Figures from National Property Information Centre (NAPIC) noted that the value of property transactions in Johor had fallen by 33% quarter on quarter (q-o-q) in the fourth quarter of 2014. Reasons attributed to the slowdown in the property market in Iskandar Malaysia (IM) include an oversupply of property, decline in interest from Singaporeans and the impact of the cooling measures introduced by the government. However, analysts are describing the slowdown as a consolidation period as balance is achieved between supply and demand while the market transitions into maturity.
The Foreign Interest Factor
One of the key reasons attributed to the slowdown in the property market in IM is a perception that there is a “property oversupply”. The size of the Chinese projects which are 3 to 4 times larger than local projects has contributed to permeating the “oversupply notion”, especially amongst investors.
According to data from IRDA, at the peak of the market, in 2013, almost 74% of non-Malaysian property buyers in IM were from Singapore. Admittedly buying by Singaporeans in the recent months has not been as robust as before. Property Expert Khalil Adis in an email response to iProperty.com’s question on the current Singapore sentiment says the current political situation and reports on oversupply are causing many to stay away from the market. Khalil, however, thinks they will return to the market once the political situation has improved.
Demand Driven Properties
Transactions in 2015 have been visibly muted especially in the light of the turn of events in Singapore – where property prices have dropped by 4%-7%. Industrial and commercial properties though are still gaining traction from manufacturers especially from Singaporean companies looking to expand operations. As for residential properties, there is a mismatch between supply and demand.
An analysis of the data from iProperty iQ research on residential property demand based on price range from 2013 to 2015 in Johor Bahru and Iskandar Puteri indicates that demand is highest for middle to high priced homes between RM300,000 to RM700,000. This demand, which makes up more than 70% of total demand has been growing substantially and is currently at 76%.
In Iskandar Puteri, demand for double storey homes priced from RM300,000 to RM500,000 in 2013 and 2014 remained high at almost 40%. However in 2015, demand in the category dropped to only 28.9%. This decrease in demand was also seen in the RM500,000 to 700,000 category. However, demand for double storey homes priced between RM700,000 and RM1 mil almost doubled between 2014 and 2015. The trends in demand for double storey homes in Iskandar Malaysia clearly show a growing affordability, which is in tandem with the strengthening of the state’s economic position.
Based on iProperty.com’s iQ study on condominiums, it is noted that between 2013 and 2015, the demand in both Johor Bahru and Iskandar Puteri is highest for medium to high-cost condominiums.
Even in the most affluent area of Iskandar Puteri, the highest demand for condominium is in the RM500,000 to RM700,000 category. However it is noted that in the last year, the demand for condominiums priced between RM700,000 and RM1 mil has grown from 22.86% in 2014 to 25.43% in 2015. Interestingly, demand for condominiums above RM1 million but below RM1.5 million has continued to grow steadily in the last 2 years. It was only 5.81% in 2013 but has increased to 8.75% this year. This growing interest in higher priced condominiums is reflective of a changing lifestyle i.e. a preference for condominium living especially amongst the more affluent Johoreans.