There is a rising interest in condominiums and serviced apartments in Johor Baru, says KGV Lambert Smith Hampton director Samuel Tan. These property types currently constitute about 11% of total transactions in Johor Baru, up from about 6% a year ago.
In presenting The Edge/KGV Lambert Smith Hampton Johor Baru Housing Property Monitor for 2Q2010, Tan also notes an increase of new condo launches in the past year, which have generated good responses.
Unlike the Klang Valley, the rise of high-rise dwellings is not a matter of a shortage of land, but rather a change of lifestyle. “It has become trendy to live in condominiums,” says Tan.
Developers have played a big role in bringing about this change as they began building condominiums of high quality, value that comes complete with full facilities and security.
“These kind of developments offer people not just a home but a lifestyle,” he says.
The price gap between landed property and high rises is also narrowing. “Before, the price of a condominium was equivalent to a 1-storey terraced house. Today, a condominium is the same price as a 2-storey terraced house,” he says.
Most of these condos are located outside the city in good townships, such as Taman Bukit Indah, which he defines as self-contained and well-planned, where even the landed properties are of high value. An example is D’ Esplanade Residence in Taman Century, which was launched early last year. The upmarket serviced apartments, by developer Khoo Soon Lee Group, saw its selling price appreciate by about 25% since its launch.
Improved bilateral ties to benefit Johor
More direct investments are expected to flow into Johor due to the improved bilateral ties between Malaysia and Singapore, says Tan. Of the RM14.95 billion invested by Singaporeans in the country to date in 2010, about RM6.9 billion flowed into Johor. Tan expects this to increase as businesses and infrastructure improve over time.
The improving Singapore economy will also affect Johor, Tan believes. “As the cost of living and housing increase, people will start looking for alternatives, most likely in Johor Baru. Our office is already getting more enquiries from Singaporeans about properties here,” he says.
Most of them are purchasing homes for rental or as second homes while corporate investors are interested in acquiring landbanks. There is also the small and medium enterprise (SME) sector.
Tan says that currently, besides old players like Keppel Land, there are no new Singaporean developers venturing into Johor.
“However, Johor is becoming a more attractive market. There is potential for appreciation and opportunities for Singaporeans to buy properties here when prices in Singapore get too high. I think Singaporean developers might take a second look at Johor soon,” says Tan.
The proposed rapid transit system link between Tanjung Puteri in Johor Baru and Singapore will have spillover effects for Johor Baru.
The proposed link will be jointly developed by both countries and is targeted for completion by 2018.
Policy changes to affect pricing
The prices of selected homes may increase over the next six months to a year with the raising of the threshold for foreign ownership of properties from RM250,000 to RM500,000. The policy came into effect on Jan 1, 2010.
Based on feedback from sampled developers, transactions from foreigners — particularly Singaporeans — increased slightly prior to the implementation date, says Tan.
“I believe developers will soon price selected homes that appeal to foreigners above RM500,000 to tap the market. But what will happen to local interest?” he says.
Tan believes that the policy is more relevant to the Klang Valley where home prices are higher than those in Johor. “Johor buyers will be affected. The government should not take such a policy wholesale and implement it throughout Malaysia. It becomes a dampener on a market that is desperately trying to pick up,” Tan laments.
The policy also places foreigners, who currently own properties below RM500,000, at a disadvantage as they can no longer sell to foreigners. Therefore, their bargaining power is not as strong as it used to be, says Tan.
“Even though developers have not started to push the prices up yet, it is a likely scenario,” he adds.
The secondary market has continued to improve in 2Q2010 as transaction volumes and prices increased slightly in several housing schemes surveyed, such as Bandar Baru Permas Jaya and Taman Perling, which sit at the end of the Eastern Dispersal Link and the East Coast Highway respectively.
These housing schemes are beneficiaries of ongoing infrastructure works, says Tan. The works include the construction of the Southern Link, Jalan Yahya Awal interchange and Senai-Desaru Expressway.
However, the gross rental yield has dropped, as rents have not risen in tandem with selling prices.
There were 20 new launches in JB in 2Q, with positive responses. Bandar Raya Developments Bhd (BRDB) soft-launched its Straits View Residences in Permas Jaya, setting a new benchmark as an exclusive strata-titled scheme with purely semi-detached houses (186 units) and bungalows (32 units).
Phase 1 of the gated and guarded development comprises 30 units of 2-storey semidees, 40 units of 2½-storey semidees, eight 2-storey bungalows and one 2½-storey bungalow. Prices range from RM848,000 to RM2.8 million.The development has a reported take-up rate of 80%.
S P Setia Bhd launched its Sky Executive Suites located in the Nusajaya Corridor. The serviced apartments comprise two towers of 363 units, with sizes of 751 to 2,778 sq ft. Prices start from RM210,000. The development has met with a take-up rate of 60% since its launch in March.
Also notable is the gradual transformation of Bandar Sri Alam located in the Eastern Gate development zone of Iskandar Malaysia, from a run-of-the-mill township into an innovative niche one called City of Knowledge.
The township will house several education institutes on its 51-acre site as well as an integrated government and commercial complex, and a transport terminal.
Thus, Tan expects good take-up rates for new launches and a boost for the secondary market in Bandar Sri Alam in the near future.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 817, Aug 2-8, 2010.
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