Interest in Iskandar not waning

Reported by THEAN LEE CHENG, The Star Online

Security issues and inconsistency in policies are concerns

THE number of launches in Johor’s Iskandar Malaysia has dropped of late, with each new quarter seeing fewer launches, according to the Iskandar Regional Development Authority (Irda).

Since January this year, there have been very few launches.

Irda senior vice-president of economics and investment Cheah Ping Yean says this may be due to the Chinese New Year celebrations and doesn’t see interest “on the wane”.

Cheah was one of the three panelists at the conference on Regional Corporate Outlook 2015, organised by Rehda Institute and Malaysia Property Inc recently.

The others in the group were Property Guru country manager Gerard Kho and Gabungan AQRS Bhd senior general manager Jerry Lau. Chur Associates managing partner Chris Tan was the moderator for the discussion entitled “Have Singaporeans Lost Their Appetite for Iskandar Malaysia?”

Kho, whose company has been conducting quarterly property shows in Singapore over the last two years, said he had noticed a drop in the number of visitors between June 2013 and June 2014.

“At our peak, in June 2014, over a two-day weekend, developers who participated in the event sold between RM70mil and RM80mil worth of Malaysian property. Recently, we only had enquiries, not outright purchases. The number of visitors has also dwindled.”

Kho said the questions visitors were asking about the Johor market were also different.

“They do not ask if Iskandar is a viable proposition. Instead, they want to know the proportion taken up by fellow Singaporeans. They also want to know the sort of policies that will be put in place, and have concerns about the daily toll rates between the two countries. They also voice concerns about policy inconsistency,” said Kho.

The debate on Iskandar is interesting for various reasons. Nowhere in Malaysia have so many high-rise residential projects been approved in such a short period of time.

According to KGV Lambert International, the local authorities there have approved 80,900 units, although only 8,000 are being constructed today.

Cheah said Johor continues to attract the highest amount of investments compared to the other states.

“At least a quarter of foreign investments entering Johor is from Singapore, so that is not waning. That is how I would surmise the situation in Iskandar. We would not have been able to do this without Singapore.”

He said much of the investments were made based on what investors call the Hong Kong/Shenzhen model.

Just as Shenzhen has benefited from its proximity to Hong Kong, investors are of the view that Iskandar’s growth and attractiveness will be due to its proximity to Singapore. The development of infrastructure projects like the Johor-Singapore Rapid Transit System and the Kuala Lumpur-Singapore High-Speed Rail projects have also strengthened this view.

Cheah said up till the end of December 2014, Iskandar had received Singaporean investments for the services and manufacturing sectors totalling RM14bil on a cumulative basis. For this year, it is forecasting between RM15bil and RM25bil for both sectors, of which 35% will be foreign direct investments. Of this 35% (about RM7bil), RM1.75bil is expected to come from Singapore. As at October 2014, cumulative committed investments into Iskandar reached RM156bil, increasing almost 13 fold compared to 2006’s RM11bil when it was launched.

Cheah said to be more investment-friendly, a central data base is in the works by Irda to further promote Iskandar. Irda will be working closely with MPI and other parties to make the information accessible to both investors and developers alike. He said Irda has three core functions, namely, to promote, physically plan and facilitate investments into the different zones that make up Iskandar, and that a central data base would be of help towards this end.

“We have executed these (functions) to the best of our abilities. We know there are shortcomings and we have taken note of the different grouses,” he said.

On concerns about the supply of high-rise units in Iskandar, Cheah said Irda had already taken note of the slowing rate of launches.

Lau of AQRS said although there was an increase in the number of developers and projects in Johor, this had not been balanced with an equal growth in population.

Earlier, at the same conference, Bank of China’s deputy chief executive officer Jenny Xu told participants that the mainland Chinese continued to view Malaysia positively.

In her paper entitled “Investor Interest in Malaysia Despite Chinese Slowdown”, Xu compared the fundamentals of both countries and scrutinised both their property sectors.

She said in an Asia-Pacific ranking of basic infrastructure, Malaysia was ranked seventh, slightly below Singapore.

In terms of real estate, Malaysia ranked among the best in terms of pricing. She, however, did not name the organiser of the poll nor the purpose of it.

The fact that prices have continued to trend upwards with positive returns was also viewed positively.

Xu said the Malaysian property sector “was not as volatile as in China”.

