The massive Country Garden project with tens of thousands of luxury condos in Iskandar is roiling the real estate market in Johor Bahru. The buyers are overwhelmingly mainland Chinese and the Chinese government has restricted outflows of currency reducing the hoped for demand from mainland China for the project.
The Beijing government has recently sharpened its tone on how its citizens are investing in property abroad, and tighten outflows of cash.
Beijing’s move seems to have had an immediate effect. As of January this year, the number of Chinese firms invested in offshore properties had fallen by 84% compared to a year earlier, according to figures from China’s Ministry of Commerce.
The Country Garden condos are now even being given away for free when a luxury condo is bought in mainland China.
For Johor Bahru the massive supply of luxury condos from Country Garden adds to the already very large supplies that continue to be added to the Johor Bahru market.
Some half a million of new apartments are in the pipeline over the coming years and the massive supply has had a negative effect on property prices in the region, according to Bloomberg.
Average resale prices per square foot for high-rise flats in JB fell 10% last year, according to property consultant CH Williams Talhar & Wong. Global property consultancy Knight Frank in Malaysia warns that office and retail markets will continue to be under pressure with rental and occupancy due to oversupply.
This oversupply are not a surprise to sensible investors. It was obvious years ago that the luxury condo market was being flooded with much more supply than Johor Bahru had shown the ability to absorb. The argument has been that an economic boom in Ishkandar would take care of everything. The problem is requiring a boom in order to have demand meet supply is a very risky condition for investors to accept.
Still many did. The prices were low compared to expensive cities which entices investors. And the prospects for an Iskandar boom were not unreasonable. A strong global economy, sensible conditions in Malaysia with a desire to create good economic conditions in Iskandar and especially the proximity to Singapore offered good reasons to hope.
If the building of luxury condos had been more constrained it is likely even today the prospects would be bright in that market. The prospects for Iskandar continue to be good. For real estate investors the main problem is that projects being delivered have exceeded real demand. Having investors speculate on future prospects can take on quite a bit of the extra supply for a while. But it is worrisome to see the current supply and the continued prospect for much more to be delivered very quickly. It is hard to see how enough investors can be willing to buy and hold for years at low rental rates (due to oversupply).
The luxury condo market seems to be the most oversupplied. Other markets such as bungalows, malls and office supply are also areas to be wary. The key for Iskandar is to provide tens of thousands of new high paying jobs every year in order to keep up the demand. It doesn’t appear that those jobs are appearing at the rate the real estate supply is expanding. That, of course, is a risky situation for investors.
In 2015 the timeline for extending the Singapore MRT to Johor Bahru was extended to 2020. Now, the latest I have read is that it is being delayed further – until 2022. There is likely no other factor more important to reduce the supply demand imbalance for luxury condos than getting a good MRT solution into operation. Next would likely be a 3rd road link. Next is the need for adding many more high paying jobs in Johor Bahru than has been the case so far. These 3 areas should be the main areas of focus. The other issue, though on this things are probably too late to be managed properly, would be to reduce the pipeline of luxury condos being added to the market.
As I said in the 2015 blog post, getting 1 station in JB connected to Singapore will be a huge benefit. For it to provide much greater benefit we should see at least 5 stations in JB and those must reach into the pockets of luxury condos to make those small submarkets in JB prosper.
With a huge push to get the MRT in place as soon as possible and add a 3rd link and refocus on adding high paying jobs to Johor Bahru the prospects for JB and Iskandar remain bright. But the delay on those 3 fronts over the last 5 years along with the approval of far too many luxury condo projects leaves a large oversupply on the market for the foreseeable future. Convincing investors to buy and hold those properties can maintain prices for a while but the underlying economic realities have to be addressed to solve the oversupply problem.
The prospects for Johor Bahru remain bright. But the delays on the improvements on transportation to and from Singapore and on adding high paying jobs have made the prospects less bright than they would have been if those matters had been moved forward more successfully in the last 5 years.
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).
Stulang Villa Condos offer large units in a small building near the Cyberport building (walkable to CIQ, though a long walk). It is an older building close to downtown but in a residential area.
Given the small size finding units available online may not be easy. Though will all the new condo units going online recently and soon it would not surprise me to see more vacancies here so more chance of finding units available.
