And so it begins. The Edge reports that over the last few months, the ‘promised land’ of the Iskandar region has witnessed a series of mega land deals, including those involving land reclamation, which have “shocked the market and changed sentiment”.
Really, nothing to be shocked about. We could see it coming.
(Data from The Edge, 14 April 2014:)
Already, based on the original master plan, there is potential supply of:
- 130 million sq ft of gross floor area in Gerbang Nusajaya
- 130 million sq ft in Medini, and
- 25 million sq ft in Puteri Harbour.
With new land reclamation, it is clear that the potential oversupply will be huge.
For example, the Puteri Cove project was launched last week. It comprise three 33-storey residential towers – 1000 homes in all.
Tower 1 (329 homes), launched some months back – 70 per cent of homes already booked.
Tower 2 (also 329 homes), launched last weekend – only 25 per cent booked.
We are talking about RM1300-1600psf here.
The Edge contrasts this to the Teega project in late 2012 – 98 per cent sold within a month of launch.
Banks are also more cautious in giving out housing loans. Bank Negara has tightened the eligibility requirements for borrowers. Other factors mentioned: the last Budget’s cooling measures, high household debt, rising interest rates, and the raising of foreigners’ minimum buying threshold to RM1m.
The report warns: “Iskandar is like the goose that lays the golden egg. Don’t kill it by over-expanding development and supply.”
Tougher market conditions mean developers have to offer better value to buyers. “Gone are the days when customers blindly bought units like hot cakes,” The Edge concludes.
What lessons can we learn for the Klang Valley and Penang? The unbridled greed behind the property speculation may pop the bubble eventually. Cool the building frenzy before it is too late.