THE Johor property market could see an increase in transactions for high-rise residential units next year as foreigners will be allowed to buy properties worth RM600,000 and above in urban areas.
Experts said the government’s move to reduce the pricing threshold from RM1 million will open the floodgates for foreign buyers, especially those from Singapore.
A property worth RM600,000 would cost only S$197,000. This is considered cheap when compared with neighbouring countries, they said.
“There are Singaporeans who are finding it too costly to live in their own country. They may consider relocating to Johor. We think the more popular choice would be Danga Bay since it is a prime area and a mere 10-minute drive from the Johor-Singapore Causeway,” said a property market consultant.
An ongoing project in Danga Bay which could benefit from this move is Tropicana Corp Bhd’s Tropicana Danga Bay mixed-integrated development.
This RM8.5 billion project spans 14.9ha. Phase 1, called Tropez Serviced Residences, offers apartments ranging from 463 sq ft to 1,798 sq ft.
“Singaporeans are keen to buy houses in Johor, but they are not willing to spend more than S$300,000. Most of them are renting in Johor. Tropez is their preferred choice because it is centrally located,” said the market consultant.
Finance Minister Lim Guan Eng said last Friday the lower threshold price of RM600,000 for foreigners was expected to reduce the overhang of condominiums and apartments totalling about RM8.3 billion.
The total residential overhang was valued at RM4 billion at the end of 2014 and this snowballed to RM29.7 billion by the end of last year, according to the National Property Information Centre (Napic).
Condominiums and apartments accounted for 43 per cent of the overhang.
Bank Negara Malaysia and property players have warned about a housing glut in cities such as Johor Baru.
Certain quarters, including the Real Estate a Housing Developers Association (Rehda), had earlier appealed to the government to reduce the pricing threshold of properties for foreigners.
Last month, Johor’s Housing, Communication and Multimedia Committee chairman Dzulkefly Ahmad said the state government was considering lowering the RM1 million threshold for foreigners in a bid to clear 51,000 unsold units in the state.
He had said houses priced from RM600,000 accounted for 70 per cent of unsold properties in Johor.
The government had also unveiled the Home Ownership Campaign (HOC) early this year as an initiative under the National Housing Policy 2.0 to deal with the property overhang and to boost the lagging housing sector.
Up to 21,000 property units worth RM13.44 billion had been sold under the HOC, surpassing Rehda’s six-month target of RM3 billion.
The HOC has been extended to Dec 31.
ADDRESSING THE GLUT
Knight Frank Malaysia said there is a shift in focus in the 2020 Budget from house buyers to developers in addressing the residential property overhang.
Generally, Malaysia has a higher distribution of unsold, completed high-rise residential properties above RM600,000 at 53 per cent compared with those below RM600,000 (47 per cent), said managing director Sarkunan Subramaniam.
“It may be an immediate remedy for the overhang situation. However, there are no rules that foreigners must buy from developers, like in Australia. Such rules could be implemented to avoid creating stiff competition in the secondary property market.
“However, the property overhang is attributed to various factors such as mismatch of products and location rather than pricing alone. Some units remain unsold due to their less favourable locations.”
PropertyGuru country manager Sheldon Fernandez said the move to reduce the foreign ownership threshold from RM1 million to RM600,000 is an interim measure to address the residential overhang in the country.
However, domestic sentiment must be balanced against the short-term benefit of reducing the oversupply, as external intervention is not an ideal solution, he said.