See our overview of the Stulang Villa Condos. I personally think the rates are a bit high and would try and negotiate a better rate, they are large units so maybe the rate is reasonable. Units available now include:
In my opinion the pool is the best part of the project. The units are ok but the pool is amazing. The location is actually pretty good too – there are quite a few shops surrounding the area (and with a Giant and Tesco right across the street).
Rents range from 2,300 MYR/month to 4,500 MYR/month (for 820 to 1,500 square feet). Purchase prices range from 800,000 to 900,000 MYR (for 1,516 square feet which is about 600 MYR per square foot).
Current listings offer rentals:
MYR 4,500/month – 3 + 1 bedrooms, 4 bathroom, 1,500 square feet, high floor, corner unit, looking South.
Sky Executive Suites @ Bukit Indah opened to tenants last year and there are still many units available. The location is quite nice, but it does seem to me the price of the units tends to a bit higher than the market (room to negotiate, especially with so many units available). See more details on our Setia Sky Executive Suites information page.
Sweetwater Mediterranean Restaurant is another excellent restaurant in Taman Pelangi, Johor Bahru. The food is excellent as are the furnishings. It is a bit expensive but worth it if you are looking to splurge.
Even the bread is worthy of mention, it is excellent and warmed in this stone oven before serving. The fixed price lunches are a great way to experience this wonderful restaurant for a very reasonable price (around 40 MYR, about US$13). They come with wonderful bread, a salad, entree, tea, and desert.
Currently there are numerous condos available at the Straits View condos in the Permas Jaya. The opening of the new highway makes commuting to Singapore much easier now (as well as just getting to the Johor Bahru central business district.
One thing you have to keep in mind when looking for a place to live in Johor Bahru is that many available units are not listed online. A few places, like Straits View and Molek Pine have a larger percentage listed online (given that that are targeting expats and also that they are more expensive, real agents representing them are more experienced and have more tools available, etc.).
iProperty is a good site to find available Straits View Condos, some current listings:
Rosmarino Italian restaurant is another very good Restaurant in downtown Johor Bahru. It is located a block from Plaza Pelangi. Expats will enjoy a taste of home and others can get a nice example of Italian cooking. The food I have had has been excellent. The restaurant is nicely appointed and has a outdoor seating (though I don’t really see it as a great location – they do have plants but still you are just on the sidewalk facing the parking lot).
The set price lunches are really one of the great bargains I have found so far. For just RM 15 you get a nice soup and an entree. The food is excellent and I have been 3 times and enjoyed new dishes each time. The regular prices are quite steep, especially for Johor Bahru. It seems like RM 50 for a dinner would be on the cheap side and easily it could run RM 100 for a drink and meal.
I highly recommend the lunch deals. And for those with plenty of money the dinners (or just ordering off the normal menu at lunch) I am sure would be excellent. The service I would say is good even very good. Still it isn’t quite as warm or somehow seems something is not quite there for the best fine dining. Overall, I like it and think it provides another great option for fine dining in Johor Bahru.
Chez Papa is an institution in downtown Johor Bahru. The French restaurant is an expat favorite and attracts many from Singapore as it is a quick trip over the causeway for fine food at a great price.
The downtown location (near Plaza Pelangi) is very convenient to those living in JB town, as well as visitors from Singapore. As you enter the restaurant your step into an oasis of calm and feel you have entered a small restaurant in rural france. The service is also remisent of rural France (rather than the brusk service found in Paris). Though the stereotype of difficult service in France, is quite overblow, in my opinion.
Chez Papa French Bistro is an excellent fine dining restaurant and a great bargin when compared to other fine dining options. It has a cozy, warm atmosphere which provides a nice respite from the bustle of daily life.
The menu at Chez Papa offers plenty of options to chose from. I have twice ordred the Salade Nicoise which was excellent each time. I am not someone that orders salads normally. But, I have noticed, one of the things that the best restaurants offer is great salads. They use great ingredients and know the importance of doing the relatively simple things well. A good salad is often an indication of a well run kitchen.
On my first visit, my main course, the Lamb Stew, was excellent. It was hot and scrumptious with large pieces of lamb and vegetables that we just right (not overcooked, which is so easy to do) and just the right amount of seasoning. It was also huge: I could finish it. The other time I ordered the salad I couldn’t finish the mean either as it was too much. I can’t remember what it was, but I remember it was great. The photo, above, shows my 3rd meal, steak, which again was excellent.