Property Slowdown in Johor

It was pretty easy to see the glut in residential property in Johor being created over the last few years, and I wrote about several times: The Potential of Iskandar is Very High but Investing in Iskandar has RisksIskandar Housing Real Estate Investment Considerations (2011), Singapore Sprawl Fueled by Cheap Housing Resulting in Long Delays at Border (2014), Malaysian Real Estate Slowdown May be Taking Hold (2014).

View of Downtown Johor Bahru looking away from Singapore

Downtown Johor Bahru with Danga City Mall (includes map) on the left (looking North-West).

The long term prospects for Johor remain strong. Building on the advantages of being a suburb of Singapore has huge potential. Managing that advantage should provide huge long term benefits. Still in the residential building boom seems overdone and not balanced with brining in enough high paying jobs or improved transportation to jobs in Singapore.

UEM Sunrise shifts focus away from Johor due to glut in the state

Iskandar Malaysia’s biggest property developer UEM Sunrise Bhd will focus on Peninsular Malaysia’s central region, as Johor faces a property glut and slowdown.

Managing director Anwar Syahrin Abdul Ajib said the company would be shifting focus to the central and northern regions as well as overseas.

“Right now, it’s a bit slow. There’s nothing to hide … everybody is feeling it. Some developers have already cut their forecasts, some are saying growth is stagnant while some say they’re going to do better than others last year,” he said.

Anwar is targeting a lower sales of RM2bil this year compared with RM2.4bil last year as buyers are also finding it hard to secure loans from banks.

“To tell you the truth, there are a lot of people who want to buy and we have a lot of bookings but they can’t get loans, so this is something that’s in the way.

“We need to find a solution and talk to financial institutions and see whether they need to relax a bit in terms of letting people be able to purchase houses for investment purposes,” he explained.

Malaysia should not relax lending standards. Property booms are followed by busts. Booms are most often triggered by huge investor demand made possible by lax lending standards. It is poor economic policy to stoke investor demand in real estate. This is a critical mistake when the rental market is weak, as it is in Johor. The luxury housing market is not supported by jobs in Johor.

The only hope for filling the luxury housing are getting those with high paying jobs in Singapore and retires from Singapore and elsewhere to move in (which has been happening but not nearly at the rate of production of new units). And given the long delays in addressing the transportation problems until the MRT is extended it is hard to see much more room for increased commuting. Once the MRT is complete the Johor market should boom.

Property development creates lots of economic value that can provide large rewards to those in power. When that pressure leads to stoking the fires of a boom the consequences will be felt in the economy very sharply once a bust develops. Johor needs to focus on attracting more high paying jobs and quickly improving transportation issues. Johor should be discouraging more luxury housing development at this time, not encouraging it – but it is hard to put long term economic prosperity above quick, short term cash. Few countries have done that well. Singapore is one that has and the future of Johor is tied to the success Singapore brings with that focus and how well Johor can show the same discipline Singapore has shown for nearly 50 years.

Renting Link Houses in Horizon Hills, Johor

Horizon Hills a gated and guarded housing community in Nusajaya (part of Iskandar) that is very popular with expats – learn more about the Horizon Hills housing estate. The housing estate offers bungalows, link houses and condos. Horizon Hills has its own golf course.

Even with the rapid decline in the value of the Malaysian ringitt the rental prices are not rising, if anything they appear to be falling. Given the amount of vacant properties for rent this makes sense. Of course for those with income in dollars (Singaporean, USA or other) this means rental prices have gone down substantially given he 20% decline in the Ringitt to the USA $ (from $1 = 3 ringitt in May 2013 to now $1 = 3.6 ringitt).

photo of Horizon Hill link house

Terrace/Link houses for rent now Horizon Hills, Iskandar, Johor:

  • RM 3,000; 2 story terrace house; 4 bedrooms; 3 bathrooms; fully furnished; land area 22’x 70′.
  • RM 4,000; cluster home; 4 bedrooms; 3 bathrooms; 2,123 square feet; fully furnished.
  • RM 3,000; 2 story link house; 2,556 square feet; 4 bedrooms, 4 bathrooms, partially furnished, the Golf area.
  • RM 3,300/month; 2 story Terrace/Link House; 3,000 square feet; 4 bedrooms; 4 bathrooms; unfurnished; the Hills area.
  • RM 2,800; 2,300 square feet built-up; 4 bedrooms, 4 bathrooms, partially furnished, the Green area.

Bungalows will cost more but there are many of those options available also.

Related: Plenty of Good Rental Options in Horizon HillsBuying or Renting in Horizon HillsLeisure Farm housing estateMalaysian Economy Continues to Expand, Budget Deficits Remain High

Map Showing Condos in Johor Bahru, Malaysia

See our new maps showing the condos in Johor Bahru:

See full screen

Each condo on the map links to our information page for that condo. (click the icon next to the name to view the popup details with the link to the page).

If you will be traveling around JB looking at condos you might want to bookmark our main JB condo page or the direct page for the map. That way you can easily refer back to it as you need to.

We do also show the major housing estate areas in JB and Iskandar (if you zoom out on the map a bit).

