By THE EDGE
The growing supply of new homes in Johor Baru is putting pressure on the values of houses on the secondary market. According to latest government data, as at end-2006, the existing supply of residential homes in Johor stood at 607,497 units (350,438 located in JB). In the same period, the state’s incoming supply numbered 72,190 units (46,685 in JB) while planned supply totalled 133,316 units (91,710 in JB).
The secondary market for houses in JB has not been very exciting over the last year and this is reflected in the sampling for The Edge/KGV Lambert Smith Hampton JB Housing Property Monitor. The sampling shows that secondary housing property prices have not improved since 2001. In fact, in some of the areas sampled, values have dipped by as much as 26% in the last six years. Apart from houses on the Kempas Corridor, property prices elsewhere are rather flattish, observes Samuel Tan, director of KGV Lambert Smith Hampton JB.
He attributed this to the ample choice before buyers. The new houses are competitively priced, come with better designs and added freebies, says Tan when presenting The Edge/KGV Lambert Smith Hampton JB Housing Property Monitor for January–March 2007.
Sampling for the monitor shows prices for standard 1-storey terraced houses in Taman Daya have dropped by 24.3% and 26.5% in Taman Johor Jaya over the last six years. Meanwhile, 2-storey terraced homes in Taman Perling and Taman Daya dipped by 25% for the same period. Other areas that saw a significant drop in prices include 1-storey terraced houses in Taman Sutera (18.3%) and Bandar Baru Permas Jaya, which recorded a drop of 18.9% for 1-storey terraced houses and 19.2% for 2-storey terraced houses. The rental market also exhibited similar trends.
On the primary market, Tan says JB will be the place to watch over the next few years, with projects expected under the Ninth Malaysia Plan (9MP) and the Iskandar Development Region (IDR). He adds however that many quarters remain cautiously positive over the initiatives. He feels that any impact by the IDR and 9MP will only be gradually felt from the second quarter onwards.
Even though the secondary market is bound to be affected at first glance, Tan says the ready houses in older schemes may serve as an advantage as well. “JB city should see an increase in population, with people coming in to work in industries spurred by the IDR. Some of these people will be looking for ready housing. If homes in older schemes can find tenants, then they will become more tradable again,” he offers.
Although the latest National Property Information Centre (Napic) Property Market Status Report (for 4Q2006) shows Johor having the highest number of surplus units in the country — 8,215 units or 32% of the nationwide market share — some developers remain upbeat about JB. Among them, notes Tan, are Scientex Bhd and SP Setia Bhd. The former has acquired about 250 acres in Sedenak, while the latter purchased 949 acres near Bandar Nusajaya. Scientex is planning a mixed housing development that will be launched early next year, while SP Setia has entered into a joint venture with Topasia Projects Sdn Bhd to develop an eco-themed township.
Based on Napic’s report, the value of unsold units in Johor stands at RM1.43 billion, with the district of Johor Baru itself accounting for 77.5% (6,366 units) of the unsold units in the state. Most of these units (87.5%) had been on the market for more than 24 months. Two to 3-terraced and 1-storey terraced units formed the bulk of the overhang, with each type contributing 36% (2,957 units) and 16.5% (1,359 units), respectively.
Tan says developers are taking steps to avoid any overhang, by going for small launches with reasonable pricing. “Developers try to find their own niche market by targeting different segments that include upgraders, first-time house buyers or those looking for gated and guarded living.”
He adds that in recent years, property development in JB has turned into a playground for the “bigger” developers. These are those who have the financial capacity to withstand slower sales and by default, enter into a “build-then-sell” arrangement.
So who’s buying?
With so many new offerings, who and where are the buyers coming from? Tan observes that they are mostly buyers who appreciate contemporary designs and well-planned environments. “Many are Malaysians working in Singapore. The other group is made up of purchasers who want to improve their lifestyle by upgrading to a larger house,” he notes.
The incentives and support packages (ISP) for investment in the IDR are expected to draw foreign investors into the state. A significant increase in interest from investors has been noted since the launching of the IDR last November, says Tan. The inflow of investment, especially in the industrial sector, will generate employment opportunities and in turn demand for housing. Tan says developers, especially those without any presence in the IDR, have shown interest in acquiring landbank to capitalise on the potential of this region.
