According to data released by the National Property Information Centre (NAPIC), Johor has shown a downtrend in residential overhang. The state has had the highest overhang in Malaysia in 2022, but this has now changed. Johor’s overhang fell 19.6% to 4,228 in 2023, from 5,258 previously. Has the RTS link unlocked heightened interest in lands along the link, and increased property demand and value in Johor Bahru? Let’s find out.
In this article
- What are the top 10 transacted landed and non-landed properties in Johor?
- Zooming in on service residences in Johor
- Top 10 most viewed service residences in Johor Bharu
- Possible reasons for top viewed projects’ popularity
- Demand backed by infrastructure development
Catalysts in 2024 for the state of Johor include initiatives to designate Forest City as a special financial zone (SFZ), the proposed Johor-Singapore Special Economic Zone (SEZ), the possibility of the revival of the Kuala Lumpur-Singapore high-speed rail (HSR), and of course, the rapid transit system (RTS) that is taking shape.
The RTS has emerged as a pivotal development in Johor, and it is slated for completion at end-2026. This infrastructure project promises to be a game-changer for the state’s economy, bilateral relations, and the local property market.
Passengers will be able to travel from the Bukit Chagar station, which is next to the JB checkpoint, to the underground Woodlands North station in Singapore, and vice versa, in about five to six minutes. The train frequency is expected to be 3.6 minutes during peak hours.
The 4km RTS can carry up to 10,000 passengers per hour in each direction, and this is expected to ease congestion on the 1km-long Causeway.
The RTS Link project is based in Johor Bahru, and our data shows that the supply and demand for residential properties in Johor Bahru are rising in tandem as well.
When Malaysia transitioned to the endemic phase in April 2022, we observed a 29% jump in the demand index within the same month – from 394 to 507. Similarly, when the RTS Link reached a 50% completion rate in Singapore in April 2023, PropertyGuru’s demand index for properties in Johor jumped by 17% to 614.
What are the top 10 transacted landed and non-landed properties in Johor?
Property prices are expected to get higher the closer it gets to the completion of the RTS. According to Sinar Harian in November 2023, Johor housing and local government committee chairman Jafni Shukor said that the state government is confident of resolving the state’s property glut issue in the next three years.
In the second quarter of 2022, Johor had 6,040 unsold property units and the number reduced to 4,717 units by the first half of 2023. It has been reported that the residential overhang in Johor was mainly due to an oversupply of high-rise projects and weak demand. Nevertheless, the situation has improved post-pandemic.
In March 2024, NAPIC said in a statement in conjunction with the release of its Property Market Report 2023, that all major states recorded positive annual growth in Malaysian House Price Index (MHPI) led by Johor (up 6.2%), Penang (up 3.8%), Selangor (up 2.9%) and Kuala Lumpur (up 1.8%) respectively. MPHI is a measure of Malaysian home prices.
With that, let’s review the Johor residential property transactions recorded in Brickz from December 2022 to November 2023. These are ranked in ascending order of the number of filed transactions.
It’s interesting to note that seven out of the 10 non-landed transacted properties listed above are categorised as *Service Residence.
Zooming in on service residences in Johor
Property buyers and investors who are keen on leveraging the RTS development in Johor Bahru can consider investing in a service residences unit. There’s no denying that there has been an influx of serviced residence supply there in the past few years.
As with any investment opportunity, property buyers and investors should do thorough research and evaluate their financial-risk appetites before signing on any dotted line.
Here, let’s take a look at the investment opportunities by delving into the price-growth trends and most popular properties in the service residence category.
Based on Brickz.my, transacted units for service residences such as Country Garden Danga Bay, Marina Cove, Setia Sky 88, D’Summit Residences, Central Park @ Laman Glasier, Tropez Residences, and R&F Tanjung Puteri, among others, saw more smaller units sold. They range from approximately 400 sq ft to 1,000 sq ft.
Our data indicated that the price growth year-on-year is higher for smaller unit sizes.
The popularity of smaller units among investors and purchasers could be due to lower entry cost, and higher likelihood of it being rented out. Plus, those working in Singapore might prefer a smaller unit as it’s easier to maintain.
Kenanga Research expects locals or Malaysians working in Singapore to be the main buyers of properties in Johor. They opine that prospective Singaporean buyers may be more inclined to purchase properties in more developed cities such as Kuala Lumpur, which are more attainable thanks to their forex advantage.
That opinion slightly differs from other industry observers who say that high-rise units in desirable areas such as Johor Bahru city centre and Iskandar Malaysia, are being purchased by Singaporeans looking for retirement, vacation, or investment properties, as well as by Malaysians who work in Singapore.
Top 10 most viewed service residences in Johor Bharu
Total views in the table below are from January 2023 to December 2023, while transacted prices are generally based on a one-year period.
The top two viewed properties located near the RTS station in Bukit Chagar are R&F Princess Cove and Twin Tower Residence.
A news report highlighted that Singaporeans made up 40 per cent of buyers for the R&F Princess Cove condominium. This could also be attributed to the increased additional buyer’s stamp duty (ABSD) in Singapore in April 2023.