Skysuites Condos @ Meldrum Hills are Nearing Completion

Skysuites @ Meldrum Hills located next to Cyberport and close to the JB CIQ is nearing completion.

photo of Skysuites @ Meldrum Hills in  Johor Bahru

Skysuites @ Meldrum Hills (completed on the left of the photo). Photo taken from Cyberport by John Hunter.

The 31-story condo building includes 250 condos (1, 2 and 3 bedroom units plus penthouse duplexs) and is near Blue Wave Hotel, Cyberport, City Square Mall, CIQ and the causeway. See our information page on Skysuites Condos @ Meldrum Hills.

photo of Skysuites @ Meldrum Hills with CIQ and the CBD

Skysuites @ Meldrum Hills with CIQ and the CBD.

Current units for purchase, they do seem expensive to me (I think the supply of small luxury units may well be too large in JB) but if the MRT to Singapore is built where it is believed it will be, this will be a very desirable location:

  • RM 1,105,000, 1,105 square feet, 4 bedrooms, 4 bathrooms, Penthouse condo.
  • RM 552,000, 581 square feet, 1 bedroom, 1 bathroom.
  • RM 698,000, 581 square feet, 1 bedroom, 1 bathroom.

Related: Stulang Villa Condos – Rentals from MYR 2,200 to 2,500Orchid View Condos Rentals – 2,500 to 3,000 MYR a month

Marco Polo Netfix Series Preview (Production Studio is in Iskandar)

One of the major projects in Iskandar, Malaysia is Pinewood Studios (an Asian venture by the famous London studios). This post is a bit different from our normal focus but it shows the efforts to build up several economic engines to power Iskandar are making progress.

Education and health care are also moving forward nicely and construction of luxury housing is booming – though too much so in my opinion. Shopping outlets, including the ever growing Johor Premium Outlets is another area that has been helping the Johor region economy – with many visitors from Singapore, China and elsewhere. And theme parks have been another area that is doing well, with more planned.

Netfix is also booming. It seems like just 3 years ago they started to dip into producing their own shows and now it seems like then have tens of shows in production around the world.

Sadly Netfix is not available in Malaysia. It is somewhat funny that people where the show is made can’t see it. Maybe the Iskandar folks can work with Netflix to add Malaysia to the countries Netflix offers its services to subscribers.

Here is a Preview of the Marco Polo Series:

Shooting for the series also took place in Italy and Kazakistan. The project started with a plan for showing on the Starz network with filming in China, but things fell through and Netflix and Malaysia entered the picture.

‘Marco Polo’ brings the court of Kublai Khan to Netflix

Here on a new 50-acre studio built on recently cleared jungle, a crew of about 400 has spent months conjuring Kublai Khan’s 13th-century capital. Carpenters and plasterers are piecing together the royal quarters, including a lavish golden throne room, a dungeon and a wood-paneled dojo. Painters are decorating a multi-bed pleasure chamber replete with a hot tub fed by elephant-head fountains.

“It’s a giant adventure. The only thing on TV that matches it, production-scale wise, is ‘Game of Thrones,'” said Harvey Weinstein, whose Weinstein Co. is producing the series.

Netflix hasn’t expanded into Asia yet (as a streaming service) but they license their shows to networks in Asia to be distributed over regular TV (premium cable TV usually). But why not make Malaysia the first country in Asia to have Netflix? Actually my guess would be on Singapore and Hong Kong in the first wave with several countries, maybe including Malaysia.

Related: The Weinstein Company sets camp in MalaysiaIskandar Housing Real Estate Investment ConsiderationsNetflix Series ‘Marco Polo’ Shot in Kazakhstan to Premiere in DecemberThe Potential of Iskandar is Very High but Investing in Iskandar is Not Without Risks

Horizon Residence and Sky Loft Suites Rentals In Bukit Indah

New condos keep being delivered to the Johor Bahru market and this will be continue for the next few years. The supply seems to be swamping the demand for luxury condos.

In Bukit Indah, Sky Executive Suiteswere delivered earlier this year and many units seem to still be looking for tenants.

If you are looking to rent you should be able to find good deals if you bargain (prices are set too high given the huge vacancy rate, in my opinion, they seem priced based on every increasing sales prices not based on the rental market). It sure seems the market is just has far too many vacancies to justify increasing rents; and is going to get worse for those seeking to rent out their luxury condos.

Horizon Residence and Sky Loft Suites are two new condos delivered in the Bukit Indah area. The Bukit Indah area actually has some quite nice things going for it (great good options for one and a convenient mall and Jusco – though the service at Jusco has been terrible when I have gone there, enormous wait times to check out).

Horizon Residence condo rentals available now (which seem more realistically priced in my opinion). 5 minutes walking distance to CW3 (bus to Singapore) pickup point.

Sky Loft Suites condo rentals available now. Next to AEON Jusco mall and walk to bus station to Singapore via Tuas link.

