KUALA LUMPUR: The Iskandar Malaysia property market has moved on from the supply glut issue with projects surrounding the Rapid Transit System Link station at Bukit Chagar, going at an average selling price of RM1,000-RM1,300 per square feet, RHB Research said.
It said this put the selling price on par with the prices of many condominiums in the Kuala Lumpur City Centre area.
Having said that however, it qualified that not all areas are blossoming, as some completed projects are still seeing prices going at 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.
It said currently there are about 11 projects surrounding the RTS Link station at Bukit Chagar.
According to a Singapore online news portal last week, the Singaporean government has taken to cautioning its citizens on the risks involved in buying overseas property, after a research report highlighted a glut of homes in Iskandar Malaysia.
A Singaporean lawmaker citing information from Malaysia's National Property Information Centre (Napic) said the number of upcoming planned properties in Johor is the highest in the country.
RHB Research however believes the RTS Link will be a game changer and the overall Iskandar property market is expected to benefit from the return of property buyers and investors – both locals and foreigners.
The firm said this will further be boosted by increased spending from visitors from Singapore, which should benefit the retail and hospitality sectors in Johor.
"The completion of the RTS Link at the end of 2026 will not only see more intense cross-border human traffic, but may also attract Malaysians from other states to relocate to Johor and work in Singapore in the future," it said.
Apart from the RTS Link, the expensive rentals and house prices in Singapore are also becoming a push factor for many Malaysians and expats working in Singapore to relocate to Johor, given the proximity and price differentials.
Rentals for condominiums in Singapore saw a surge post pandemic – largely due to the delays in the construction works and completion of many housing projects during the pandemic period – as well as pent-up demand due to the work-from-home trend.
In addition, the Singapore Government significantly hiked the additional buyer's stamp duty for foreigners, from 30 per cent to 60 per cent at the end of April 2023, mainly targeting foreign purchasers and local investors.
"Therefore, we think houses near the Johor Bahru city centre (causeway), and perhaps the Second Link, will see increasing demand for rentals over the near term – given the price and rental gaps – while the completion of RTS Link and the upcoming Kuala Lumpur- Singapore High Speed Rail should drive demand for property in the Iskandar region over the longer term.
Is the property overhang still a major concern in Iskandar Malaysia?
Admittedly, the Iskandar Malaysia region experienced a period of overbuilding in 2012-2014, and hence, the overhang units surged.
Subsequently in 2018-2021, the glut gradually eased, in line with the overall trend for Malaysia.
According to NAPIC data, the number of overhang units in Johor peaked at 7,030 in the fourth quarter of 2020 (4Q20), and has since eased to 4,228 in 4Q23.
RHB Research believes the overhang units will continue to trend lower in the coming years.
It said that due to the Johor state government issuing a freeze on new applications to construct serviced apartments in 2015, many major listed developers aggressively wound down their completed unsold inventory since 2017 and developers cut down their launches during the property market slowdown in 2015-2020. "Therefore, with new catalysts from the completion of major transport infrastructure such as the RTS Link, we think that not only will the overhang units fall further, new demand can also be created, supported by the influx of foreign and domestic direct investments," it said.
RHB Research also said that many Tier-1 developers'increasing sales from the Johor region over the last 3-4 years, is strong evidence that the Iskandar Malaysia property market is not as bad as initially perceived.
"We also note that the sales that these developers secured were very much from the landed residential as well as commercial products from their respective ongoing township projects," RHB research said.