The headliner for the 1H2016 for Johor is, of course, Forest City. The 1,386-hectare mixed development project spread over four man-made islands by Chinese heavyweight developer, Country Garden, was officially launched by the Sultan of Johor and The Prime Minister on March 6, 2016. An entire city designed from scratch, this mega- development is set to include extensive green landscaping and to utilize clever design to create a green ‘smart city’. The development is expected to take over 20 years to complete. The project has been heavily marketed and has generated a buzz around town that has been sorely missed over the last 6 months.
At the launch, the Prime Minister announced that Forest City will be accorded duty-free status. In addition to that, further tax incentives for green developers, tourism, health and education sectors were also bestowed upon Forest City.
As of March 2016, Iskandar Malaysia has registered cumulative investments of RM202.45 billion starting from 2006, mainly from the manufacturing sector which accounted for about 27%. Of this total, RM103.50 billion or about 51% of the total investments has been realized. Foreign investors have contributed RM81.01 billion to the total cumulative investments which represent approximately 40% of the total investment thus far.
The locally listed JCY Group, a regional producer of hard disk drive components, has announced that it will be setting up its principal hub in Johor. Announced by MIDA on April 2, the principal hub will serve as a global procurement centre for the group
In March 2016, 3Cnergy, a property solutions company has entered into a conditional sale and purchase agreement (SPA) for the acquisition of all the issued shares in Liberty Bridge Sdn Bhd for RM186 million. Pursuant to the SPA, 3Cnergy will acquire Liberty which owns ten parcels of undeveloped land measuring approximately 37.4 acres in Puteri Harbour. 3Cnergy intends to continue with Liberty’s existing plan to develop the land into an integrated development consisting of SOHO, serviced apartments, condominiums, office lots, office tower, hotel, street front retail, and activity retail.
The 197km Gemas-Johor Bahru electrified double-tracking project (EDTP) is expected to start at year-end upon completion of its land acquisition; it is expected to take three to five years to complete. The double-tracking rail has a capacity for the train to run at 160km per hour and an operating speed limit of 140km per hour.
UEM Sunrise Bhd (UEMS) has entered into a JV and shareholder’s agreement with Mulpha International Bhd (MIB) to jointly develop and optimise the value of 38 parcels of freehold land with a combined land size of 231.35 acres at Gerbang Nusajaya. UEMS and MIB will develop the land into a mixed residential and commercial development comprising luxury landed villas as well as mixed-use and neighbourhood retail shop developments. The project is expected to span over a maximum period of 20 years with an estimated GDV of over RM5 billion.
In January 2016, Multimedia University (MMU) launched its new campus at Educity which was built on the success of its two campuses in Melaka and Cyberjaya. Occupying an area of 45,000 sq ft, the new campus can accommodate 500 students and provides state of the art facilities.
Hua Yang Bhd has acquired Grand View Realty Sdn Bhd which owns the 73.16-acre freehold land at Pasir Gudang for RM52.9 million.It plans to develop it with cluster houses, semi-detached houses and shop offices with an estimated GDV of about RM346.4 million.
Swiss-Garden International Sdn Bhd had a soft opening for its 205-room SwissInn Johor Bahru in Jalan Syed Mohd Mufti. The company had spent RM63 million and two years renovating and refurbishing the 10-storey existing office building into a mid-sized hotel.
The RAPID project in Pengerang is still seeing committed development from stakeholders in the face of the current global oil and gas crisis. As at April 2016, the committed investments in Pengerang Integrated Petroleum Complex (PIPC) are from Petronas developing the Petronas Integrated Complex (PIC) valued at RM104.73 billion, as well as the JV between Dialog Group Bhd, Royal Vopak of Netherlands and Johor State Secretary Inc (SSI) with their Pengerang Deepwater Terminal valued at RM11.64 billion.
This is a welcome sign to many as it shows that PIPC is a long term investment with stakeholders that have visions that go beyond the current economic situation. The complex is expected to be operational early 2019.
Gleneagles Medini Hospital commenced its operation at the end of December 2015 with a capacity of 300 beds and 162 medical suites. Managed by IHH Healthcare, the RM400 million hospital is located on a 6-hectare land in Medini, Iskandar Puteri.
