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Wednesday, January 25, 2012

Developers advised to look into location, cost and design to make sale

JOHOR BARU: Property developers in Johor must be prepared to face tougher times this year and next if the eurozone debt crisis prolongs and the United States continues to experience economic slowdown.

Johor Real Estate and Housing Developers Association (Rehda) branch chairman Simon Heng expected 2012 property outlook to be not as good as 2011.

"Hopefully, our members are ready to brace the hard times and should carefully plan their launches to avoid a property overhang," he told StarBiz.

Heng said the sign was already there with developers chalking lower sales in the Malaysia Property Expo (Mapex) held in November last year.

Developers who took part in the four-day event raked in about RM256mil in sales over a month-period lower from RM384mil in Mapex in May 2011 and RM331mil in November 2010.

Heng pointed out that the 30-day period starting from the first day of Mapex was the benchmark used by Rehda to determine the value of sales by participating developers.

He said the last five to six years were considered good for most Johor property developers as they were able to keep the number of unsold properties to a minimal.

Heng said local developers had learnt their lesson well from the 1997-1998 Asian financial crisis as they were caught unaware resulting in many abandoned projects and unsold properties.

He advised developers not to be overly ambitious and more realistic when launching a project this year and their focus should be more on products that could sell in view of the unfavourable property market.

"Go for affordable residential properties as demand for them is good especially in the Johor Baru district as there are many potential first time house owners out there," said Heng.

He said first time house buyers normally went for houses priced within their budget and with no-frills designs as what was important was to have a roof over their heads.

Heng said areas like Gelang Patah, Kempas, Kulaijaya, Mount Austin, Nusajaya, Senai and Tebrau would be the property hot spots and many projects were expected to be launched this year and 2013.

"For instance, land in Tebrau has been sold for RM4 per sq ft on average the last few years but now the asking price is RM20 per sq ft or even higher," he said.

Heng said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway and Southern Link this year would improve accessibility and connectivity within Iskandar Malaysia.

Leisure Farm Corp Sdn Bhd senior project manager Siew Fook Wah said that he always believed there would be a silver lining despite uncertainties in the property market.

He said the ruling introduced by Singapore last December to foreigners buying private residential properties in the republic was likely to benefit property developers in Iskandar Malaysia.

Foreigners have to pay an additional 10% stamp duty when buying a private home there; effectively raising the purchase price by 10%.

The move is seen to cool the private residential prices in the island state which are on the uptrend despite a slowing economy.

Siew said Johor's close proximity with the republic was an added advantage and prices of private properties here were lower than those in Singapore and to some extend in places like Kuala Lumpur and Penang.

"Iskandar Malaysia will continue to drive the growth of the property market in Johor in many years to come with demand for high-end properties likely to remain good," he said.

Siew said that with Iskandar Malaysia progressing well since its inception on Nov 4, 2006, these buyers (foreigners and Singaporeans) were most probably looking at Johor Baru.

A subsidiary of Mulpha International Bhd, Leisure Farm is developing the RM2.1bil Leisure Farm Resort on 714.27ha in Gelang Patah. The residential and gated resort development project offers 11 architectural design themes.

The villas are built on lots of 3,000 to 18,000 sq ft and priced from RM2mil and above. The scheme is now home to international communities from 35 countries.

SP Setia Bhd executive vice-president (property division) Datuk Chang Khim Wah said the company was still upbeat on the Johor property market as demand for properties had gone up steadily in the last few years.

"Take up rate for our properties in South Johor has been good over the years as we don't only cater for locals but also Singaporeans," he said.

Chang concurred with Siew that Iskandar Malaysia was one of the strong factors that would help to mitigate the slow growth in the Johor's property market this year and next if there was one.

He said Singapore would play a significant role in the development of Iskandar Malaysia as when people talked about Iskandar Malaysia, they would look at the bigger picture and include Singapore as well.

He said compared with other economic-growth corridors in the country, Iskandar Malaysia had the competitive edge due to its close proximity with Singapore.

"Investors, especially foreigners, will be attracted to invest in Iskandar Malaysia as they have the best of both worlds Johor and Singapore," said Chang.

By The Star

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