JB home prices rise in 1Q despite election jitters

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THE traditional first-quarter lull, coupled with politically-induced anxiety over the economy prior to the general election did not affect home values in Johor Baru's residential market in 1Q2013. House prices grew further during the period, according to The Edge-KGV International Property Consultants Johor Baru housing property monitor for 1Q2013.

"[This is because] the market has come to a stage where the 'train cannot be stopped'," KGV International Property Consultants (M) Sdn Bhd executive director Samuel Tan tells City & Country.

The recently-concluded general election had little impact, if any, on Iskandar Malaysia's development. "It has come to a point where things are running on their own steam," Tan says.

Leading the way in terms of growth in prices are the Suria Mas apartments in Larkin. The average price of the 850 sq ft leasehold units breached the RM300,000 mark to hit RM320,000, rising a whopping 18.51% from RM270,000 in 4Q2012.

Half of the high-rise homes sampled also chalked significant gains. The average price of Sri Samudra's 1,000 sq ft units rose to new levels of RM420,000, up 10.52% from RM380,000 in the previous quarter. Prices of Lagenda Tasek's 1,040 sq ft units appreciated by 9.37% to RM350,000 from RM320,000 in 4Q2012, while mid-level 1,469 sq ft units at Molek Pine Tower 2 rose modestly by 2.94% q-o-q to RM700,000. The apartments' performances were buoyed by the higher prices commanded by new launches.

Landed homes

Average prices of Horizon Hills cluster houses rose the most, by 13.63% to RM1 million from RM880,000.

Semi-detached houses in Blue Sky at Adda Heights and Taman Gaya in Tebrau/Kempas areas, both with built-ups of 2,080 sq ft, appreciated by 8.33% to RM600,000. Two-storey terraced houses, meanwhile, saw more consistent growth.

Primary market

Tan notes that there were more new property launches during the period under review. In fact, there were a number of highly sought-after projects — including launches — being brought forward, thanks to heightened demand.

High-rise homes that were much in demand were Molek Pulai serviced apartments, D'Inspire Residences at Nusa Bestari in Nusajaya, Medini Signature, One Danga at Danga Bay, Astaka, Paragon Suite and block two of The Garden Residences in Taman Mutiara Mas, Pulai, while new landed homes that performed well were the Wetlands at Horizon Hills, Nusa Sentral in Pulai, Taman Skudai Indah 2, New World Garden in Plentong, Maya Heights at Seri Alam, Ophira at East Ledang and Taman Gaya in Tebrau. The launch of Ophira and Taman Gaya had been brought forward.

Rising prices and talent issues

However, Tan notes that the locals have expressed concern over escalating house prices which have risen to between RM800 psf and RM1,000 psf. Taking into account the typical 20-year cycle of ups and downs, the market is due for a price adjustment. However, Tan sees this as unlikely, given the bullishness of the property market and what he calls a "herd mentality to make money" from the market.

While the rapid growth of Iskandar is undeniable, this growth could become untenable in light of the escalating living costs and a lack of talent. Hence, Tan lauds the federal government's plans to build 8,000 PR1MA homes priced from RM199,000 in Larkin, Tampoi, Kulaijaya, Plentong and Pasir Gudang.

As far as talent is concerned, Tan wonders if Malaysia is able to offer enough talent in areas such as technology to meet the needs of the more sophisticated businesses expanding in the state. "In the short to immediate term, you can bring in skilled labourers because it takes time to train, but investors are also looking at the long term. I think we need an overhaul in the education system. It must change. We need savvy professionals, not labourers. Are we doing enough?"

An eventful first quarter

The first quarter of 2013 was eventful, with the most significant event being the meeting between the prime ministers of Malaysia and Singapore. This meeting heralded a number of landmark infrastructure projects, including the high-speed rail (HSR) project and rapid transit system as well as the proposed business cooperation between Senai International Airport and Changi Airport.

"The projects will be a game-changer for Iskandar Malaysia as it will be intertwined with Singapore in many ways," says Tan.

Meanwhile, Singapore's investment company Temasek Holdings and its unit CapitaLand Malaysia inked a joint-venture deal with Iskandar Waterfront Holdings to acquire a 71.4-acre parcel for RM811 million, which will be developed into a mixed-use development worth RM8.1 billion.

The total cumulative investment in Iskandar as at March 2013 was RM111.3 billion, up RM5.06 billion from last quarter, with 40.2% of the total realised. Of this, manufacturing continues to take the biggest share at RM41.28 billion, with Singapore being the top foreign investor. This was followed by property (RM27.3 billion) and miscellaneous sectors (RM34.47 billion) comprising tourism, healthcare, creative industries, finance, retail, logistics and education.

Meanwhile, the groundbreaking ceremony at the University of Reading — its first campus outside of the UK — was held on Feb 27 at EduCity Iskandar Malaysia. The campus is expected to open in September 2015 and will offer undergraduate and postgraduate programmes in business and law, science, and the built environment. The campus is expected to accommodate 2,000 students.

In terms of tourism, the state recorded tourist arrivals of 15 million in 2012, up 35% y-o-y, thanks to theme parks such as Legoland at Nusajaya and the Johor Premium Outlets in Senai. This has also benefited the retail, and food and beverage sectors, says Tan.

He feels that Johor can tap into tourists visiting Singapore, who could be persuaded to take a two or three-day visit to the state.

Meanwhile, Destination Resorts and Hotels opened the Traders Hotel and the Little Red Cube — a mall housing the Indoor Theme Park, in 2Q following an announcement in March. Both are part of an integrated development by the waterfront at Puteri Harbour.

The 283-room Traders Hotel has five multi-function meeting and event rooms, including a banquet hall that can accommodate up to 600 people.

The Little Red Cube is a 150,000 sq ft retail, F&B and recreation area with 88 lots. It houses indoor theme parks including Hello Kitty Town.

While Tan says the opening of a new hotel is timely and having more attractions in Johor is a good thing, he feels it is "silly" to have a children's theme park close at 5pm, because working parents will not be able to take their children to the theme park after work.

This story first appeared in The Edge weekly edition of June 17-23, 2013.