The Big Read: Iskandar’s lure is a strong pull for S’poreans
By Yvonne Lim
With the high property prices in Singapore, residential developments in Iskandar have provided Singaporeans with attractive — and relatively low risk — options of owning a luxury home with a fraction of the financial outlay that would be required to buy similar properties in the Republic. The risks for those looking to invest in the properties, however, are higher. Concerns are brewing over an oversupply of homes, particularly from the slew of mega developments by Chinese developers in the pipeline — a problem exacerbated by the dearth of housing data from the authorities.
Property developers in Iskandar are not required to disclose sales or rental updates.
Iskandar Malaysia, which is three times the size of Singapore, was launched as one of Malaysia’s five economic corridors in 2006. The project only took off after 2012, when several projects, including Educity, Puteri Harbour, Horizon Hills, and Asia’s first Legoland theme park, were completed.
The Iskandar Regional Development Authority (IRDA) — a statutory board established by the Malaysian government to oversee the zone’s development — releases regular updates on the level of investment. However, although long term targets have been declared — by 2025, 800,000 jobs will be created and the population will more than double to three million — figures on job creation or population growth are not available.
A Singaporean investor, who wished to be known only as Mr Lee, said: “There are too many mega developments, it’s very scary… The authority says there is demand, but what the real demand is, you cannot tell.”
The 42-year-old, who runs an investment holding company, has been buying properties in Johor for investment for the past five years. He currently owns about 10 residential and commercial properties. He noted that in the initial phases of Iskandar’s development, there was more information available allowed prospective investors to plan their purchases.
For example, Guangdong-based developer Country Garden, which launched 9,000 units in Danga Bay last year, is set to begin work on another 1,386ha of land at Forest City — a project which has been given the go-ahead by Malaysia’s Department of Environment amid concerns about the environment impact from some quarters in Malaysia, as well as the Singapore government.
Hong Kong-based developer Guangzhou R&F Properties, which is building the 3,224-unit R&F Princess Cove @ Tanjung Puteri, has bought 46.9ha of prime land at Tanjung Puteri Waterfront — an area that is three times the size of the Danga Bay project, which is also developed by Country Garden.
Singaporean investor Fabian So, 47, said the sheer number of units in the pipeline a cause for concern. Mr So, a manager at a building products company, called on the Iskandar Regional Development Authority (IRDA)to intervene. “IRDA needs to make sure that supply and demand is balanced for these developments… but so far we have not heard of any catalytic factors (that could increase demand),” he said.
Agreeing, Mr Lee said: “I have not heard of any initiatives by IRDA to put the brakes on these (new developments). The market sentiment is that there is an oversupply, and then you have the IRDA saying, ‘Don’t worry, we have enough people coming in (to buy and invest)’.”
At a recent meeting with Singapore media, IRDA Senior Vice President of Strategic Communications Khaidzir Rasip said that Iskandar is an “open market”, and developers were expected to “do their own research, to ensure supply will match demand”.
He added that the influx of Chinese developers was unexpected. “We now have to work harder to bring in investment, to ensure that economic activities actually happen,” he said.
Several developers are aware of the threat of oversupply and are holding back their projects. Medini Iskandar Malaysia (MIMSB) — the master planner for Medini township, which is being developed as Nusajaya’s Central Business District — recently announced that it has stopped selling land for residential developments. “The last thing we want to do is to ‘cannibalise’ the market. Most of the developers who have bought land in Medini are developing residential properties,” said MIMSB managing director and chief executive officer Khairil Anwar Ahmad.
He was speaking at a media familiarisation trip to Iskandar, organised by Singapore-based developer Pacific Star.
Last month, Pacific Star announced the release of their 79 retail units and 56 Soho/loft units within Puteri Cove Residences & Quayside in Puteri Harbour in Nusajaya. All 400 residential units released previously in the mixed-use project have already been sold.
Some Singapore developers have reportedly held back their launches amid a subdued market.
Capitaland had clinched a high profile S$3.2 billion Danga Bay project in February 2013 with other consortium partners such as Temasek Holdings and Iskandar Waterfront Holdings. In September last year, the company said it was still waiting for the relevant regulatory approval for the project’s master plan. Property investment expert Ryan Khoo pointed out that the Singapore developers are committed to the Iskandar projects but they have to bid their time, and wait for the market to pick up again.
“The good thing is that a lot of the developers in Johor at this point are fairly financially strong. Even in a downturn, I doubt anyone will go bust as they all have holding power. Market conditions will improve once more infrastructure is up to improve connectivity and create more jobs,” he said.
Originally published at www.todayonline.com.