Would there be property bubble in Iskandar?

No property bubble brewing in Iskandar, which is at ‘take-off’ point….

One place they have had their eyes on for several years now is Iskandar, Malaysia which they think it could be viewed as an example of the potential bubble we see in Southeast Asia.

Some developments in Iskandar should help to bring more economic and job growth to the area. When people, particularly foreign investors flock to a place, it can drive up real estate prices beyond the reach of local residents. However, they don’t see a bubble building in Iskandar at this time and property prices are still reasonable. In the long run, locals who already own property could benefit from a potential rise in values.

Iskandar is a good example of diligent planning and foresight on the part of the Malaysian government and the area has now reached what could be described as a “take-off” point. Developments should start to become self-generating, creating the potential for a virtuous circle.

Singapore, located across a narrow waterway, has vested interest in Iskandar’s success. As long as the close cooperation between Malaysia and Singapore continues, it could be a win-win situation for both countries. Recently, the two countries announced plans to strengthen economic tires – including through further cooperation developing Iskandar as well as a high-speed rail link between Kuala Lumpur and Singapore. There is a great potential for intra-regional trade and development in Southeast Asia, and this is a prime example of that trend.

Emerging Asia

If you look at Asian economies‘ growth expectations versus the developed markets generally, you will see the divergence.

For 2013, the International Monetary Funds project GDP growth in developing Asia at 7.1%, versus 1.2% for advanced economies. In the long run, they believe strong economic growth should translate into higher earnings growth in developing Asia.

Another encouraging trend emerging is the Inter-Asian trade which is currently on the rise. There is increased exports from Asia to China, with exports to the US falling as a percentage of the total. This means there is less dependence on the US for export growth and buoyant demand from emerging economies could help offset the impact of weakness in the developed world.

Demographics represent another interesting trend that creates a variety of potential investment opportunities, particularly related to the consumer sector. If you examine the population pyramids, you will see that the demographics of emerging Asia indicate a great number of young people, which equates to a lower dependency ratio. That is, more people fall into the working population by age so there are fewer dependents.

As of 2010, the pyramid was skewed towards younger people, whereas in Japan and the US, the elderly were a lager percentage of the total population. These trends are expected to continue diverging.

Pull factors into Iskandar Malaysia coupled with the push factors from various economies inevitably would benefit skateholders in Iskandar Malaysia handsomely.
Are you prepared for the rally again?
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