HSR is great for Iskandar Puteri but watch out for Jurong

PETALING JAYA (Sept 9): Iskandar Puteri (Nusajaya), Johor would benefit from the Kuala Lumpur-Singapore High Speed Rail (HSR) link but one needs to be aware of the competition from Jurong, Singapore, said Nawawi Tie Leung Real Estate Consultants Sdn Bhd consulting and research director Saleha Yusoff.

An intermediate HSR station has been proposed at Iskandar Puteri just before the line ends at the HSR terminus in Singapore’s Jurong East. The KL-Singapore HSR is expected to start operations around 2026.

Saleha said Jurong has been planned to become Singapore’s second CBD or central business district and it is expected to compete with Iskandar Puteri in attracting companies to operate there. She was speaking during a special briefing on Iskandar at the 19th ASLI-National Housing & Property Summit 2016 in Bandar Sunway yesterday.

"If we are targeting some companies from Singapore to relocate to Iskandar Malaysia, especially Iskandar Puteri, we need to be mindful of the competition of Jurong," she said.

She noted that the HSR may be seen as a game changer but there are other not so rosy possibilities as well. For instance, there may be more day trippers from Singapore opting to visit Kuala Lumpur instead of Johor Bahru, thus affecting the retail market in Iskandar Puteri.

Competition from Chinese developer Country Garden’s Forest City development in Johor Bahru may also impact the office market in Iskandar Malaysia, she added.

"Currently, more than 4,000 units in phase one of Forest City have been sold and we do not know how much office space will be built in the project in the next five to 10 years," she said.

She added that the Chinese developer has good development execution and it can complete a high-rise property in eight months, compared with the usual two to three years that Malaysian developers take.

"The Chinese developer not only has better marketing strategy, but also has the ability to build at a faster pace, so market players need to come up with creative marketing strategies, otherwise we will see more vacant office space in Iskandar Malaysia."

According to Saleha, the offices in Iskandar Malaysia have recorded 78% occupancy as at the second quarter of this year (2Q2016) with nine million sq ft of supply coming in, in the next five years.

Based on the 233,000 sq ft average absorption per annum over the last 15 years and the expected 150,000 to 200,000 new jobs coming in, in the future, the office occupancy rate in Iskandar Malaysia would drop to 73% with three million sq ft of space vacant.

On the other hand, transaction volume of residential properties in the economic zone would pick up when the property market rebounds from the current downturn, said Saleha. The number of residential property transactions in Iskandar Malaysia declined by 32% from 24,165 units in 2014 to 16,491 units in 2015.

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