This article first appeared in City & Country, The Edge Malaysia Weekly on June 10, 2024 - June 16, 2024

Johor Bahru’s property market is headed for its next growth cycle following a strong rebound last year and the announcement of the new investment target set by the Iskandar Regional Development Authority (IRDA) for Iskandar Malaysia earlier this year, according to KGV International Property Consultants (Johor) Sdn Bhd executive director Samuel Tan when presenting The Edge Malaysia | KGV International Property Consultants Johor Bahru Housing Property Monitor 1Q2024.

Tan cites data from the National Property Information Centre (Napic) to highlight steady growth throughout 2023. The total transaction volume of all property types in Johor Bahru increased by 65.3% from 18,188 units in 2022 to 30,071 units in 2023 while the transactional value rose by 61.1% from RM13.9 billion in 2022 to RM22.4 billion in 2023.

For the residential property sub-sector, transaction volume increased by 59% from 14,718 in 2022 to 23,406 in 2023 while transaction value increased by 82.9% from RM6.812 billion in 2022 to RM12.462 billion in 2023.

“Apart from the receding Covid-19 pandemic, Johor Bahru’s strong property market performance last year was largely due to the list of infrastructure projects and new initiatives announced by the governments and the recovery of businesses post-pandemic,” Tan says.

Spanning over 2,000 sq km, Iskandar Malaysia covers several areas, namely the Pasir Gudang industrial zone, Johor Bahru, Iskandar Puteri, Kulai, Sedenak and part of Pontian town.

Earlier this year, the IRDA set a new cumulative investment target of RM636 billion for Iskandar Malaysia by 2030. It has been reported that the initial target of RM383 billion set during the inception of the economic region in 2006 was surpassed last year. The region recorded total cumulative investments of RM409.5 billion from its inception to September 2023.

“Iskandar Malaysia has performed well in the past 17 years, from 2006 to 2023. Its strategic location and offering of various competitive advantages continue to attract investors to the region. This serves as a solid base for Iskandar Malaysia to pivot into the next growth cycle,” says Tan.

In the next stage of Iskandar Malaysia’s growth, Tan explains that the forthcoming Johor Bahru-Singapore Rapid Transit System (RTS Link), the Gemas-Johor Bahru electrified double track, the possible revival of the Kuala Lumpur-Singapore high speed rail and the initiation of elevated autonomous rail transit will collectively enhance the connectivity intra-state and inter-districts. This will improve efficiency by enhancing mobility and minimising bottlenecks, he adds.

In addition to that, he says initiatives such as the Special Financial Zone and Special Economic Zone are poised to be game changers for Iskandar Malaysia’s economy.

“Such collaboration can capitalise on Johor’s vast natural and human resources and Singapore’s services, financial and technology sectors. In short, we are optimistic that Iskandar Malaysia will do better in its next lap of development. An economic model tapping on the strengths of Malaysia and Singapore would have a far-reaching impact across sectors such as property, trade, manufacturing, logistics and transport, hospitality, retail and entertainment,” he adds.

According to Tan, the number of overhang and unsold units that are still under construction in Johor Bahru has been on the downtrend in the past few years. Data from Napic shows that the number of overhang properties in Johor Bahru has reduced from 16,799 in 2022 to 14,063 in 2023.

He also elaborates that the overhang for high-rise residences has decreased from 19,544 units in 2020 to 14,063 units in 2023, registering a drop of 28% over the period. Similarly, unsold units that are still under construction also dropped from 11,054 units to 5,597 units over that period, registering a drop of 49%.

“During Covid-19 from 2020 to 2021, we observed that developers either stopped or slowed down the launch of high-rise residential properties in general. Most developers concentrated on clearing the existing stocks. Thereafter, the property market started to pick up in 2Q2022 when the borders reopened. Developers have managed to clear a lot of unsold stocks over the past two years. That basically summed up the downtrend in the overhang figures,” Tan explains.

Following the decreasing number of overhang properties, several developers have begun to expand their footing in the city. Tan reports that Maxim Pelangi Sdn Bhd, which is a joint venture company between Maxim Global Bhd (KL:MAXIM) and Alliance Gloss Sdn Bhd, is acquiring a parcel of approximately 6.5 acres of freehold land in Taman Maju Jaya for RM167 million in cash. He says this works out to be about RM589 psf and speculates that the land would most likely be developed into a high-rise serviced apartment or an integrated project with other complementary components.

Besides that, Venice View Development Sdn Bhd, a wholly-owned unit of Mah Sing Group Bhd (KL:MAHSING), is acquiring a parcel of about 100.4 acres in Pulai, Johor Bahru, for RM103.75 million, or RM23.7 psf. The newly acquired land is located close to its existing M Tiara site. Tan thinks the developer might use the land to build housing estates. Another developer, KSL Holdings Bhd (KL:KSL), bought 183.33 acres of land along Jalan Gelang Patah at Mukim Pulai for RM211.58 million, or RM26.5 psf.

“With the improved market sentiment post-pandemic, many developers reactivated their stalled plans, building up land bank and launching new projects. Serviced apartments in the city area have since been in high demand with the impending commencement of the RTS Link, the consequential effect of escalating property prices in Singapore, the strong Singapore dollar and the closer collaboration between Malaysia and Singapore.

“For the residential sub-sector, high-rise properties have performed particularly well after years of underperformance. Prices of those projects located in the city area and near the RTS Link are largely hovering around RM900 to RM1,200 psf. Moving forward, reasonably priced high-rise development with unique concepts from developers with proven track records should attract buyers,” Tan opines.

