The redevelopment of Johor Bahru City Centre

As it is, Singaporeans are heading north to Johor Bahru (JB) for business, leisure and even to live. But with massive plans to re-develop JB into hubs of many industries, what impact will it have on the real estate scene there as well as here in Singapore?

coronationasquarePhoto credit:

Areas outside of Johor Bahru’s city centre, areas such as Iskandar Puteri and Danga Bay have been attracting many foreign investment dollars over the past few years. But JB’s city centre could be the place that will reveal major yields in the long term as it’s essentially the transport, retail and commercial hub of the city.

So it is perhaps not surprising that the government has put a RM20 billion (S$6.48 billion) plan in place to rejuvenate the ageing district. Launched in 2015, the plan aims to develop JB’s city centre into an international business district, complete with all-new infrastructure – the Ibrahim International Business District (IIBD). The most recent unveiling was the 268m link bridge which is targeted for a 2017 completion. It will connect the JB Sentral railway station and bus terminal to Persada Annexe, an extension of the Persada Convention Centre.

But perhaps the true gem of the project is Coronation Square, a major mixed use development. The RM$3 million project is overseen by Coronation Properties and consists of 6 towers – 2 office blocks, 1 condominium block consisting of 480 high-end apartment units, 1 block of serviced apartments, 1 hotel and 1 tower dedicated for medical purposes. The residential units have not yet been put up for sale, but the developers are so bullish about its potential they have already started the construction process.

AstakaJBAnother large-scale development near the city centre is the One Bukit Senyum project located just off the Tebrau expressway. Aside from a shopping mall, residences and a 5-star hotel, it will also house the Johor Bahru City Council‘s new headquarters. The residential component of the project is The Astaka, with 438 units spread across 2 blocks of 65- and 70-storeys. Already 300 units have been sold and Singaporeans make up more than half of the buyers.

As Singapore and Malaysia continues to improve on their inter-country accessibility, the demand for properties across both borders will remain high.

New 153,000 hectare township near KL planned for next 30 years

There are big plans for a big project spanning 153,000 hectares in Negeri Sembilan, just beside the administrative capital of Putrajaya. At twice the size of Singapore, the township will launch its first phase which at 11,000 hectares is 22 times the size of Sentosa, in Q3 this year. 

MVV ipropertyMYThe Malaysia Vision Valley (MVV) is a major township development which encompasses the Seremban and Port Dickson districts near the Kuala Lumpur International Airport (KLIA) and just an hour’s drive away from downtown Kuala Lumpur. The masterplan is managed by 2 government-linked entities – Sime Darby Properties and Kumpulan Wang Persaraan – and  is reflective of the Iskandar Malaysia development in Johor. The MVV will consist of 5 main clusters, namely: a Central Business District (CBD), residential estates, a nature city, an education and technology hub and a tourism and wellness precinct.

SenadaResidencesSimeDarbyPhoto credit: Sime Darby Properties

The residential offerings in this new township is expected to be at lower costs in comparison with the higher property prices in KL city. There seems to be future plans for an eventual merging of KL and Seremban within the next 2 decades and the current impetus is for the development to accrue RM290 million (S$93.9 billion) in investments and to become the hotbed of potentially 1.38 million job opportunities. The federal government has also put aside RM560 million to develop transportation infrastructure that will serve the MVV district.


Forest City aims to reach out to International market

As China’s foreign exchange reserves dipped, the authorities have taken steps to stem the outflow of capital by putting restrictions on investments by their citizens outside of China. Their aim is to stabilise the Chinese yuan. And what effect does this have on Malaysia‘s Forest City development? Not as much as it was deemed to have been.

forest-cityPhoto credit: Forest City

The Forest City development in Johor is part of the overarching Iskandar Malaysia master plan. Country Garden, one of China’s largest developers has recently signed a joint venture with Damansara Realty Berhad to develop the mega Forest City project in Johor. Despite having to shut down the showrooms in China, the project is still garnering interest from investors in the region, with many making the effort to visit show flats. Though China’s capital controls might have an impact on the Forest City project, it only drives the developers to market more aggressively in the international and regional markets, in countries such as Myanmar, Vietnam, Dubai, Japan and Taiwan.

8,000 units in Forest City have been sold last year, making it the largest of the 60 projects with the Iskandar Malaysia development. Other China-backed projects include Princess Cove and Danga Bay. The former had sold more than half of its 3,000 units last year.

CountryGardenJohorPhoto credit: Danga Bay at Country Garden

Allaying fears of a possible housing supply glut, Iskandar Regional Development Authority chief executive Ismail Ibrahim has conveyed the need for 500,000 more homes in Iskandar to cater to the projected population of 3 million by 2025. Current housing stock stands at 70,000, with an estimated 20,000 t0 25,000 more being built. Taking into account the 7 to 8 per cent growth rate expected in Iskandar, whether a property bubble develops might be dependent on the various factors associated with economic growth.

Minimum purchase price for Malaysian properties may increase

Foreign ownership of properties in Malaysia have been out of the news for awhile. And as popularity of homes in Iskandar Malaysia has risen, especially amongst Singaporean investors, the Malaysia government may be considering raising the entry price bar for foreigners, in turn making it easier for Malaysians to own property.

KL Kepong PropertyAs the ringgit continues to weaken, the Malaysian government may increase the minimum purchase price for foreign buyers of Malaysia properties. The move may not affect foreign buyers as much since the currency exchange rates still favour them for now. The Housing Minister Noh Omar says the motivation behind the possible policy change is to give Malaysias more options and availability when it comes to property ownership.