If one were to consider the past five years, prices of Chinese properties have increased “by a few hundred percent,” which is rather extreme. Although the Malaysian Government has introduced various tightening measures to rein in speculation in 2013/14, affecting both the primary and secondary markets, this has been viewed positively.

“The Malaysian Government is taking a sustainable approach in terms of control and tightening in terms of property ownership and investment,” she said.

“China started measures in 2005 and it is only today that we are seeing results. We continue to expect to see volatility in spite of these measures in the Chinese property landscape.”

Comparing Kuala Lumpur with the hotspots of Beijing and Shanghai, Xu said Kuala Lumpur “is better than both in terms of investment returns”, at 5%-6% in Kuala Lumpur and below 2% in both Beijing and Shanghai.

Without referring to any particular area, Xu said her observation on Malaysian real estate is that there are many hotspots and “some show signs of overheating”.

“But if the population or earning power can be increased, then consumption will be higher,” she said. She said Chinese investors in search of overseas investments found Malaysia attractive because of the availability of freehold land, compared with land tenures of 70 years back in China.

Financing cost is also lower and condominium units come complete with car parks, which is a unique feature. She said unlike Malaysians who prefer landed property, mainland Chinese have a preference for high-rise condominiums, as there are concerns about security.

She said although Malaysia offered “vast opportunities”, there were some concerns, among them, security.

“If Malaysia can improve its security, then this would make the country more attractive.”

On the impact of the impending goods and services tax, Xu said this was a non-issue. A bit of price increase “will not drive investors away”, but security issues and policy inconsistencies will. Another concern is the lengthy time taken to seal a deal, six months compared with a day in China.

On Iskandar, she said that parts of Malaysia were relatively overheated, but there will still be demand, especially if buyers plan to send their children to study in Singapore.

“If you look at the investment viewpoint, there is a speculative element, especially when buyers and investors recall the Shenzhen/Hong Kong factor. We feel there is a different model (in Iskandar), however,” Xu said.

Malaysian states beyond Johor woo Singapore investors

Reported by Tan Weizhen, TODAY

Published on 2nd March 2015

SINGAPORE: Against the backdrop of a weak Malaysian ringgit, the coming Singapore-Kuala Lumpur High Speed Rail and the series of property cooling measures introduced here, developers in Malaysian states beyond Johor Bahru are eyeing Singaporean investors.

The developer of a mixed development in Malacca - a three-hour drive away - that comprises a 500,000 sq ft theme park, retail mall and three hotels was the latest to do the courting.

With an oversupply of properties in Malaysia, analysts said developers could well continue to woo investors from Singapore.

In only two roadshows, more than 60 Singaporeans have pumped their money into retail and hotel units at Harbour City@Pulau Melaka, said its developer Hatten Group. Units in the mall cost between RM150,000 (S$57,000) and RM3.7 million, while suites are priced from RM270,000 to RM1.2 million.

A second roadshow held over the weekend drew dozens of Singaporean investors, mostly middle-aged, although the developer has begun to see younger Singaporean investors — those in their mid-30s — turning to Malaysian properties for their first punt.

Hatten Group’s Head of Marketing and Sales Cassandra Tio said the booming medical tourism industry in Malacca has led many Singaporeans and Indonesians to flock there.

"THE MAIN DRAW IS THE PRICE"

Speaking to TODAY at the roadshow on Sunday (Mar 1), prospective Singaporean investors pointed to Malacca’s appeal as a tourist destination and a viable alternative to Johor, particularly the Iskandar region, where there has been buzz in recent years.

Mr W Lee, 55, said: “It is something different as it is a historical town. It’s been mostly Johor or Kuala Lumpur so far, and I’m still cautious about Johor, as it is not quite safe.”

Another interested investor in his 40s, who wanted to be known only as Mr Lim, added: “Tourism in Malacca has potential and the weak ringgit now means it is cheaper for us to invest. Besides, the property market in Singapore now is not as good (for investment).”

Commenting on the trend, Mr Colin Tan, Director of Research and Consultancy at Suntec Real Estate, said: “Singaporeans may bite with the main draw being price, as the ringgit has fallen so much.”

While Malaysian developers have targeted Singaporean investors, these were uncommon and mainly in Johor, Penang and Kuala Lumpur.

Mr Tan added: “If developers feel that the particular property appeals to foreigners, they would come to Singapore. Also, there are many Malaysian permanent residents here, which is another target market.”

