Johor Bahru still digesting existing and incoming high-rise homes

PETALING JAYA (Aug 9): While fewer launches of high-rise homes in Johor Bahru are planned this year, the market will still need time to digest its existing and incoming supply of high-rise homes, said Knight Frank Malaysia in its latest property market report.

In the “Knight Frank Malaysia Real Estate Highlights for First Half of 2016”, the real estate services firm said the number of new launches will likely be decreased on the back of the state government’s decision to halt new approvals for high-rise residential projects to allow existing supply to be absorbed.

“Developers are keen to sell off their existing stock before starting new launches,” it added.

Nevertheless, there are still good deals to be found and momentum is building among buyers, said the report.

Knight Frank Malaysia noted that the most anticipated new high-rise apartments launched in the first half of 2016 (1H2016) is phase one of Forest City, which comprises 482 units with built-ups from 753 sq ft to 1,862 sq ft and gross selling price from RM1,200 per sq ft.

Knight Frank Malaysia said while the 1,386ha mixed-use development project has done much to draw attention to Johor, given the dampened economy, many consumers are still waiting for “encouraging signs” before they invest in property.

The firm also noted that catalytic projects are needed in Johor to spur growth and investment — with the state’s development corridor Iskandar Malaysia achieving cumulative investments of RM202 billion as at 1Q2016.

“Spearheading these will be the infrastructure improvements such as the High Speed Rail (HSR) connecting Kuala Lumpur to Singapore and the Rail Transit System which will connect Johor Bahru to the MRT of Singapore.”

It said the recent signing of the memorandum of understanding (MOU) between the governments of Malaysia and Singapore for the HSR is an encouraging sign.

“There is no doubt that when these mass transit links become operational there will be a fresh injection of interest and added development impetus in Johor Bahru.”

On the other hand, prime retail space in Johor Bahru continues to perform well with occupancy rates of over 80% as at end-2015, commanding gross rentals ranging from RM15 to RM40 per sq ft per month.

By the end of last year, the total net lettable area (NLA) of Johor Bahru retail space (including shopping centres, arcades and stand-alone hypermarkets) stood at about 11.78 million sq ft, with an average occupancy rate at 78.2%.

The office market registered an overall average occupancy rate of about 78% as at the end of last year, a slight increase compared to the previous year.

The total NLA of purpose-built office space which includes private buildings and government buildings in Johor Bahru stands at approximately 8.87 million sq ft.

Rentals of prime and non-prime CBD office space remained stable, with asking gross rental for prime space ranging from RM2.50 to RM3.50 per sq ft per month while non-prime office space commanded gross rental of between RM1.80 and RM2.50 psf per month.

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