The values of homes in a number of areas in Johor Baru trended upwards on the secondary market in 1Q2012. Prices in most areas sampled in The Edge-KGV International Property Consultants Johor Baru housing property monitor 1Q2012 were higher, thanks to the completion of the West Coast Expressway and Eastern Dispersal Link (EDL), and good property market sentiment in Iskandar Malaysia, says KGV International Property Consultants (Johor) Sdn Bhd’s director Samuel Tan.
In the Plentong/Pasir Gudang, Nusajaya/Skudai and Tebrau/Kempas areas as well as Pontian Road, most 2-storey terraced houses saw price growth. For instance, the value of a 1,400 sq ft house in Taman Setia Tropika in Tebrau/Kempas increased 9.37% from the previous quarter to RM350,000.
Similarly, three of the six apartment developments surveyed — Straits View Condominium, Lagenda Tasek and Molek Pine Tower 2 — registered growth. A 1,600 sq ft unit on the middle floor of Block F at Straits View saw the highest growth, rising a whopping 20% to RM600,000.
Meanwhile, almost half of the 2-storey semi-detached/cluster houses sampled also registered growth. These homes in Adda Heights within Tebrau/Kempas saw an average gain in value of 11.11% to RM500,000.
“The positive effects of the Southern Link were not felt in places that it has yet to reach. Apart from that, the property types in some of the samplings may not be as popular as others,” says Tan.
He expects prices of new homes to stay at 1Q levels in the near future or rise marginally.
“Homes launched in Nusajaya may see an increase in price when some of the catalytic projects open for business, but I don’t anticipate it to be much. When the effects of the new highways are fully felt, schemes benefiting from them will also see an upward adjustment on the secondary market,” Tan observes.
Rental rates have not kept pace with the growth in values, but Tan says this is typical. “When house prices become too high for some, they resort to renting as the alternative. This happens at schemes that are in demand. Those that are not popular will not see any change in rental rates. Apart from that, the economy determines the direction of the rental market. In a growing economy, the popular schemes will likely see an increase in rental rates. But if the economy is uncertain, the rental market will not perform well whether or not the scheme is popular. Consumers become more cautious about their expenses.”
He notes that the rental market in areas where catalytic projects such as Legoland, EduCity, Lifestyle Mall and the indoor theme park are expected to be completed, will improve with an increase in job seekers and traffic.
Tan says the favourite areas are still those in the Tebrau and Skudai corridors. Meanwhile, foreign investors continue to train their sights on Nusajaya. “Schemes in Nusajaya that are close to Johor Baru will be much sought after,” Tan says.
The EDL’s completion has improved accessibility to east Johor Baru. “For example, it used to take 30 to 45 minutes to drive from Taman Molek to the city centre. Now, it takes just 15 minutes. Hence, schemes along the EDL will benefit,” he adds.
The northern part of the city too is poised for a transformation. “It will be a seamless connection from the North-South Expressway to the EDL and then all the way to the city and Singapore,” observes Tan.
He says those that will benefit from the connection are Bandar Baru Permas Jaya, its neighbours Taman Setia Tropika, Taman Molek and Taman Ponderosa, the Tebrau corridor and townships such as Taman Austin Heights, Taman Austin Perdana, Taman Setia Eco Cascadia and Taman Kempas Utama.
“A sizeable portion of Johor Baru’s property buyers are those working in Singapore. This category will explore the properties mentioned above,” says Tan.
Tan notes the introduction of more high-rise serviced apartments to the Johor Baru market. “In the city centre, this is due to the lack of large tracts for landed properties. Outside the city, stratified properties offer security features that are a necessity. If priced right and made affordable, these properties often see good take-up rates.”
He says serviced apartments in Nusajaya have been well received by foreign buyers as they are easier to maintain as holiday homes.
“It is very noticeable that the high-rises launched have a high percentage of units with small floor areas of less than 700 sq ft. In this way, the units become affordable even to the locals. Foreigners are also more comfortable with high-rises, especially those from Singapore.”
