected to be in Bukit Chagar, the area will be popular among Singaporeans and Malaysian Permanent Residents (PRs) they can buy a freehold property in JB Sentral with full condo facilities whereas in Singapore, they can only buy an HDB flat.

In addition, the opening of Sungei Segget by end 2015 and various Johor Bahru rejuvenation projects will result in a positive impact on property prices in JB Sentral.

This, together with the newly refurbished Menara Komtar JBCC and Angry Birds Theme Park will further add vibrancy of the area especially the tourism and retail sectors.

Supply

Commercial properties will be popular as they are in limited supply compared to residential properties.

Data from NAPIC showed that as of the second quarter of 2014, the existing stock and incoming supply for shop units are 70,792 and 14,657 units respectively.

In comparison, there is currently an existing stock and incoming supply of 710,324 and 131,994 residential units respectively.

The main driver for the buying activity in the commercial sector will be the GST on commercial properties to be implemented on 1 April 2015.

Thus, some investors will look to buying commercial properties before the ruling kicks in.

Oversupply in the residential sector has been a huge concern and it appears the state government is acting on it.

It recently announced it will be putting a freeze on the supply of serviced apartments.

For investors who are thinking of selling their properties, it is best to take a long term investment horizon due to the huge supply coming on stream in 2016 to 2017.

This will put pressure on rental yields and result in high vacancy rates, especially in the Danga Bay and JB Sentral area.

In addition, as a foreigner, you will need to pay for Real Property Gains Tax (RPGT) should you sell your property in the first five years at 30 per cent.

On the overall, the strength of the Singapore dollar versus the weakening Malaysian ringgit will continue to spur investment across the causeway.

However, sales volume will not be as robust as before.