It was also reported that Chinese developer R&F saw five times as many transactions for its R&F Princess Cove serviced apartments between April and September 2023, in comparison to the same period in 2022.
Possible reasons for top viewed projects’ popularity
1) Proximity to RTS station
Two out of the top 10 most viewed projects are located close to the RTS station – R&F Princess Cove, and Twin Tower Residence. According to Google Maps, R&F Princess Cove is about 2.1km away (about 7 min’s drive) from the RTS Bukit Chagar station, while Twin Tower Residence is about 900m (about 3 min’s drive) from the station.
Singapore’s high rent and home prices could lift demand for properties in Johor Bahru. So, Malaysians working in Singapore who are already renting units near the RTS Bukit Chagar station will benefit from cheaper rent, on top of commuting time that’s reduced to just 5 minutes.
The revisions to Malaysia My Second Home (MM2H) coincided with Singapore’s cooling measures in April 2023. Singapore citizens now pay 20 per cent ABSD on the second property, and 30 per cent on the third or subsequent property. This could push investors in Singapore to look at properties in Johor instead.
2) Tenure
9 out of 10 on the list above are freehold properties. Those seeking properties in Johor seem to still prefer that over leasehold properties.
Most properties in Iskandar Puteri are freehold tenures, an essential criterion for many homebuyers. However, this could just be one of the many factors that influence purchase decisions. After all, due diligence includes a thorough look at location, facilities and amenities, infrastructure, density, future plans or phases (especially for integrated developments), financing options, and so on.
3) Completion year
Most of the projects were completed in the years 2017 and 2018, while Palazio and Tropez Residences were completed around 2014. The newest project on the block is Twin Tower Residence, which was completed in 2023/2024.
So, it seems that property seekers are drawn to sub-sale properties that are about 6 or 7 years old. These properties aren’t considered old, and its surrounding infrastructure and amenities has had some time to mature, and could still grow. Potentially, there could be more population and demand growth, which could also lead to some capital appreciation.
A sub-sale property also gives good insights of the management, maintenance, and resident profile.
4) Amenities and facilities
Each project has its own attractions, be it accessibility, location, a long list of facilities, unique concepts, or proximity to malls. The projects on the most viewed list have three key things in common – proximity to either a highway or public transport (railway station, RTS, and so on), malls, and/or schools.
For example, Twin Tower Residence is close to the Johor Bahru CIQ complex, RTS Bukit Chagar station, and several malls (Johor Bahru City Square, KOMTAR JBCC and R&F shopping mall).
Another example, D’Summit Residences is near the Kempas exit of the North-South Highway, CIQ Complex, Fairview International School and AEON, among others.
As an integrated project, R&F Princess Cove has it all, as it was the first in South East Asia to encapsulate the HOPSCA (Hotel, Office, Parking, Shopping Mall, Convention and Apartment) marina living concept. It’s also close to JB Sentral Bus Terminal, KTM JB Sentral railway station, and RTS link. It’ll have its own mall, R&F Mall, while being close to City Square.
Palazio also offers residents daily conveniences as it is close to Lotus’s Tebrau City, IKEA, SK and SMK Taman Johor Jaya 1, SK and SRK Mount Austin, and SJK (C) Foon Yew 5.
Be it part of an integrated development or smack in the middle of business districts, amenities play a huge role for service residences, which are often directly connected to public transport stations, shopping malls and hypermarkets.
5) Gross rental yield
Global Property Guide reports that the average gross rental yield in Malaysia is 5.16% as of Q1 2024, and the and the average gross rental yield for Johor is above the country’s average at 6.25%.
Example of gross rental yield of top viewed properties in Johor
We calculated the rough gross rental yields for the most popular projects in Johor Bharu and discovered that the figures exceed 5% for most of the properties. While not stellar, the figures are somewhat promising when benchmarked against the nation’s average rental yield.
Note: Figures are based on listings on iProperty.com.my. Thus, they’re an estimate as the final purchase price and monthly rental could vary upon negotiations.
Demand backed by infrastructure development
With the completion of major transport infrastructure such as the RTS, new demand is likely to be created, supported by the influx of foreign and domestic direct investments.
Some projects close to the RTS station at Bukit Chagar have an average selling price of RM1,000 per sq ft to RM1,300 per sq ft. This range is on par with prices of many condominiums in the KL city centre.
The overall Iskandar property market is expected to benefit from the return of property buyers and investors, both locals and foreigners. This will further be boosted by increased spending from visitors from Singapore, which should benefit the retail and hospitality sectors in Johor.
Notes:
- The data is sourced from iProperty.com.my and PropertyGuru.com.my between January 2023 and December 2023, and it does not represent the whole residential property market in Malaysia. The data used in this analysis is organic; paid advertisements or searches are excluded.
- The price growth data in this article is calculated based on figures derived from sale listings on PropertyGuru.com.my and iProperty.com.my, where the growth shown is a comparison of 2023 figures vs 2022 figures.
- Analytics from brickz.my is based on the data available at the date of publication and may be subject to revision as and when more current data becomes available. Readers are encouraged to seek independent advice before making any investment.