The minimum purchase price for foreign property buyers has been raised twice in the last 20 years and currently stands at RM1 million (S$318,000). State governments are however allowed to set their own limits. The Penang state government has for example set their minimum purchase price at RM800,000. The government is in discussion on the 2 options in which the policies can be adjusted – 1) to raise the floor price of RM1 million per property or 2) to set the minimum purchase price in US dollars for all foreign buyers.

But before the new policies are implemented, will there be increased fervency for Malaysian properties, especially in states popular with foreign buyers such as Penang, Malacca, Kuala lumpur and the Iskandar Malaysia region?

Glass tower condominium project in KL

eatonresidencesgshThe glass ceiling may not be such a bad thing in the case of this 52-storey private residential project in Kuala Lumpur. The massive development will feature an all-glass facade and an infinity sky pool – the highest in KL.

Developed by Singapore’s GSH Corporation, it is the developer’s first condominium launch in KL though they already have a slice of the real estate pie with their involvement in the Sutera Harbour Resort in Kota Kinabalu and also the Coral Bay@Sutera residential development just next to The Magellan Sutera Resort .

eatonresidences2Photo credit: GSH Corporation

Overlooking the Petronas Twin Towers and Royal Selangor Gold Course, the 52-storey Eaton Residences will have views that may be well worth the RM1.14 million (S$375,000) to RM4.92 million (S$1.62 million) price tags. The 99-year development is slated for a completion date of 2020 and will consist of 632 units, each with a unique view of either the Petronas Twin Towers or the golf course due to the specially-designed tilt of the building. It will have a good range of 635 sq ft one-bedders to 2,874 sq ft four-bedders as well as penthouses sized between 2,200 to 3,000 sq ft priced at RM$4.19 (S$1.38 million).

GSH has released 200 units in its initial launch where 150 units have already been booked through private previews.

Penang properties a hit with Singaporeans

Over the recent decade, Penang has quickly found favour with foreign investors, many of which are Singaporeans. And many have invested in vacation homes and condominium units to earn rents on.

Penang ShophouseAs the prices of Singapore’s pre-war era shophouses skyrocket, many are turning to snapping similar properties in Penang, Malaysia. In the World Heritage Site of George Town, foreign buyers have been buying up pre-war shophouse units to renovate and refurbish and then renting them out, at times up to 5 times the previous rental rates. Just slightly over half a decade ago, rental rates were about RM$1,300. Now, monthly rents can easily come up to RM$10,000 – that is about 8 times higher than in 2010.

Tropicana Bay Condo PenangIn fact, so many Singaporeans have bought up these shophouses along a street near Komtar, that the place has been nicknamed “Little Singapore”. Some locals have expressed their concerns about the commercialism of George Town and that some local businesses or residents may be chased out of the area by rising rents. Most Penang property owners charge around RM$4,000 for monthly rents, less than half of what foreign property owners are asking for. Some local NGOs are lobbying for rent control and some traditional organisations such as the Cheah Kongsi who owns about 100 shophouse units and have kept rental prices between RM$1,500 and RM$2,700 to allow the city’s British Straits Settlement heritage to live on.

But market analysts are also aware of the high cost of conservation for these pre-war properties and foreign property buyers such as World Class Land are able and willing to put in the monies to keep the integrity of these historic properties.

No signs of weakening China property market

Shanghai and Shenzhen – both super cities for properties. Home prices in these 2 top-tier cities have not waned despite China’s government tightening rules on the property market.

Savannah Hong KongIn April this year, home prices in Shanghai and Shenzhen continued to rise 2.3 and 3.1 per cent respectively. Though the numbers are slightly lower than March’s 3.7 and 3.6 per cent, in light of economic instability in other countries, this is a good sign. Even within China, where internal restructuring, higher global competition and weakening demand have began to put the brakes on their economy, the property sector continues to enjoy the momentum of growth.

Just over a year, home pieces in Shanghai  have risen a whooping 62.4 per cent and that in Shenzhen have grown 28 per cent. Across 70 cities in China, home prices are now 6.2 per cent higher, a further increase from the 4.9 per cent in March. Besides buying in the mainland, Chinese investors are also buying up properties in various other international cities such as Vancouver, Sydney, Melbourne, Hong Kong; and countries such as New Zealand, Malaysia, Cambodia and Thailand.

Canada HouseEven while property prices in first- and second-tier countries continue to accelerate, third-tier cities are also beginning to post positive growth after a period of declining interest and sales. Policy makers are however concerned about the excessive lending and rising debt levels and may be prompted to tighten lending rules and implement further measures.

EduCity and Medini – Iskandar’s Bright Spots

Albeit a sluggish 10-year development period for Iskandar, with some projects and real estate developments taking longer than expected to take off, some bright spots have emerged and investors are still hopeful for value appreciation.

The Iskandar Region Development Authority (Irda) estimates a 50 per cent materialisation of the RM187.96 billion already invested into the development. It’s ultimate target is to attract RM338 billion worth of investment monies into the region by 2025. For now, the main developments and attractions are education and healthcare.

MEdini SignaturePhoto: Medini Signature

In EduCity, the international education institution Malborough College Malaysia has brought about 823 students and their families to the region. The school is about a 10-minute drive away from the Tuas second-link in Singapore while also offering boarding facilities. Other tertiary institutions under the EduCity scheme include the Netherlands Maritime Institute of Technology and Newcastle University of Medicine Malaysia. Soon the Management Development Institute of Singapore (MDIS) and Raffles American School will also open, boosting the population and perhaps real estate growth in the vicinity.

Real estate in Nusajaya City could benefit from the EduCity development while the Medini Iskandar project looks to bring in investment monies through healthcare. Gleneagles Medini has already opened its doors in 2015 and soon Regency Specialist Hospital, Thomson Medical Centre and more KPJ Group healthcare centres will join the ranks.