The world-class hospital attracts local and foreign visitors especially from Singapore due to its strategic location and is set to offer one of the best medical services currently available in the country.
The looming oversupply and tepid market activity has justifiably caused uncertainties in the market and is representative of the reduced number of launches so far in 2016. Some developments that were in the pipeline have been shelved for now as the market sits in the ‘wait-and-see’ camp. That said there are still good deals to be found and the momentum is building for the buyers. Notable activities in 1H2016 include:-
The most anticipated new high rise apartments launched in 1H2016 is phase one of Forest City. It consists of 482 units with sizes ranging from 753 sq ft to 1,862 sq ft and gross selling price from RM1,200 per sq ft. This launch has received plenty of attention globally and is continuing to be aggressively marketed internationally.
Bukit Impian Residence, which was launched in March, offers 100 units of 2-storey terraced houses with built-ups of 2,567 sq ft to 2,638 sq ft and priced from RM648,000 to RM1.13 million per unit.
UEM Sunrise Bhd has launched Melia Residences, the first freehold landed strata residential development in Gerbang Nusajaya. The 73.64-acre development offers 625 units of 2-storey terraced houses with built-up areas ranging from 2,006 sq ft to 2,594 sq ft. The selling prices for phase one starts from RM550,000 per unit.
Mutiara Rini Sdn Bhd recently launched Phase 5B of Rini Homes comprising a total of 223 units of 2-storey terraced houses. These houses have built-up areas ranging from 1,694 sq ft to 2,327 sq ft and are selling from RM480,000 per unit.
Hua Yang Bhd has launched Tower A, the second tower of its Citywoods serviced apartment project, along Jalan Abdul Samad. Like Tower B, which was launched in September 2014, Tower A is also a 19-storey apartment block with only nine units per floor. Tower A offers three design layouts ranging from 764 sq ft, 958 sq ft and 1,249 sq ft respectively with prices starting from RM446,000 per unit.
In March, Mah Sing Group Bhd held a topping-up ceremony for The Meridin @ Medini which symbolizes the completion of the development’s structure. Launched in 2013, the completion of The Meridin@ Medini’s structural works comes with the CONQUAS Structural Assessment score above 80 points. The Meridin@Medini is an integrated development offering hotel services suites, serviced residences, SOVO, and retail shops.
Afiniti Medini that was launched in 2013 and developed by Pulau Indah Ventures, a JV between Khazanah Nasional and Temasek Holdings, has received its Certificate of Completion and Compliance. Keys were handed over to purchasers from end April. The development comprises of Afiniti Residences (147 units), Somerset Medini Serviced Apartments (310 units) a training centre, retail components and 50,000 sq ft of space dedicated to wellness and health anchored by Pantai Parkway.
As at the end of 2015, the total net lettable area (NLA) of purpose-built office space which includes private buildings and government buildings in Johor Bahru stands at approximately 8.87 million sq ft with an overall average occupancy rate of about 78%, a slight increase as compared to the previous year.
Rentals of prime and non-prime CBD office space remained stable with asking gross rental for prime space ranging from RM2.50 to RM3.50 per sq ft per month while non-prime office space command gross rental of between RM1.80 and RM2.50 per sq ft per month.
Bank Rakyat Johor Tower, a 37-storey office building with a gross floor area of about 550,000 sq ft was recently unveiled by Sultan Ibrahim Ibni Almarhum Sultan Iskandar. It is located at Jalan Trus and Jalan Gereja within the Ibrahim International Business District, Johor Bahru city centre. The construction work has already started and is expected to complete in 2019.
D Pristine Medini Sdn Bhd (a wholly owned subsidiary of B&G Capital Resources Bhd) has entered into a sales and purchase agreement with Pelaburan Hartanah Bhd (PHB) to sell its Grade A Office Tower component of its d’Pristine@Medini project located in Medini. The sale of the 32-storey office building to the government agency was concluded on January 15, 2016. The office building is part of the 8.42-acre integrated mixed development, d’Pristine@ Medini that comprises two SOFO towers, a 4-star hotel, and interconnected lifestyle retail mall.
