Iskandar developers change strategy
Builders in Danga Bay, Nusajaya-Medini focusing on landed, industrial properties instead of high-rise projects
PETALING JAYA: Malaysian developers are scaling back launches of high-rise integrated properties in Danga Bay and Nusajaya-Medini in Iskandar Malaysia due to the more than ample incoming supply by the end of 2015/2016.
They are instead focusing on landed and industrial properties, according to Maybank research report.
Analyst Wong Wei Sum said in the report that the oversupply might result in a decline in property values over the medium term of between two and five years.
She also raised concern about the “increasingly crowded development space in Iskandar” after the research house hosted a group of 19 Malaysian investors there in late September.
“To avoid direct competition with the foreign developers, Malaysian developers are either switching their focus to townships, business parks and land sales (due to low holding costs for the land versus foreign developers).
“(Either that or they) are moving out to the suburbs such as Kulai and Senai to meet the strong demand for affordable housing,” Wong said.
A number of high profile foreign developers have entered the Iskandar market the last couple of years. Most of them are from China. They include Country Garden Holdings Ltd and Guangzhou R&F Properties Co while state-owned Greenland Group is the latest to enter that market.
Guangzhou R&F is adopting an aggressive “fast selling and fast building” strategy for its Princess Cove project while Greenland Group is registering interest for its Jade Palace development in Danga Bay.
“Our view is that affordable landed and industrial properties would be better investment choices in Iskandar,” Wong said. On a national basis, Wong prefers the Klang Valley over Iskandar.
Exacerbating the situation in southern Johor is the possibility of “a few more land sales to foreign developers,” the report said.
Already, local and foreign developers are resorting to huge discounts in order to sell. Sunway group is offering discounts of between 15% and 17% for its Citrine office suites in Medini while Guangzhou R&F’s first phase of 1,488 apartment units received bookings of 46% since its late July launch. About half of its 79 retail lots are “booked”.
Tropicana Corp Bhd has yet to launch its Danga Bay projects while a fifth of both UEM Sunrise Bhd’s Almas project in Puteri Harbour – at RM700 per sq ft – and WCT Holdings Bhd’s Signature Tower B in Medini – at RM1,800 per sq ft has been sold. Gamuda Land Bhd is also lowering its sales target by 12.5% year-on-year for its flagship project Horizon Hills for its financial year 2015.
Wong also noted that Johor’s House Price Index (HPI) contracted 1.6% quarter-on-quarter in the second quarter of this year, the first decline in 27 months, due to government cooling measures which started in January.