Concerns about an oversupply in the property market in Iskandar, the southern economic corridor of Malaysia’s Johor state, is “a bit overblown”, said Mr Lock Wai Han, chief executive of real estate and investment firm Rowsley.
Mr Lock added that the thousands of housing units in the pipeline, many of them by Chinese developers, will take time to come into the market — a point that has not been “fully explained”.
“They have to reclaim the sea, let the land settle … so this will be phased out over a longer period of time, but I think that kind of messaging has not been conveyed to the market. So when the market hears that kind of numbers, it’s a bit spooked,” he told reporters today (Sept 22), as the company announced plans to re-conceptualise its Vantage Bay project into a healthcare city. He added that investments into Iskandar will create jobs that will attract migration towards Johor, which will in turn drive demand for homes.
“We don’t expect the population to double in three years, but it will continue to increase in the next 10, 15, 20 years, and I think if you look at it in that context, we do not believe that’s an oversupply situation where housing is concerned in Johor,” he said.
Mr Lock’s comments came after warnings by several market observers that a glut of homes in Iskandar will put pressure on property values. One of the latest to do so is Malaysia’s largest bank, Maybank, whose analysts said in a report that the oversupply situation “is likely to get worse before it gets better”.
Adding to concerns are mega projects that involve land reclamation, such as Country Garden’s Forest City and R&F Properties’ Princess Cove.
Even without these projects, which are estimated to add tens of thousands of homes, property firm Century 21 chief executive Ku Swee Yong told TODAY that the Iskandar market is still oversupplied with non-landed homes.
“Many projects are already being constructed, so they add to the existing supply,” Mr Ku said. “Where will these homes find buyers? A Malaysian of average income would not be able to afford a RM1 million (S$329,800) property and many Malaysians prefer landed properties.”
The latest statistics from Malaysia’s National Property Information Centre showed that as at the fourth quarter of last year, there were 142,567 homes under construction in the state of Johor, with another 193,271 units planned — among the highest in the whole of Malaysia.
Official statistics also showed that residential transactions in Johor fell to 7,719 units in the first quarter this year, down 6.8 per cent from the last three months of 2014. Compared with the first quarter of last year, this figure was 9.1 per cent lower.
My advice is to look medium to long term for investments here and you would not go wrong!