Developers adapt in Johor as market slows

KUALA LUMPUR: The property market outlook in Johor remains positive despite concerns of oversupply in the state, as developers scale back on launches and change strategies in response to the cooling market, said the Malaysian Institute of Estate Agents (MIEA) Johor state branch chairman Vadeveloo Suppiah (pix).
According to him, many units have been planned and launched in the state especially in the Iskandar Malaysia (IM) economic zone but take-up rate has been slow, especially in the second half of 2012 and moving into 2013.
"Some have been sold, some are under approval. With the cooling measures, some developers who were supposed to launch, are scaling back and some like UEM Sunrise Bhd with a big landbank are shifting towards township and landed properties or industrial parks instead of doing serviced apartments and condominiums which they had planned earlier. Now they are shifting while waiting for the market to recover," he told reporters at the MIEA Annual Malaysian Property Market Outlook yesterday.
He said one of the concerns is the sustainability of prices especially for condominiums in IM with the large incoming supply namely Country Garden's 9,500 units, R&F Properties' 32,000 units over 10 to 15 years, The Greenland Group's 2,200 units and 80,000 units in Danga Bay, Senibong, Medini with some scattered around the Johor Baru city area.
Vadeveloo said the cooling measures announced in Budget 2014 were effective in Johor and the state's house price index contracted 1.6% quarter-on-quarter in the second quarter of 2014.
"This is the first decline in 27 months, on weaker buyer sentiment due to government cooling measures in Budget 2014 coupled with new strict government policies on foreign purchase especially on supply in certain sectors," he said.
Vadeveloo said state policies to address oversupply has slowed down the market this year especially in the first half, and especially in the condominiums and serviced apartment market. The move also tremendously reduced the number of speculative buyers.
Some of the measures include the foreign purchase consent fee, which was increased from a flat fee of RM10,000 to 2% of purchase price now, the 7.5% levy for release of bumiputra units and the RM1 million floor price for foreign purchases except for projects with special approval and those in Medini.
However, the outlook remains positive with total investments in Johor to exceed RM20 billion this year. The total cumulative committed investments up till September this year is RM156 billion with 50% already materialised.
"Landed residential properties in IM continue to see healthy demand and stabilised prices. Demand from first time buyers, upgraders who live and work in Johor, and Malaysians working in Singapore, remain strong," said Vadeveloo.
He said the completion of various infrastructure projects such as the Eastern Dispersal Link Expressway and coastal highways have improved connectivity and unlocked the value of land nearby while the completion of projects such as Legoland, Johor Premium Outlet and Pinewood Iskandar Malaysia Studios have boosted the confidence level of developers and purchasers.
Meanwhile, investments such as the Pengerang Integrated Petroleum Complex and Microsoft Corp's data centre in Kulai Jaya will create more jobs and boost the population in IM.