Home Economy Development issues Huge potential property oversupply in Iskandar: Edge

Huge potential property oversupply in Iskandar: Edge

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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.”

READ MORE:  Gentrification alert! Developer snaps up some 200 George Town properties

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.

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19 Comments on "Huge potential property oversupply in Iskandar: Edge"

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jamesgoh
Most developers are building houses beyond the reach of the Johor bahru citizen.Government of the day is only interested in so called “DEVELOPMENT’. Ordinary citizen are caught in the middle income trap;they cannot afford these houses and as the price of houses keep moving up without any abatement, we can only hope for a change of government to curtail the spiraling which is already out of hand. I am a chinese Malaysian and I am unhappy the the China chinese grabbing all the premier sea frontage for foreigners.Please stop all these ‘pawning’ for the sake of our children and their… Read more »
Don Anamalai
Don Anamalai
Iskandar Malaysia is now facing dire consequences because of an oversupply caused by a sudden surge of land reclamation and property deals in Johor? Just looking at the planned launches (serviced apartments, hotels, office and retail spaces) by Country Garden, Hao Yuan, Guangzhou R&F Properties Co Ltd, CapitaLand and Greenland Group, the hotspot areas, ie, Danga Bay and Tanjung Puteri is already an enormous supply of high-rise mixed development projects and thus may put pressure on asset value. Country Garden Holdings Co Ltd, with Kumpulan Prasarana Rakyat Johor (PRJ) have planned a development of over 5,000 acres of reclaimed land.… Read more »
OWC
OWC
Iskandar properties: Hitting the doldrums? http://www.youtube.com/watch?v=JjDhraBsPcg The Iskandar development corridor has had a massive impact on Johor in terms of direct foreign investments in several industries including property development, education, leisure, hospitality, logistics, manufacturing, petrochemical and a host of other activities. The development work has been furious since 2006. For awhile, since the first bulldozers came in to clear the land for development in the Iskandar property prices have shot up, even in Johor Bahru town itself which has seen depressed prices. This buoys those looking at properties as instruments of personal investments. But the Iskandar development isn’t without criticism,… Read more »
Yuk Lo
Yuk Lo
On The Star today: Another developer from China comes to Johor Baru, plans RM10bil project . http://www.thestar.com.my/Business/Business-News/2014/04/17/Another-developer-from-China-comes-to-Johor-Baru/ The Greenland Group is the latest developer from China to purchase land for a property project in Danga Bay, Johor Baru. It entered an agreement yesterday to buy 13.96 acres from Iskandar Waterfront Holdings Sdn Bhd (IWH) for RM600mil with plans to develop projects with a potential gross development value (GDV) of RM2.2bil. The transaction comes amid an environment where property developers are seeing lacklustre response from buyers for their launches in Johor. The latest to feel the heat was Singapore’s Pacific Star… Read more »
Yuk Lo
Yuk Lo
THE property market in Johor, particularly Iskandar Malaysia, might be a case of too much too soon. Red flags are showing in the state where launches of projects and high prices are common place but the pace of launches, which now includes “carpet building” by China developers, is flooding the market with more houses than what could be sustainable. Hwang-DBS Vickers Research says Country Garden’s 9,000 units launch at-one-go in Danga Bay alone could cause a glut, although delivery could be challenging given tight building material and labour supply over the next three to four years. Hong Kong-listed Guangzhou R&F… Read more »
bowen
bowen

Puteri Harbour is for rich foreigners as it us priced beyond the affordability of average Malaysians, just like The Light in Penang.