By the end of 2015, the total NLA of Johor Bahru retail space (inclusive of shopping centres, arcades and stand-alone hypermarkets), stands at about 11.78 million sq ft with an average occupancy at 78.2%. Prime retail space continued to perform well with occupancy rates recorded in excess of 80%, commanding gross rentals ranging from RM15.00 to RM40.00 per sq ft per month.
After a legal tussle lasting for 11/2 years, the land amalgamation process for Mid Valley SouthKey is finally concluded with the completion of SouthKey mall to be delayed until the end of 2018. Once complete, Mid Valley SouthKey Megamall will be one of the largest shopping centres in the Southern Region. IKEA Malaysia’s third store which is located in Taman Desa Tebrau, Johor Bahru is slated to open by the end of next year. IKEA Johor Bahru is to be located on the 36.94- acre tract next to AEON Tebrau City.
Ikano had purchased the land for RM64.4 million, or approximately RM40.00 per sq ft in July 2007. The IKEA store will be integrated with a shopping centre. The proposed shopping centre revolves around F&B streets that straddle its frontage, with IKEA being the anchor tenant, together with a hypermarket, junior anchors and specialty shops.
The construction of Paradigm Mall set along the Skudai Highway, by WCT, is making good progress and is expected to be opening by the end of 2016. Its completion will see over 1.3 million sq ft (NLA) of retail space entering the market.
In May 2016, Axis-REIT acquired a parcel of industrial land erected with a single-story warehouse building and other ancillary buildings located in Zone 12C of Kawasan Perindustrian Pasir Gudang for a total lump sum cash consideration of RM33 million from Oriental Int. Sdn Bhd.
AmanahRaya Real Estate Investment Trust has entered into a sale and purchase agreement (SPA) with Pipeline Distribution (M) Sdn Bhd on April 20, to acquire a parcel of freehold land in SiLC for RM24 million. A single-story factory annexed with a three storey office building, known as Deluge Factory, with a GFA of approximately 78,360 sq ft is built on the 1.2-hectare land.
MSM Malaysia Holdings Bhd, the country’s largest producer of refined sugar, will build the largest sugar refinery in Malaysia. Set on a 20-hectare plot in Tanjung Langsat, the RM1.09 billion integrated plant is expected to be operational by the end of 2018.
Amity-Energy Pte Ltd will build and operate a Refrigerated Liquefied Petroleum Gas (RLPG) terminal in the Tanjung Langsat Industrial Complex. The RLPG Terminal is the first of its kind in Malaysia and expected to be operational in Q1 2018. The facility is expected to cost between RM586 million and RM781 million.
Despite the recent difficulties, Petronas Chemicals Bhd, a unit of Malaysia’s state energy company, will continue to spend RM16 billion over the next five years in the ongoing RAPID project in Pengerang. Most of this investment will be allocated to a refinery and petrochemicals complex.
1H2016 has been impacted with multiple headwinds that include oil and gas crisis, weaker ringgit, and reduced mortgage availability.
Several projects particularly high-rise residential developments have been put on hold for the time being. The state government made the decision to halt new approvals for high-rise residential projects to allow existing supply to be absorbed. As a result, new launches for these developments are expected to be fewer this year. Developers are keen to sell off their existing stock before starting new launches. In order to entice buyers, a myriad of special incentives are being offered to potential purchasers. Rebates, free legal fees, fully furnished units, free moving services are all being offered by various developers. Some are even offering to help provide financing packages in order to encourage sales.
Lending policies of banks appear to be more restrictive, with loan approval rates sitting at 50% as of the end of 2015. The recent global launch of Forest City has done much to place Johor in the spotlight. However, with the current economic climate, many consumers are prepared to wait for encouraging signs before committing to an investment in real estate. Catalytic projects are needed here to spur growth and investment.
The recent signing of the MoU between Singapore and Malaysia for the HSR is an encouraging sign. There is no doubt that when these mass transit links become operational there will be a fresh injection of interest and added development impetus in Johor Bahru.
DISCLAIMER: The data above represents the findings of Knight Frank and is not in any form and endorsement or recommendation by iProperty.com. Readers are encouraged to seek independent advice prior to making any investments.
This article was first published in the iProperty.com Malaysia September 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!