Landed home prices continue to rise

RESIDENTIAL property values on the secondary market in Johor Baru continued to grow in 4Q2012 with gains typically ranging from 5% to 8% from the previous quarter, according to The Edge-KGV International Property Consultants Johor Baru housing property monitor for 4Q2012.

Growth is expected to continue as new components within Iskandar Malaysia, such as Pinewood Malaysia Studios, open. Pinewood Studios will generate some 1,500 job opportunities in various film pre-production lines, while other newly-opened projects such as the Legoland and Puteri Harbour Family Theme Park gain traction as tourist attractions, KGV International executive director Samuel Tan tells City & Country.

In the Nusajaya/Skudai area, 2-storey terraced houses and 2-storey semi-detached homes in most of the schemes sampled recorded higher values. For instance, 2-storey houses in Horizon Hills appreciated by 8.33% to RM650,000 from RM600,000 in 3Q while prices of semidees inched up 3.53% q-o-q to RM880,000 from RM850,000.

Nusa Idaman 2-storey terraced house prices averaged RM540,000, up 8% q-o-q from RM500,000, while Taman Sutera Utama home values rose slightly by 2.2% to RM460,000 from RM450,000. Two-storey semidees in Taman Bukit Indah saw their values increased by 5.55% to RM950,000 from RM900,000.

At the Tebrau/Kempas area, 2-storey terraced houses in all schemes except Austin Perdana — where homes appreciated by 6.25% q-o-q to RM340,000 from RM320,000 — maintained their values. Semidees fared much better in the area, with most schemes registering growth. For instance, homes in Austin Heights increased by as much as 7.7% to RM700,000 from RM650,000 in the last quarter, while homes in Taman Gaya also rose 7.7% to RM550,000 from RM520,000. Meanwhile, values of semidees in Adda Heights grew by 5.77% to RM550,000.

Meanwhile, all high-rise homes covered in the monitor maintained their values this quarter, being less sought after than new launches which have seen decent take-ups, says Tan.

Rents remained the same, translating into a slight decline in yields for homes where property values grew. However, Tan expects rents to grow as new catalytic projects such as Pinewood Malaysia Studios in Iskandar open circa 3Q.

Significant launches

According to Tan, there were several noteworthy launches in the last six months. Most of these were serviced apartments, which are fast becoming the norm in prime locales such as Puteri Harbour in Nusajaya and even suburbs such as Kempas Utama.

Some notable launches were [email protected] Harbour, D'Inspire Residences at Nusa Bestari in Nusajaya, One Danga at Danga Bay, Wateredge Apartments at Senibong Cove, Midori Green at Austin Heights, Twin Residences, Maya Heights in Johor Baru, and D'Summit in Johor Baru.

Wateredge Apartments, the first high-rise homes in Senibong Cove developed by Australian company Walker Corporation, saw about 80% of its first release — 390 units with sizes from 455 to 2,702 sq ft with two penthouses at over 4,000 sq ft — taken up, with prices from RM455 to RM530 psf.

Meanwhile, other projects in the suburbs that did well were Mahabuilders Bhd's Nusa Heights. Its first two blocks, which featured a total 364 units from 509 to 2,471 sq ft, were priced from RM202,000 to RM1.5 million.

"This is becoming a trend among younger people, especially since 1-storey and 2-storey terraced houses in the suburbs are becoming quite expensive," says Tan.

For instance, a 1-storey house in the suburbs will now cost RM250,000 on average, compared with RM160,000 three years ago. Meanwhile, a 2-storey house is priced at almost RM400,000, compared with RM250,000 three years ago.

The Singapore factor

Singapore initiated seven rounds of cooling measures to lower its property prices. These include higher stamp duties, a lower loan margin for those buying subsequent properties, higher cash down payment, limitations on mortgage service ratio for HDB flat purchases, restrictions on permanent residents subletting entire HDB units and owning any HDB units after acquiring private properties, as well as a cap on floor areas and dual key sales for executive condos.

"Round six was implemented in 2H2012 but property prices in Singapore continued to increase. With round seven implemented, the cooling effect will be felt.Those who are interested in property investment will look at Iskandar. This applies to Singaporeans and foreigners who used to invest in the republic. The effect was felt in recent launches where these investors often say the policy changes in Singapore have taken away the glitter of investing there. Iskandar Malaysia is now a target market due to its relatively lower price and potential upside," Tan says.

The last six months proved to be an eventful period for Iskandar Malaysia. The high-growth corridor drew RM105.14 billion in investments as at Dec 31 last year, with 63% of the investments from local companies while the remainder came from foreign companies.

Property accounted for the largest slice of the pie at RM35.1 billion, followed closely by manufacturing (RM33.9 billion). Other sectors include utilities (RM9.5 billion), government (RM7.3 billion), petrochemicals and logistics (RM5.7 billion), port and logistics (RM3.7 billion), tourism (RM2.1 billion), education (RM1.6 billion), and creative industries (RM400 million). Other sectors attracted RM4.2 billion.

