City & Country: Good take-up for unsold stock

Developers in Johor Baru have reported improving sales since 2Q2009 in tandem with the overall economic outlook. “Low borrowing cost and payment schemes, such as zero- cost packages rolled out by developers, are helping to encourage more transactions,” says KGV-Lambert Smith Hampton Johor director Samuel Tan.

There have not been many new launches as most developers are clearing unsold stock. “The take-up has been good. The demand is there when there are limited units; people will not want to lose out,” says Tan in presenting The Edge/KGV-Lambert Smith Hampton Johor Baru Housing Property Monitor for 3Q2009.

According to Tan, a property market that is only starting to emerge from a recession needs to be tackled differently. He says developers are changing their marketing approach and becoming increasingly aware of the factors that make a development attractive, such as convenience, price and proximity to shopping facilities.

“We are also seeing developers choosing to soft-launch their products first to test the market and scaling down the number of units for launch. For properties tagged at RM700,000, we are looking at an average of 40 to 150 units launched and for those below RM200,000, it will be about 200 units,” says Tan.

Despite the slowdown, prices have been maintained, with developers offering better designs and finishing.

Most of the new projects are located within the Tebrau Corridor, where the purchasing power is the strongest.

New launches
In 3Q2009, some 16 new developments were unveiled, of which two were considered interesting — the Ujana Executive Apartments by UEM Land Bhd and Mudra Tropika’s 2-storey cluster houses.

The Ujana development in Skudai is noteworthy because it is a high-end apartment located in a new area. “High-end apartments are not common in Johor, and this particular development is targeted at the higher-income group and foreigners. It also comes with guaranteed rental returns of a minimum of 14%,” says Tan.

The Ujana apartments are selling from RM320 to RM360 psf, with sizes ranging from 911 to 2,480 sq ft. The development, comprising 168 apartments and four penthouses, was launched in September.

Mudra Tropika’s landed development called Nong Chik Heights in Johor Baru is located on Malay reserve land and is the first of its kind to feature a honeycomb housing design. “This development can be a challenge because of its design — it is neither a terraced nor a semi-detached housing development. Honeycomb housing is, as its name suggests, a cluster of houses built around each other like a beehive. A honeycomb housing promotes community living, but the design also ends up with odd corners in the house,” says Tan.

The development, comprising 82 units in Phase One, was given a soft launch in August and offers built-ups of 1,658 to 3,024 sq ft at prices ranging from RM295,500 to RM407,500.

Secondary market
For homes on the secondary market, despite a general improvement in market sentiment, investors and property purchasers continue to adopt a “wait-and-see” attitude as they seek stronger evidence of a recovery, says Tan.

According to the Johor Baru Housing Property Monitor for 3Q2009, rents and house prices on the secondary market in Johor have stabilised since the beginning of the year. As investors and buyers are still taking a cautious approach, factors such as location become even more critical in motivating buyers.

“Certain areas are more popular than others such as Taman Bukit Indah, houses along the Pasir Gudang Highway and particularly Bandar Baru Permas Jaya, which is reaping the benefits of the Eastern Dispersal Link due for completion in 2011,” says Tan.

Homebuyers generally prefer to buy from developers on the primary market, where prices are more stable and more likely to appreciate in the future.

Tan believes that once some infrastructure work being carried out in Johor is completed, more buyers will be attracted to the secondary market. The rapid recovery of Singapore’s property market will also have spillover effects on the market in Johor, he says.

Looking ahead
According to Tan, much hope is pinned on Iskandar Malaysia. “From what we have observed in 3Q2009, we are beginning to see tangible infrastructure work being done. These are foundation works that will benefit the property market in the future,” he says.

In the meantime, Tan feels that the government should offer developers some incentives to encourage them to move forward with their projects.

Policies on bumiputera quotas and low-cost housing should be amended, while measures should be taken to reduce the inventory of unsold properties.

Tan notes that with the recent shift of the state administrative centre to Kota Iskandar, the central business district (CBD) may risk becoming a ghost town at night. “A comprehensive plan should be drawn up to encourage people to stay in CBD day and night,” says Tan.

On building trends, Tan feels that waterfront projects, such as the joint-venture project between Iskandar Waterfront Developments Sdn Bhd and Danga Bay Sdn Bhd in Danga Bay, will usher in a new type of housing not seen before in Johor. “Developments along the pristine waterfront are something that other states may not be able to offer. We should capitalise on this. We expect it to be a more common feature for Johor in the future,” says Tan.


This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 778, Oct 26-Nov 1, 2009