KUALA LUMPUR: Can the Malaysia My Second Home (MM2H) programme help sell off a large stock of unsold luxury condominium units and serviced apartments in Johor, especially in Iskandar Puteri, which is where Forest City is located?
In order to allow developers to sell off their sizable stock, the Johor state government is pushing for a modification of the country's laws for foreign residents.
The MM2H programme, under which wealthy foreigners can maintain long-term residence in Malaysia, is overseen by the Home Ministry.
Residents of MM2H are eligible to purchase real estate in Malaysia at prices higher than a set minimum.
The benchmark varies from state to state, ranging from RM350,000 in Sarawak to RM500,000 in Penang and RM1 million in Johor, while the federal recommendation is RM1 million and higher.
According to reports, the US$100 billion Forest City, led by Guangdong-based Country Garden Holding, is having trouble selling real estate to its principal investors in China and Singapore.
More than 20,000 residential units have reportedly been handed over by Forest City, significantly fewer than the planned 700,000 residents who are anticipated to move there at the completion of the fourth island in 2035.
The majority of the property owners are from Singapore, Malaysia, and China.
Additionally, buyers from Vietnam, Indonesia, Taiwan, Hong Kong, South Korea, and Japan have shown interest in the project.
Forest City, which is located off the southern edge of Johor, is 1,740 acres in size, or roughly three times the size of Singapore's Sentosa resort island.
It is a mixed development that includes residential, leisure, commercial, and industrial spaces.
It is intended for Forest City to have its own customs and immigration checkpoint, allowing its citizens to travel to Singapore with ease.
The development, which comprises eight phases, has slowed down as a result of the pandemic, according to Country Garden.
In response to inquiries from Nikkei Asia in March 2023, Country Garden said that only the first island has so far been developed.
Country Garden said the closure of international borders has also hit businesses on the first island, which include houses, an international school, retail and commercial spaces, luxury hotels, and two 18-hole golf courses.
"As the pandemic prolongs, there have been changes made with regard to the direction of corporate investment, tourism, and vacation, as well as other project directions and development ideas, which definitely affect our business," Country Garden said.
The scare of oversupply in Forest City has brought fear to many investors and homebuyers.
However, according to Loong Kok Wen of RHB Research, the Iskandar real estate market has gotten past the issue of a supply glut and the concern over Forest City.
She said the total Iskandar property market is anticipated to profit from the return of property purchasers and investors, both locals and foreigners, due to the scarcity of vacant land available for development in JB city centre.
"Since we last visited in 2019, we feel that things have changed and the momentum has picked up significantly in Johor, especially in areas surrounding the RTS station at Bukit Chagar," she said.
Loong believes that the RTS link will be a game changer that will significantly enhance the connectivity between Johor Bahru and Singapore.
She said upcoming news flows that may favour the Iskandar property market include the review of the MM2H programme, an update on the Johor-Singapore special economic zone, and the progress of the Kuala Lumpur-Singapore high speed rail project.
"We learned that some projects are seeing prices rise by as much as 50 per cent from the time of launch to vacant possession, and some newly-launched projects are going at RM1,000 to RM1,200 psf, and they are well taken up.
"However, not all areas are blossoming now, as some completed projects are still seeing prices go 40 per cent below the initial launching price.
"Hence, only projects that are strategically located and commercial properties that are well managed are popular among property buyers, investors, and tourists," she said.
Loong said the completion of RTS in three years' time will not only see more intense cross-border human traffic but may also potentially attract Malaysians from other states to relocate to Johor and work in Singapore in the future.
There are about 11 projects (Sky Suites, V Summer, Sky Habitat, Meldrum Heights, R&F Princess Cove Phase 1 & 2, Tri Tower, Twin Tower, Bukit Chagar Luxurious Apartment, SKS Pavilion, and Paragon Suites) surrounding the RTS station at Bukit Chagar, going at an average selling price of RM1,000 to RM1,300 psf.
"This is already on par with the prices of many condominiums in the KLCC area (aside from the branded ones). While some projects were launched in 2016 to 2018, some newer projects are seeing strong take-up, mostly by local Johoreans," she said.
Loong said RHB also visited Coronation Square's sales gallery.
This integrated development is located at the heart of Johor Bahru city, and elevated walkways will be built to connect the RTS station and Bangunan Sultan Iskandar CIQ complex.
Loong said Bank Rakyat and KPJ Healthcare Bhd have taken up an office building each in the project.
Both towers were sold at above RM1,000 psf, she added.
While KPJ will utilise the space for non-ambulatory and non-emergency medical services such as aesthetics, dentistry, aged care, and paediatrics, Bank Rakyat will turn the building into a digital business hub for banking and digitalised transactions.