Out of the about 463,000 in existing supply, Tan says about 65% are landed properties and 35% are high-rise residences. However, the incoming supply is witnessing the exact opposite with about 35% landed properties and 65% high-rise properties.

He further provides a breakdown of the numbers. Landed incoming supply has 12,967 units while high-rise properties including condominiums, apartments, serviced apartments and SoHos amount to 25,359 units.

With regard to this, Tan says, “Due to the increasingly high land and construction costs, especially in more mature areas, the absolute prices of landed houses are beyond the reach of many prospective buyers. High-rise properties, in turn, have become the most affordable housing option especially for first-timers. It is an irreversible trend to see more high-rise properties in Johor Bahru.”

In terms of price trends, Tan says both rental and price of most landed and high-rise properties in the monitor have increased in 1Q2024. As the percentage of increase in price and rental vary, the yield did not move in a uniform direction, he adds.

“We also noted that the uptrend in resale prices and rentals appears to be wide [across the property types],” he adds.

Just as Tan points out, the monitor shows an increase in the prices of landed properties in 1Q2024. A 2,891 sq ft unit at Taman Molek had a selling price of RM850,000 in 1Q2024 compared with RM800,000 in 4Q2023. Similarly, a 1,916 sq ft unit had a selling price of RM650,000 in 1Q2024 compared with RM600,000 in 4Q2023.

Apart from that, a 2,553 sq ft semi-detached unit at Taman Molek saw an increase of RM100,000 in selling price from RM900,000 in 4Q2023 to RM1 million in 1Q2024. Another unit that saw a RM100,000 increase is a 2,380 sq ft cluster home at Senibong Cove. It had a selling price of RM1 million in 4Q2023, which increased to RM1.1 million in 1Q2024.

For rentals, semi-detached and cluster units saw the most increase in rentals during the quarter. Some notable ones include a 3,780 sq ft unit in Senibong Cove which saw an increase from RM4,000 per month in 4Q2023 to RM4,300 per month in 1Q2024. At Austin Heights, a 3,595 sq ft unit saw an increase from RM3,600 per month in 4Q2023 to RM3,800 per month in 1Q2024.

As for serviced apartments and condominium units, a 1,600 sq ft unit at Straits View Condominium saw an increase in asking rent from RM1,800 per month in 4Q2023 to RM2,000 per month in 1Q2024. At Molek Pine, a 1,469 sq ft unit also witnessed an increase in asking rent from RM2,000 per month in 4Q2023 to RM2,200 in 1Q2024.

Five landed and two high-rise residential projects were launched in the quarter. In Taman Desa Tebrau, 76 units of double-storey cluster homes under the Harp 2C project were launched with land areas starting from 2,550 sq ft and built-ups from 2,698 sq ft. These units were priced from RM1.27 million to RM1.33 million and all of its non-bumiputera units have been sold.

In Taman Pelangi Indah, part of the Palmwood 2 development, 60 units of double-storey terraced homes were unveiled. These units have land areas starting from 1,820 sq ft, built-ups from 2,079 sq ft, and selling prices from RM898,000. The non-bumiputera units are fully sold.

Under Greenwood Phase 1 in Taman Daya, 106 units of 2-storey cluster, semi-detached and bungalow homes were launched. These homes have land areas starting from 2,080 sq ft, built-ups from 2,114 sq ft and selling prices from RM987,000. Fifty per cent of the non-bumiputera units have been sold.

At Taman Impian Emas, a project called Bukit Impian Residence saw the launch of 42 double-storey semi-detached houses that have land areas starting from 4,050 sq ft, built-ups from 3,613 sq ft and prices from RM1.7 million. Over 90% of the non-bumiputera units are sold.

Also at Taman Impian Emas, under the KSL Pulai Bestari project, 325 units of cluster, semi-detached and bungalow homes were launched with land areas starting from 2,240 sq ft, built-ups from 2,630 sq ft and selling prices from RM997,800. About 50% of its non-bumiputera units have been booked.

At Taman Mount Austin, a serviced apartment development named Austin Regency (Phase 4) launched its Tower D comprising 279 units. They have built-ups ranging from 490 to 1,317 sq ft and selling prices from RM562 to RM728 psf. All non-bumiputera units have been sold while the bumiputera units are 50% sold.

Another serviced apartment was launched at Wadihana named Oasis Residences. The project comprises 612 units with built-ups ranging from 589 to 958 sq ft and selling prices from RM950 to RM1,200 psf. Ninety seven per cent of its non-bumiputera units have been sold.

Tan says, “Oasis Residences, developed by CTC Development Sdn Bhd, has shown commendable performance. They focused on one single development with limited units and this works well with the locals, which is different from some of the China-based developers in the state.”

He adds that other projects priced from RM500 psf and above also achieved good sale rates with non-bumiputera units fully taken up. “It is an indication that there is also demand for high-rise apartments and apartments away from the city centre if the pricing is right. Riding on the positive market sentiment, there were more new launches compared to earlier quarters with a good mix of landed properties and high-rise apartments or serviced apartments in 1Q2024.

“Sale rates have been good with many projects achieving high sale rates for non-bumiputera units. More landed property types such as cluster and semi-detached houses were launched instead of only terraced houses. This is another indication that the developers are more confident and buyers are more receptive to committing to big-ticket properties,” Tan says.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.