There have been differing stories coming across the water from Iskandar regarding the financial health of the project and its long term prospects. So what are the facts, and what is the truth behind the rumours and speculation?
Born out of the 2006 masterplan, Iskandar Malaysia is located on the southern tip of Johor, and stretches along the coastline facing Singapore. It was developed to take up the demand and overspill from the Singapore housing market, and hoped to attract foreign as well as domestic buyers. It is a vast area – three times the size of Singapore, and as well as residential properties, the project also boasts leisure and retail facilities such as Johor Premium Outlet, Educity, Pinewood Iskandar Malaysia Studio and Legoland Malaysia. The total approved investment currently stands at more than S$56 billion (RM172 billion) with almost S$30 billion in completed projects.
Regarding the make-up of current buyers, approximately 26 per cent of those who have purchased property at Nusajaya were foreigners, and of those 73 per cent were Singaporeans. It is a similar story at Danga Bay, where around 1500 units (25 per cent) have gone to Singaporeans.
The Bad News
There has been a lot of concerned voices, and worrying news regarding the state of the project in terms of take up and the long term viability of the development.
The National Property Information Centre (NAPIC) has released figures showing that sales of condos and apartments fell 23 per cent in the first three quarters of last year compared to the same period in 2014. Many developers have decided to either scale down their projects or defer the launch altogether, concentrating instead on existing developments. Last year just 12 high rise residential projects were launched compared to twice that in 2014 and almost 50 in 2013.
As well as the economic slowdown, and the unease and uncertainty that comes with that, many commentators feel that not only is there a surplus of properties available, but the properties that are available are of the wrong type. Many of the developments feature non-landed homes, which are unpopular with Malaysians. Additionally, a sales price of S$329,800 (RM1 million) is considerably outside the reach of the average Malaysian family.
Transaction prices in Johor have dropped by a third in recent years, considerably more than in other areas of the country. Even with 20 per cent discounts however, many developers are struggling to sell. Maybank weighed in on the topic last year too, urging caution for potential investors, and saying that the situation would get worse before it improved.
The Good News
It isn’t all negative however. The weakening Malaysian Ringgit will continue to provide a lower entry cost for investors, while the people behind many of the developments are (unsurprisingly) bullish about the situation, and predict that the market will pick up in the coming years, driven in a large extent by the increase in commercial developments and improvements in infrastructure. There is evidence that developers have taken notice of the market conditions. Besides the deferments, many are now shifting their attention to landed properties as well as to more affordable residencies.
The biggest card the project has up its sleeve however is the proposed extension of the MRT system to Johor, which would almost certainly create renewed interest if and when that is rubber stamped.
Refer to the link below for more info
http://www.straitstimes.com/business/property/housing-market-struggles-amid-weak-interest http://www.todayonline.com/business/concerns-iskandar-property-glut-overblown-says-rowsley http://www.theedgeproperty.com.sg/content/good-signs-growth-iskandar
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