  • RM 3,000 per month, 1,214 square feet, 3 bedrooms, 2 bathrooms, high floor, partially furnished (for fully furnished add 500 to 800 RM a month).
  • RM 3,500 per month, 1,214 square feet, 2+1 bedrooms, 2 bathrooms, high floor, partially furnished (for fully furnished add 500 to 800 RM a month).
  • RM 2,500 per month, 833 square feet, 1+1 bedrooms, 1 bathrooms, high floor, unfurnished.

Related: Indah Samudra Condo Rentals: 2,800 – 3,500 RMStraits View Condo, Permas JayaHorizon Hills Housing Estate

Malaysian Real Estate Slowdown May be Taking Hold

The moves to cool off the overheated property sector by Malaysia in the last few years were wise (if a bit late). The 6% sales tax was also likely wise. Real estate development tends to get overheated and collapse – taking much wilder swings than other areas of the economy. Reducing those swings is useful but challenging. How the current situation plays out will be interesting and requires government paying attention and taking action to prevent bubbles and excessive speculation, as well as watching for signs the bubble is deflating too quickly.

Malaysia Builders Hit by Tax Amid Worst Slump Since 1998

Malaysian property companies are grappling with higher costs in an industry already reeling from central bank curbs on lending last year and the first interest-rate increase in more than three years in July. Property transactions in 2013 sank the most since the aftermath of the 1997 Asian financial crisis, while home prices in the first quarter rose at the slowest pace since 2010.

Property transactions dropped 11 percent in 2013, according to the National Property Information Centre, the most since a 32 percent slump in 1998, when Malaysia had its first recession in 13 years. The Malaysian House Price Index rose 8 percent in the first three months of 2014, the slowest growth since the third quarter of 2010.

Developers offered 6,339 new units in the first quarter, a drop of almost 50 percent compared with the previous quarter. Only 30 percent of the units were sold.

It is possible the slowdown in real estate development will be too sharp which creates problems. But if that happens the main reason will be the bubble was allowed to build too quickly. And there is also the possibility the slowdown will not be quick enough (the bubble will keep growing); this seems less likely.

Luxury condos in Johor Bahru seem the most bubbly of all areas in Malaysia. It seems like Kuala Lumpor and Penang are also in danger of too must leverage and speculation. The moves to reduce that leverage, speculation and bubbly markets are good. We will see how the market develops the rest of this year and next year.

Related: Singapore Market Impacts on the Johor Bahru Real Estate MarketSingapore and Iskandar MalaysiaPenang’s Economic GainsIskandar Housing Real Estate Investment ConsiderationsJohor Bahru Restaurant ReviewsSingapore Taxes Increase In Attempt to Cool Condo Prices

360 Degree View of Downtown Johor Bahru in 2014

Here is a webcast showing a 360 degree view of downtown Johor Bahru in 2014. You can see the sky scrapers in the central business district (CBD) of Johor Bahru and Iskandar and in 5 years this will show many more high rise luxury condos. The beginnings of numerous (more than the total completed high rises) are visible in the video.

The CIQ, the causeway to Singapore, the Straits and Singapore beyond are visible. Even Singapore’s Marina Bay Sands, located at the far southern edge of Singapore, can be seen in the background.

Related: Setia Sky 88 Construction Progressing QuicklyIndah Samudra Condo Rentals: 2,800 to 3,500Johor Bahru Old Chinese Temple in CBDD’esplanade Residence @ KSL Mall

Singapore Sprawl Fueled by Cheap Housing Resulting in Long Delays at Border

As I have written previously the potential for Johor Bahru, Malaysia is great. The proximity to Singapore give JB the extra boost that moves the potential above that of dozens of similar locations throughout South East Asia. But potential has to be managed properly or it is wasted. The inability of Singapore and Malaysia to cope with the demand for cross border traffic has to be a huge concern for investors.

The backups have become progressively worse throughout the last year and especially bad the last few months. As I have also written previously the massive supply of luxury housing in JB without a visible source of equally high paying jobs in Johor that will allow people to afford those houses is a worrisome sign.

The failure to complete a 3rd link by last year and the huge delays experienced all this year create strong headwinds for realizing the potential of Iskandar. Obviously cross border transportation was going to be bad before the MRT was finally extended given the huge volume of luxury condos being build in JB. But things are tremendously bad already when only a few of the new luxury condos are completed.

The potential is still great but the huge problems with the borders already calls into question the ability to plan, execute and grow to meet that potential. More high paying jobs need to be created in Johor Bahru itself. I don’t see how the number of luxury condos being built will be workable in the next few years. 10 years from now all may be well, but from 2015 to 2018 (or whenever the border gets fixed so the median border delay is under 15 minutes, likely the extension of the MRT to JB will have to play a role in fixing the problem) I see big risks countering the big potential.

Johor Bahru street with KSL in the background

Houses on Johor Bahru street with KSL in the background (D’esplanade Residence @ KSL, KSL mall, KSL hotel and more condos are being build across the street).

People are willing to envision themselves putting up with huge commutes. but as they live with them year after year and miss their children, spouses and lives sitting at a border waiting to move forward many will decide it isn’t worth it.

Cut-Price Luxury Homes Fuel Singapore-Johor Bahru Sprawl

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