Century 21 Chief Executive Ku Swee Yong said developers in Malaysia are trying to cash in on the Singapore-Kuala Lumpur High Speed Rail, which is targeted for completion by 2020 — one of the planned stops is just outside Malacca.

“However, KL and Penang are better options. In Penang, for instance, there is a strong multinational corporation base, with strong job growth. Malacca is mostly still a tourist destination.”

He warned, however, that Malaysia may not be an ideal investor destination, given that there is an oversupply of properties and dipping tourism numbers, and the number of long-term residency applicants remains low.

Up next at Iskandar Malaysia: A snow world theme park and an opera house

Reported by Rennie Whang, The Straitstimes

Published on 21st January 2015

SINGAPORE - Another large mixed development project at Iskandar Malaysia is on the cards.

Chinese state-owned company Greenland Group and Iskandar Waterfront City Berhad (IWCB) will be jointly developing a RM3 billion project over 128 acres along Tebrau Bay.

The first phase of the Tebrau Bay Waterfront City project, as it is called, will include a snow world theme park, an opera house, a hospital specializing in Chinese traditional medicine and a school. It will be developed over 15 years.

Johor Menteri Besar Mohamed Khaled Nordin said in Shanghai on Wednesday that this is part of plans to develop the eastern corridor of Johor Bahru, stretching from Tebrau Bay to Pasir Gudang.

He was speaking at the signing of a joint-venture agreement between Shanghai State Government-owned Greenland Group and Johor State Government-linked IWCB.

Datuk Khaled noted that about 13 local and foreign companies are already actively involved in developing the proposed Iskandar Waterfront City in Danga Bay.

The Iskandar Waterfront City has a cumulative gross development value of RM125 billion and is on the western corridor from Johor Bahru to Nusajaya.

High impact foreign direct investments (FDI), including from China, are necessary to jump-start economic activity in Johor, Datuk Khaled said. Johor's growth has been invigorated by the launch of several mega foreign property developments which have boosted the local economy due to their spillover effects, he added.

Greenland Group executive vice-chairman Xu Jing said that Greenland was "extremely upbeat" about growth prospects in Iskandar Malaysia as the special economic zone was spearheaded by the Malaysian government.

Greenland is, together with Iskandar Waterfront Holdings (IWH), developing a RM2.2 billion integrated property project on a 13.6 acre plot in Danga Bay

"We've undertaken urban development in over 80 cities throughout China. We're keen to share the experience with IWH as our long-term joint-venture partner and help transform Iskandar Malaysia into an international destination," added Mr Xu.

Horizon Hills upbeat on high-end houses

Reported by ZAZALI MUSA, The STAR Online

Published on 15th September 2014

JOHOR BARU: Horizon Hills Development Sdn Bhd is confident of maintaining its status as a choice location for high-end residential property buyers in Iskandar Malaysia.

Assistant general manager Jim Woon (sales and marketing department) said the development had been steadily attracting both local and foreign buyers since the project started in 2007.

He said the company was fortunate because it was one of the first developers to offer high-end residential properties in Iskandar Malaysia.

“We are banking on the strategic partnership of two well known property developers to undertake the project and it works well for both of us,” Woon said in an interview withStarBiz recently.

The gated and guarded project is sited on 485.622ha of freehold land located in Nusajaya, one of the five flagship development zones in Iskandar Malaysia.

The 50:50 joint-venture project between Gamuda Land Bhd and UEM Sunrise Bhd will keep the two partners busy until 2017-2019. About half of its total land area has been developed. It has so far sold about 1,400 units of housing over three phases.

“As a pioneer of a high-end residential property developer in Iskandar Malaysia, we had a good start as we launched the projects years ahead of our competitors,’’ he said.

The company invested RM200mil for infrastructure and was the first developer in Iskandar Malaysia to offer golf club membership to house owners for the 18-hole, 80.93ha golf course within the development.

Woon said prices of residential properties at Horizon Hills were higher than the average selling prices way back in 2007.

Its first phase, with a gross development value (GDV) of RM220mil, comprised 453 units of link houses, cluster homes and semi-detached houses with average selling prices of RM300,000, RM450,000 and RM750,000 respectively.

“Many were caught by surprise with the price tags then but we managed to sell all the units,’’ he said.

According to Woon, that prompted the company to increase its selling prices for the second phase, with a GDV of RM400mil, which comprised 650 units of similar dwellings as in phase one. Buyers took delivery of their properties at the end of 2009.