Tan points out that serviced apartments are also a popular option for developers in Johor Baru as they can be built on commercial land at a higher density — at over 80 units per acre compared with 40 units per acre of residential land. This translates into higher profits.
“A change in trend over the last five years with consumers more willing to live in stratified properties is also apparent. Oftentimes, the price of a serviced apartment can be similar to or lower than that of 2-storey terraced houses. The added features of security, recreational facilities, better view and so on are what make consumers favour high-rises,” says Tan.
He observes that the prices in current launches are higher, although the take-ups are still encouraging, thanks largely to the newly completed highways offering easy accessibility.
“Improved confidence in Iskandar Malaysia staying on track could be another factor. The completion of several catalytic projects this year and next will bring about an increased demand for housing.”
Tourist arrivals are also expected to improve, boosting the business environment.
Tan highlights some of the significant events of the past few months — the formation of a new work group for industrial cooperation between Malaysia and Singapore; the completion of the EDL, Western Coastal Highway and most of the Southern Link; the proposed rejuvenation of the Johor Baru city centre; and a possible increase in the property price threshold for foreign investors.
The work group, formed in January under a joint ministerial committee, is tasked with promoting mutually beneficial twinning of economic activities between Iskandar Malaysia and Singapore.
“Iskandar Malaysia can provide infrastructure and industrial facilities for project expansion by Singapore companies or for projects that want to come to Singapore but cannot be accommodated there. The manufacturing sector, which represents about a quarter of Singapore’s economy, is continuously upgraded and is growing. However, the city-state has space and manpower constraints. Synergistic developments based on the impetus of Singapore and the existence of Iskandar Malaysia as a large hinterland have proved workable.”
Tan also expects the new highways to cause shifts in demographic and property development trends. For instance, the EDL — which connects the Customs, Immigration and Quarantine (CIQ) complex in Johor Baru to the North-South Expressway — is expected to positively impact properties along it.
“The partially completed Southern Link has rejuvenated the property landscape along Bandar Baru Permas Jaya and beyond. Developers are now planning high-end properties rather than the usual mass housing. Among some of them are Senibong Cove and Senibong Villas,” Tan says.
In March, Prime Minister Datuk Seri Najib Razak announced 11 rejuvenation projects in the Johor Baru city centre. These entail environmental beautification, a RM1.8 billion revival of Sungai Segget and the upgrading of public transport.
“This is a timely move. Any region must have a vibrant city centre where residential, commercial, leisure and a host of other developments can complement each other. The historical heritage and value of the city centre should be preserved or enriched. The point is to make it liveable day and night,” Tan says.
Tan opines that the CIQ should be used as a “staging platform” to direct traffic flow and development.
Through activities and amenities, inner-city living should be encouraged, he adds. “This is possible because many of those who work in Singapore will find it very convenient. All stakeholders must come together to craft a workable master plan.”
The possibility of a higher price threshold — RM800,000 or RM1 million — for house purchases by foreigners, however, worries Tan. He calls it a “regressive move”, although the majority of purchases by foreigners are already over RM800,000.
“In Johor Baru, we have been waiting for recovery since 1998. We cannot afford to have the foreign investors lose confidence. The proposed new price threshold may not affect market sentiment, but it will send wrong signals to prospective buyers. No investor likes uncertainty.”
He adds that developers may, out of commercial necessity, start producing more products priced at RM800,000 or higher and create an artificial scarcity for mid-range houses.
“From my observations and discussions with developers, it appears that the bulk of foreigners is buying properties in Nusajaya. This could be due to their misconception than Nusajaya is Iskandar Malaysia.
“Also, Nusajaya is better promoted regionally. And it being a greenfield allows a planned development with interesting features such as Puteri Harbour, the indoor theme park, Legoland, high-end housing and so on.
“The homes there are also of contemporary design, which is appealing to foreigners. There is much emphasis on greenery and security as well.”
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 911, May 21-27, 2012
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