On infrastructure, Tan points out that the government has approved the construction of the Eastern Dispersal Link. This highway will connect the present North-South Expressway (NSE) Interchange at Pandan to the new customs, immigration and quarantine complex (CIQ). It will run along Sungei Tebrau towards Kampung Bakar Batu and thereafter link to the CIQ along Jalan Pasir Pelangi. When completed, the highway will reduce travelling time from the NSE to the city centre, promoting the development potential of lands along the highway. Among the beneficiaries would be Tebrau Teguh Bhd and other land owners in the region.
“The ‘feel-good’ factor generated from the stock market will also trickle down to the property market. Since November last year, the stock market has been moving northwards. Many could have reaped profits and reinvested them in the property market,” observes Tan.
One of the more interesting launches in the JB market is Horizon Hills in Bandar Nusajaya, says Tan. The project was launched in March after months of publicity. A joint venture between UEM Land Sdn Bhd and Gamuda Bhd, the 1,200-acre freehold tract will offer mixed housing coupled with an 18-hole, 200-acre golf course. The design concept is based on clusters or precincts with 12 design themes that will incorporate lakes with islands and a 2km canal system.
Under its maiden launch, the developer offered for sale 250 units comprising 2-storey terraced homes, 2 and 2½-storey cluster homes and semidees. Built-ups start at 1,845 sq ft onwards, with tags starting from RM245,000 or an average of RM132 psf. Tan expects the project’s marketability to be enhanced once the proposed western coastal highway linking Danga Bay to the new administrative centre is completed as this runs along the southern boundary of the project.
Travelling time to the city centre will then be shortened considerably.
Another new launch nearby is Taman Amyra located on a 35-acre site adjacent to Taman Perling. The gated project comprises 210 units of 2-storey semidees and 17 bungalows. Built-ups start from 2,850 sq ft and prices from RM403,800 for the semidees. For the bungalows with built-ups of 4,800 sq ft onwards, these are priced from RM798,000.
Over at the Kempas Corridor, Johor Land Bhd unveiled the 1,400-acre Bandar Dato’ Onn. The initial launch in February saw several types of terraced houses launched. Built-ups start from 1,608 sq ft and these are priced from RM209,000. The construction of a link road connecting the Kempas Highway to the project has enhanced its accessibility. The opening of the link has also benefited other housing schemes such as Taman Sri Austin, Taman Adda Heights, Taman Daya and Taman Setia Indah. Tan says all the schemes reported better performance since the opening of the link.
In Taman Adda Heights, the developer reported a pick-up in sales, especially in March. At press time, only 11 out of 172 units of 2-storey cluster houses remain unsold. Prices range from RM278,000 to RM298,000 for the units with built-ups of between 2,048 and 2,200 sq ft. According to Tan, the developer is considering the build-then-sell concept for future launches.
Another scheme that reported good performance for the quarter under review was SP Setia’s Taman Setia Tropika. A new interchange from the Kempas Highway costing RM18 million was completed during the period. The developer increased the prices for residential units by RM5,000 to RM7,000 per unit, while shopoffices by RM10,000 to RM30,000 each. The sale rate is about 80%, says Tan.
On Feb 14, SP Setia announced that Aeon will open its flagship shopping centre in Taman Bukit Indah. The mall, sitting on 37 acres of commercial land, is expected to be operational by end-2008. The convenience of shopping and entertainment brought by this mall will have a positive impact on demand for houses in the region. Apart from Taman Bukit Indah, the other schemes that will enjoy a spillover effect from this development are Taman Perling, Taman Nusa Bestari, Taman Nusa Indah and Taman Nusa Idaman, says Tan.
Over in Taman Nusa Idaman, 224 houses were launched with prices starting from RM149,000 for 1-storey terraced houses, RM239,000 for 2-storey terraced houses and RM397,000 onwards for semidees. In Taman Molek, the Berinda Group launched 26 units of super 2-storey semidees with a land area of 50ft by 100ft and built-up of 3,900 sq ft. Prices start from RM868,000. More than 30% of these units were reportedly sold since their launch in January. A stronger take-up rate was noted towards the end of March, says Tan.
Taman Austin Perdana by Mah Sing Group relaunched its 2-storey deluxe terraced houses priced at between RM277,556 and RM317,556. The developer has reported an average take-up rate of 70% since the initial launch in end-2004.