Peng Cheong
Peng Cheong
Take EDL highway to the end approaching the sea facing Spore – the area has been fenced up to build super condos most locals cannot afford (except those Msians who earn big Spore $ salaries !). Country Garden along Danga Bay project by China developers cater for Sporeans / China Chinese as primary target. Compare this Giant Developer to our local developer that develop Danga Tropicana you can see the big difference. China developer create the infrastructure for recreational/dining/shopping to be ready for operation before they start building residential units. Foreign buyers are impressed with their big operational readiness. Tropicana… Read more »
bowen
bowen
The developers (some are from China that have bought RM4.3 billion worth of Johor land from the Sultan) are targeting Singaporeans and China citizens using proximity to Singapore and ‘lower cost’ (lower Ringgit vs SingDollar) as factors to lure them. Heavy promotion on Singapore TV and newspapers with Singapore TV artists and China film star Tang Wei as spokespersons (Danga Bay Country Garden mixed development). But MH370 and Singamata incidents may dampen the purchasing mood from China residents. Now prices are beyond locals as they are pegged with assumptions that local Johorean folks work and earn SingDollar. Oversupply is imminent… Read more »
Yuk Lo
Yuk Lo
Singapore’s Billionaire Peter Lim (Company: Rowsley) is jointly developing the RM5.5 billion integrated project Vantage Bay @ Iskandar in the heart of JB with the Sultan of Johor. Vantage Bay sits on a land area of 9.23ha, which can be compared to the size of 13 international-sized football fields, consisting of developments like Medical hub, Shopping Malls, Offices, Residential Condo, Convention Centres and Service Apartment into one project. Once completed, its set to become the most important and iconic development in Zone A of Iskandar. It will have a twin tower residential condo, set to become one of the tallest… Read more »
ktwong87

Indeed, Tong Kooi Ong posted recently on his blog, “Why another Iskandar launch falters?”.

But John Gilbert, writing in The Malaysian Reserve, proclaimed: “Iskandar on track despite cooling measures”.

What is the truth? Which shade of grey is closest to that?

Meanwhile, I am pondering about Najib’s “Friendship Bridge”, announced after his pow-wow with S’porean PM Lee Hsien Loong. Dr M’s aptly tagged “Crooked Bridge” reincarnated, possibly with a different set of ghouls and vampires?

tunglang
In Cosmopolitan Penang, who actually approves the frenzied scale of building + pricing of high-end properties? Or is it tied to a hidden Local Plan that has morphed into a Developers’ Plan? Such hifi-frenzies are labelled by Hokkien lang as ‘Tua Khang’, by Malay as ‘Gaya Raya’ by Indian… Anil can you help to phrase it? Btw, we were shown many moons ago, leadership by example of thrift & prudence in a sadiwara of taking economic flight, bla-bla-bla. Buat sekarang, tak serupa bikin dulu. In the not too far future, I can see a MercS300Lansi driven all the way up… Read more »
Peng Cheong
Peng Cheong

i am now in Penang on food visit and tasted the chendol u recommend. sorry to say at RM2.30 by road side standing eating a rip-off !

Penang past 5 years develops faster than past 2-3 decades combined. Don’t just blame LGE. STP2 project likely to involve BN components otherwise why they keep silent all these months ????

Awang Selamat Ori
Awang Selamat Ori

Learn from Johor?

Take it from the Kapitan! He will want to do it bigger than Johor. His developer friends will advise him that Penang has more potential than Johor, as Penang is nearer to the South Indian Ocean!

If the property bubble bursts, it is not the developers ( his friends) who suffer. It is the poor first time house buyer, the ordinary guy in the streets.

tunglang

The Kapitan Deity works on the frail human delirium of overt-worshipping + high hopes of CHANGE (that never delivers in ori-form & genuine promises).

The greedy-not-enough developers thrive on the FEAR Factor of Kia Su or Bing Chui covetousness.

Both of these highly skilled psycho-political & economic hi-pricing manipulation work hands in perfect fitting gloves to deliver a blow to the cherished dreams of Home Sweet Affordable Homes for Penangites post 308.

looes74
looes74

Anil,
More debates coming up. It’s your cup of taste

http://dinmerican.wordpress.com/2014/04/14/61795/

Gordon Gekko’s words…….Watch Wall Street 2…….Not “Lupus” of Wall Street

bowen
bowen

Wolf of Wall Street financed by som of Rosmah has more ‘terror factor’!

bigjoe99

I say pop it. RM1,000 per sq feet condo where there is no public transport and few jobs that can pay for it, is just flight of fancy of complete integration with Singapore which will fall far far short from the fantasy.

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