City&Country: Market braces for slower year

Prices and monthly rentals of homes on the secondary market in Johor Baru remained largely unchanged over the last two quarters of 2011, although certain housing schemes stood out with significant price growth.

The eurozone crisis has dampened buying sentiment somewhat and “the market will remain cautious if the current world economy remains uncertain,” says KGV International Property Consultants Sdn Bhd (Johor) director Samuel Tan when presenting The Edge/KGV International Property Consultants Johor Baru Housing Property Monitor for 4Q2011.

He notes that the market has turned somewhat cautious, as people are becoming more selective because of higher borrowing costs now and a reluctance to commit to bigger-ticket items over concerns about employability in the current uncertain economic climate.

He also lists signs to look out for. “Increased non-performing loans are signs of an unhealthy market. In the primary market, it is another adverse sign when developers start to ‘throw’ prices due to unsold stock. These will be precipitated by a tougher business environment and a higher unemployment or under-employment situation,” says Tan.

According to the sampling in the monitor, home values in Johor Baru remained stable with increases in specific developments that have benefited from improved infrastructure or their proximity to upcoming landmarks, says Tan. New property launches in the vicinity of some of these developments have also propped up prices.

Price growth was noted for the landed homes sampled in the property development hotspot of Tebrau/Kempas. The standard 2-storey terraced homes in Taman Gaya for instance saw a quarterly growth of 7.1% to RM300,000 from RM280,000 in 3Q while similar houses in Taman Setia Tropika rose 3.22% to RM320,000 from RM310,000.

Values of 2-storey semi-detached/cluster homes in most of the selected schemes sampled in Tebrau/Kempas also rose significantly in 4Q including in Taman Gaya and Adda Height, which recorded a 12.5% hike to RM450,000 from RM400,000 in 3Q. In Austin Heights, prices appreciated 5.77% to RM550,000 from RM520,000 and in Taman Setia Indah, prices rose 3.57% to RM580,000 from RM560,000.

Tan attributes this growth to two factors, namely more launches of new properties in the area that have boosted values as well as the area’s popularity among the middle to high-income group, resulting in more transactions.

Meanwhile, monthly rents remained the same as the previous quarter across all types of housing in the sampled areas.

Overall gross yields continued to drop with only a few areas registering very modest growth, in the region of under 1%.

Record launches in 4Q
In the primary market, the Johor property market ended 2011 on a strong note with the most launches in a long time that were largely well received, says Tan.

He attributes this exuberance on the part of developers and buyers to the good sentiment that has buoyed the property market thus far.

“Developers want to catch the overflowing good sentiment before government policies slow things down [like the use of net income to approve loans and the increased loan-to-value ratio],” he says. However, Tan expects a quieter 2012 with developers holding back their launches as tighter banking regulations kick in.

He points out two trends in the market, namely the rise of serviced apartments and condominiums as well as more bungalow and semidee launches.

“Serviced apartments represent a new generation of properties and a new price threshold in the market,” he says.

Most of these are targeted at singletons, young couples or small families, he adds. However, a significant portion of four of the most notable serviced apartments launched in 4Q were snapped up by foreigners, mainly Singaporeans, says Tan.

According to Tan, among the four more significant projects launched are Dijaya Corp Bhd’s Tropez Residences in Tropicana Danga Bay in Iskandar Malaysia; UEM Land Holdings Bhd’s Imperia Condominium in Puteri Harbour and Impiana Resort Apartment in East Ledang, both in Nusajaya; and WCT Bhd’s 1Medini Residences, also in Nusajaya. Their overall take-ups average 65% to 70%, he says, citing reports.

This interest from foreigners and Singaporean buyers may be due to the imposition of a 10% stamp duty on foreigners buying properties in the island republic as well as local buyers who are purchasing their third property, says Tan.

“Some serviced apartments that were launched two years ago have also seen their values go up. For example, [S P Setia Bhd’s] Sky Loft Premium Suites in Bukit Indah and the Sky Gardens Residences in Setia Tropika have risen from RM380 psf on average to RM480 psf,” he says.

Meanwhile, bungalows and semidees are coming up in good addresses,  thanks to strong demand for these products as evidenced by the encouraging take-ups of these property-type launches in places such as Taman Seri Austin, Taman Austin Heights and Senibong Cove.

Major announcements and developments
There were a number of significant announcements in 4Q2011. These included RM2.5 billion worth of mixed-use residential and commercial developments, of which two out of three phases will be jointly undertaken by Iskandar Investment Bhd (IIB) and Qingdao Zhuoyuan Investment Holdings, a subsidiary of China’s Zhouda Real Estate Group.

IIB and Zhouda inked two framework agreements to develop these projects last November. This marked the first time a developer from China had invested in Iskandar Malaysia.

In December, Sunway Bhd announced that it had, via a joint venture (JV) with Khazanah Nasional Bhd, acquired the leases for a period of 99 years for two adjacent parcels measuring 691 acres from IIB for RM745.3 million.

The parcels in Zone F Medini have an estimated GDV of RM12 billion, and the acquisition has boosted Sunway’s landbank in Johor to 755 acres, with a GDV of RM13 billion.

The group will form a JV with Khazanah’s unit, Dayang Bunting Ventures Sdn Bhd, to form Semerah Cahaya Sdn Bhd, which will be responsible for conceptualising, managing, implementing and developing the 691 acres.

“A developer with a good brand going into the area in a big way bodes well for Iskandar Malaysia,” Tan says.

Another positive announcement is the MRT tunnel linking Malaysia with Singapore. According to a report, the line is expected to be an extension of the Thomson line and the stations are expected to be somewhere in JB Sentral and the Republic Polytechnic — representing the Northernmost point of the line in Singapore. The line is expected to be completed by 2018.

In addition, as part of a land swap deal, the Malaysian and Singapore governments have also set up a committee to explore the possibility of relocating factories in Singapore to Iskandar Malaysia.

In November, it was announced that Singaporean businessman Peter Lim and the Johor royal family had inked a deal to acquire a 24.71-acre piece of prime waterfront land to build a medical hub and marina city. Phase 1 will entail the development of a 200-bed hospital, serviced apartments and a mall, says Thomson Medical Pte Ltd.  Its subsidiary, Thomson International Health services, will manage the hospital.

“Singaporeans will be coming in a big way once they see Iskandar Malaysia crystallising. 2012 to 2013 is a critical period. It is the ‘tipping point’ where catalystic projects happen,” Tan says.

Meanwhile, 4Q also saw the opening of Johor Premium Outlets (JPO) in Kulai, which sells branded designer goods at a discount. While it is a little quiet on the weekdays, Tan says throngs of shoppers — many of them Singaporeans — visit the place every weekend.

The opening of the stores has boosted the value of homes in the vicinity, thanks to its vibrancy and the opening of the Coastal Highway.

“It is 20 minutes away from the toll after the Second Link Highway. Actually the Coastal Highway was officially opened with the JPO and as a result, a whole stretch of housing schemes have actually gone up in value and are most in demand such as Taman Nusa Idaman and Ledang Heights,” Tan says. Based on the monitor, 2-storey terraced homes in Nusa Idaman in the Nusajaya area rose to RM420 in 4Q from RM350 in 1Q2011.

Other significant announcements include the opening of the new Multimedia University and University of Reading campuses in Iskandar Malaysia, notes Tan.

“It bodes well for Iskandar Malaysia when we see things moving.”

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 898, Feb 20-26, 2012

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