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Monday, January 21, 2008

Johor property prices nowhere near KL levels: Developers

Property developers and consultants say Johor property prices are unlikely to rival those in Kuala Lumpur in the near future given their current growth rate.

While prices of properties in the Kuala Lumpur City Centre area are hitting new highs, with talk of a high-end condominium fetching RM2,000 per sq ft, Johor can only command a quarter of that price.

Prices in the Klang Valley are higher because it is more cosmopolitan and has a bigger population, Mah Sing Group Bhd group managing director and group chief executive Datuk Leong Hoy Kum said.

LEONG: Klang Valley is more cosmopolitan, has more people

SP Setia Bhd group managing director and chief executive officer Tan Sri Liew Kee Sin said the increase in property prices was largely a function of demand, supply and affordability.

LIEW: Property market in the state remains highly competitive

"In order for prices to rise, demand has to outstrip supply, which can only happen when buyers increase or existing residents experience a real increase in their net disposable income," he said.

He added that Johor's property market remains highly competitive as more developers jump on the bandwagon, resulting in a crowded buyers' market.

SP Setia has four projects in the Iskandar Development Region, with a gross development value (GDV) of RM8.9 billion.

Property experts said a quick way to boost demand would be to attract foreigners, especially with property prices in Singapore rising to stratospheric levels and the island republic becoming crowded.

"The potential spillover effect for Johor Baru is immense, but this can only be realised with free movement of human and vehicular traffic between the two neighbours, minimal regulatory approvals on foreign purchase of properties in Johor and improvement of physical infrastructure and linkages," said Liew.

In addition, security concerns need addressing to convince foreigners to relocate.

While there has been renewed interest from regional investors, including Singapore, the Middle East, South Korea and Japan, the prime mover for Iskandar remains industrial land, said Samuel Tan, executive director of property consultancy KGV-Lambert Smith Hampton (Johor) Sdn Bhd.

He noted that gross rental yield for factories is now nine to 10 per cent a year compared with seven per cent previously.

"The higher yield is due to more quality tenants (multinational companies) in the industrial sites, who are willing to pay for better services and quality," he said.

Tan added that landed property targeting the masses will remain a challenge. "Due to the previous overhang, it will take time to clear the properties priced at RM200,000 and below," he said.

Previndran Singhe, chief executive officer of real estate firm Zerin Properties, said industrial and residential prices had shot up by 15 to 20 per cent in good locations, driven largely by Iskandar.

"The property market in Johor is not robust like Kuala Lumpur's, but vibrant. In the next two years, some serious action is expected to take place in Johor Baru, Pasir Gudang, Nusajaya and Port of Tanjung Pelepas," Previndran said.

By New Straits Times

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