Iskandar now aims to pull RM15 billion to RM21 billion worth of investments this year.

The real estate sector witnessed a number of high-profile land deals inked with national and regional property players. In December, China's Country Garden (Holdings) Ltd signed an agreement with Iskandar Waterfront Holdings Sdn Bhd (IWH) to buy 55 acres of land from the latter for RM900 million. This deal is huge not only because of its size, but also because it was the first time IWH had sold land to a third party without taking a stake in the development.

The land will be developed into a marina and marina club, hotel, serviced apartments, offices and commercial development with an estimated gross development value (GDV) ranging from RM10 billion to RM18 billion.

"This is an endorsement from one of the largest real estate companies in China on the viability of Iskandar. It will usher in more regional and global real estate players into Iskandar. To date, most of the investors and developers are locals who are familiar with the property market here. Country Garden's participation will showcase that Iskandar is ready for a wider market," says Tan.

UEM Land Holdings Bhd, meanwhile, signed two contracts for some massive projects within its 9,308ha Gerbang Nusajaya township. The first was an MoU with Chinamall Holdings Pte Ltd to develop China Mall, a RM562 million trade and exhibition centre on a 12.94-ha site. With a gross floor area of 1.4 million sq ft, the centre is expected to feature 3,000 Chinese traders offering a variety of consumer products.

The other is a RM3.5 billion motorsport city that will be jointly undertaken by FASTrack Autosports Pte Ltd and UEM Land on a 70:30 basis. It will come up on a 270-acre tract in the township.

"The proposed development is intended to be a Motorsport City consisting of components such as showrooms, automotive retail, workshop, test track, go-kart track and all other automotive related trades and activities with emphasis on 4S, namely sales, service, spare parts and system," said the group in a statement.

Tan says: "These two developments will be catalytic in enhancing the growth of the Nusajaya area. It also signals that Nusajaya is now positioning itself beyond housing into value-added developments. These projects will obviously add to the value and appeal of Nusajaya as a place to live, work and invest."

In January, Sunway Bhd acquired a further 300 acres of land from Iskandar Investment Bhd for RM183.88 million. The site is located east of the Western Pendas South Land and will be developed into a mixed-use development worth an estimated RM6 billion.

This acquisition will boost the group's landbank there to 1,858 acres, making it among the biggest landowners in Iskandar.

This is on top of acquisitions and developments announced by other Klang Valley-based developers such as Mah Sing Group Bhd, UM Land Bhd, Distinctive Ace Sdn Bhd and B&G Capital Resources Sdn Bhd. All these companies had signed deals with Iskandar Investment to acquire land in Medini Iskandar for mixed-use developments with a GDV north of RM1 billion in 4Q.

"The entry of the largest Malaysian property players signal that Iskandar, apart from the Klang Valley and Penang, will be the next region that will see the emergence of iconic and modern living. Designs and pricings will no longer be similar to the old regime," says Tan.

February also proved to be an eventful month in Johor. A slew of landmark deals were signed after the brief Chinese New Year lull, the biggest one undoubtedly being the Kuala Lumpur-Singapore high-speed rail.

The 350km rail will cut travel time between Kuala Lumpur and Singapore to 90 minutes. Currently, the journey takes about four hours by car or almost an hour by aeroplane, excluding check-in time.

According to Transport Minister Datuk Seri Kong Cho Ha, the five possible stops between Kuala Lumpur and Tuas in Singapore are Ayer Keroh in Melaka, Seremban in Negri Sembilan, Batu Pahat and Muar in Johor, and Iskandar Malaysia.

On the same day the high speed rail was announced, Temasek Holdings and its unit CapitaLand Malaysia Pte Ltd signed a joint-venture agreement with IWH to acquire a 71.4-acre land parcel for RM811 million, to be transformed into an integrated development worth RM8.1 billion.

Earlier in October, GLC Ascendas Land International Pte Ltd had embarked on a joint-venture agreement with UEM Land to develop an integrated eco-friendly tech park in Gerbang Nusajaya valued at RM3.7 billion.

It will come up on a strategically-located 519-acre freehold tract that is linked to not only a wide network of main roads and highways but is also the nearest industrial site to the Second Link checkpoint. The park will be designed to support various industries including fast-moving consumer goods (FMCG), food processing, pharmaceuticals and medical apparatus, electronics, general engineering, precision engineering and plots for customised facilities.

The high-speed rail culminates a host of investments from the island republic into Iskandar, which Tan says is testament of the symbiotic relationship between Malaysia and Singapore.

"There is no denying that 2013 will be a major milestone for Iskandar, which has passed the stage of infancy when there were doubts over its success."

This story first appeared in The Edge weekly edition of Mar11-17, 2013.

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