Singaporeans look to JB as HDB prices rise

Singaporeans look to JB as HDB prices rise
By Yow Hong Chieh
June 26, 2011

Despite having the strictest restrictions on foreign property ownership in the whole country, JB continues to attract rising number of property investors from Singapore. — file pic
KUALA LUMPUR, June 26 — Johor Bahru, once described by Lee Kuan Yew as “notorious for shootings, muggings and carjackings”, is fast becoming home to more and more Singaporeans eager to swap their modest HDB flats for prime real estate.

Landed properties and high-end condominiums are increasingly being snapped up by Singaporeans willing to endure the daily commute to and from the republic as house prices there continue to outpace wages.
The median price of a four-bedroom HDB flat has risen 38.2 per cent from S$285,000 (RM670,000) in the first quarter of 2008 to S$394,000 (RM967,000) in the corresponding quarter of this year, according to HDB figures.

In contrast, wages only rose some four per cent annually during the same period.

The growing price gap between HDB and private flats — which Goldman Sachs says hit a high of S$490 (RM1,200) per sq ft this quarter — also means fewer Singaporeans can now realise their dream of owning private homes.

Former Malaysian Institute of Estate Agents (MIEA) Johor chairman Lim Boon Ping said foreign ownership restrictions at national and state level were the only thing stopping Malaysia’s richer southern neighbours, armed with a strong Singaporean dollar, from flooding over the Causeway.

He pointed out that Johor had the strictest restrictions on foreign property ownership in the whole country, which did not allow Singaporeans to buy single-storey terraces and pre-owned double-storey terraces.
This is on top of federal restrictions that, among others, require foreign owners to only buy homes worth RM500,000 and above.
“Without all these limitations, the pace of people coming in (from Singapore)... will be very fast,” Lim told The Malaysian Insider.

He said Singapore’s attempts to cool down the housing market were likely not prove effective in the long term, citing the S$880,000 (RM2.2 million) per unit opening price for the Centrale 8 design, build and sell scheme (DBSS) project launched last week.

“And that’s supposed to be public housing,” he said.

Developers from Johor and Kuala Lumpur are already responding to greater demand from Singaporeans, and some have started building homes in and around Johor Bahru that few locals can afford.

A realtor who declined to be named said a couple of high-rise developments targeted at Singaporeans are looking to sell 1700-2000 sq ft units at RM700 per sq ft, compared to the RM400-500 average for other luxury condominiums in the city.

“I have doubts about how many locals can afford that,” he said.

Real Estate and Housing Developers Association (Rehda) Johor chairman Simon Heng said the government’s “quite successful” promotion of Iskandar Malaysia was a strong factor behind the Johor Bahru’s improved profile among Singaporeans.

The entry of the Raffles Education Group and several Singapore-based healthcare providers into Johor as well as better connectivity offered by the nearly-completed RM1.1 billion Coastal Highway has also led to more properties being picked up by Singaporeans, especially in Nusajaya, he added.

Heng said anecdotal evidence suggests many more Singaporeans were now even willing to send their children to school in Johor Bahru while continuing to work in Singapore, even though crime remained a key concern.

“To them, it’s cheap to stay here. While travelling to Singapore may be a bit of a hassle, in Singapore they’ll only be able to stay in a small HDB flat... Over here, they can own a landed semi-detached house or bungalow,” he said.

Heng added that the Singaporean MRT’s new Thomson Line, which will terminate at Woodlands station upon completion in 2018, will allow Singaporeans to take the Rapid Transit System (RTS) into Johor Bahru and likely boost the number of cross-border commuters.

“With that, the mass movement of people will be so easy. Maybe many Singaporeans will look at that and say why don’t we buy property in Johor Bahru and take the MRT to Singapore,” he said.