They Call It Great Singapore

Reported by Trinity Chua, theindependent.sg

Published on 25th February 2014

When we crossed the Causeway, we were expecting to see the Johor we knew. The vast land, the terrace houses leading up to Johor Bharu. We anticipated the familiar sight of the yellow “bus sekolah” [school bus] on the weekdays and the old shop houses selling anything and everything.

But the Iskandar region is different. The border town, three times the size of Singapore, has become almost an extension of home for many Singaporeans.

Set across 2217 sq km at the southern-most part of Johor, Iskandar is a joint project by the Malaysian government and the local government of Johor. It aims to be one of the largest fully integrated urban developments in southern Asia.

Hwang-DBS Vickers Research predicts a surge in residential properties in the Iskandar region, with 9,000 new units in Danga Bay alone. Within the first month of their launch, 3300 units were sold to foreigners. 50 per cent of the foreign buyers are Singaporeans.

Jeremy Hoon, 58, is one of them. Hoon came to Iskandar in 2013. He bought a 3,000-sq ft double-storey terrace house in Horizon Hills. He travels several times a week to Singapore and works as a business adviser after he retired last year. The ex-partner of KPMG Singapore says the township allows a seamless cross-border life.

“If you rent out your house and move here, you can easily purchase a unit in Iskandar. If you have a car, you can easily commute to work in Singapore every day,” he says, citing that it only takes 10 minutes to the border of Singapore outside peak hours. The prices of homes where Hoon lives range from RM600-RM1000 per square feet.

Like Hoon, Danny Chua, 45, has also invested in Iskandar.

Since 2011, the ex-banker has bought about a dozen landed houses in Nusajaya, Iskandar.

“From my observation, there are 70 per cent Singaporeans and 30 per cent upper middle-class to upper class Malaysians here [Horizon Hills],” the property agent says.

Kuala Lumpur people call this place [Johor] ‘Greater Singapore’ because in KL you have inner KL and beyond that you call it greater KL,” he says. He gestures at the new spacious bungalows set on top of a neatly trimmed hill-scape of Horizon Hills.

He is now a property agent in Johor. He helps Singaporeans purchase or rent residential units in the Iskandar region.

“People are pushed out of Singapore,” says Chua. “With the eight cooling measures, high stamp duty and total debt service ratio, Singaporeans find it almost unaffordable to invest in residential property in Singapore and it is impossible to get a loan,” he adds.

Hwang-DBS Vickers Research notes that recent launches in Nusajaya, Medini and Danga Bay within the Iskandar region have reached an all-time high of 45 per cent in the last five years; the country’s residential property price surged at 30 per cent.

“I have an ex-colleague who found the costs of living in Singapore too high. She sold her flat and came to Iskandar,” he says. She had a four-room flat in Sengkang. With the cash, she bought a landed double-storey terrace house here,” Chua says.

Like his ex-colleague, Chua now spends a big portion of his time in Johor, travelling back to see his teenage children in Singapore once a week.

“Many people say that Johor is not safe but I live here and I know this part of Malaysia is as safe as Singapore,” Chua adds. Horizon Hills, where Chua lives, is also a heavily gated community with security guards and high wire-fences.

“Don’t be too showy,” he advises. “You cannot just leave your phone on the table and walk away like we do in Singapore. We like putting the phone on the coffee shop table and walking over to make an order [in Singapore],” he says.

Chua believes that only the middle class Singaporeans are interested in living in Iskandar.

“They have a little bit of savings and they can come here to start a small investment in houses or rent a unit. The lower-end Singaporeans are not going to be interested because they are already having trouble making ends meet. The upper class Singaporeans are not interested at all. They are well-off in Singapore and they can afford most things in Singapore. Expanding your money 2.6 times ($1=RM2.6) makes no difference to them,” Chua says.

Yet life in the gated communities in Iskandar is rather secluded from the larger community of Johor. Chua and Hoon both said their neighbours are mainly Singaporeans and if they mix with Malaysians, they are usually form the richer part of society.

Chua laughs when asked how he feels about his neighbours. “They are the same. I am meeting Singaporeans who are my neighbours.”

Another Singaporean who bought a home in Johor in 2006, Ameerali Abdeali, said Singaporeans living in Johor should not be too arrogant.

“Look, the prices are shooting up because of the Singaporeans living here. They are coming here and they say, ‘cheap this and cheap that’ and they are pushing up the prices. There is no such thing as ‘cheap’, you know. It is just more affordable for Singaporeans because of the exchange rate,” the 63-year-old says. He owns a three-bedroom apartment in Perling, Johor.

“If they go to the bazaar, they should bargain like the locals. They should not just spend however they wish because of the exchange rate,” the Managing Director of GetIT Communications Pte Ltd says.

Semi-retired and also the president of the Muslim Kidney Action Association of Singapore, Ameerali and his wife look forward to the day they can retire in Malaysia.

“You only need to see someone washing their car and you greet them. Chances are he will invite you over. The wife will give you some pineapple tarts. Very nice,” he says, of the handful of times he was invited over to his neighbours’ homes.

Expatriates in Singapore buying Johor homes

Published in Straitstimes on 30th September 2012

Some expatriates working in Singapore have moved to live in Johor's Nusajaya area, attracted by lower prices of homes and the extra space there.

They have bought houses to live in and commute to work in Singapore. Many plan to continue working in Singapore for the long haul, but say they moved because their housing allowances were reduced or cut altogether.

Developers and property agents said expatriates began moving to Johor from about five years ago, but the completion of houses and recent opening of international schools in the Iskandar Educity project has raised interest markedly.

UEM Land, the major developer in the area for projects including East Ledang and Horizon Hills, said about half of the buyers for its properties are foreigners, including Singaporeans.

Local firms move operations to Iskandar Malaysia to save cost

Published in Channelnewsasia on 24th September 2012

SINGAPORE: More than 3,500 Singapore businesses have set up shop across the causeway in Iskandar Malaysia over the past six years, with a cumulative investment of more than RM5 billion as at June 2012.

Iskandar Malaysia is a special economic zone in Johor, Malaysia that was launched in 2006. It covers an area of 2,217 square kilometers and is administered by the Iskandar Regional Development Authority, a Malaysian Federal government statutory body.

Over 70 per cent of the businesses are small and medium enterprises.

Fishing equipment supplier Hong Guan started operations in its Iskandar warehouse in May.

Twice as large as its warehouse in Singapore, Hong Guan's 14,800 square feet freehold space cost about S$900,000.

Its local warehouse will shut down next month.

Hong Guan's managing director, Lee Seng Shoy, said: "Singapore will always be our HQ and the brain centre but from a business point of view, we need to be competitive and cost is always a factor. We foresee Iskandar helping us contain our costs and that is something we're leveraging on so we hope that by moving to Iskandar on the logistics side, we are actually enjoying the best of both worlds."

Similarly, Global Capital & Development wants to replicate on a larger scale in Medini, a core development zone in the Iskandar Development Region.

Global Capital & Development, the developer of Medini, is supported by a consortium which includes the Khazanah-backed Iskandar Investment Berhad.

It hopes companies in Singapore and Medini can work together as a single entity to bid for projects.

Global Capital & Development's CEO, Keith Martin, said: "We have Pinewood Malaysia Studios, Medini Media Village and straightaway we went and spoke to the Media Development Authority of Singapore and Mediapolis in Singapore. If you now add up the sum of those parts, it's a much greater proposition. And within a one hour driving radius, we have everything we need to take a TV or film production from a draft script to a full finished product."

With increasing business activity in Iskandar, other firms are moving in with the aim of gaining first-mover advantage.

Shanker Iyer, Chairman, The Iyer Practice's chairman, Shanker Iyer, said: "We think it could be two or three years before this place really starts to get up and running. Initially our main activity would be to offshore some of our less important activities from Singapore to Iskandar. That is actually becoming a need now, because the rising cost of doing business in Singapore, the immigration challenges now, the reduction in S-passes - it's beginning to affect firms like us."

But most acknowledged that concerns remain, such as crime, and the lack of a critical mass of human capital and supporting businesses.
But the authorities are confident the situation will improve.

Iskandar Regional Development Authority's chief executive, Datuk Ismail Ibrahim, said: "As we have seen today, there has been increased bilateral ties between Malaysia and Singapore, and from which the greatest beneficiary is definitely going to be Iskandar Malaysia. We would like to create an environment where both Singapore and Iskandar will see themselves as one destination, not only for investment but for people to work as well as other offerings."

Into its sixth year of development, the Iskandar region in Johor, Malaysia has seen annual investment growth of 8 per cent with Singapore firms accounting for 5 per cent of total foreign investment.

- CNA/ck