Published on New Straits Times on 21st September 2012
Johor‘s real estate market before the rise of Iskandar can best be described as sluggish and uneventful. While Kuala Lumpur has been the epicentre of Malaysia‘s development, Johor Baru has long moved forward at a glacier pace. However, the growth of Iskandar changed all that and has propelled the state into its long overdue growth spurt.
According to Gavin Tee, founder of SwhengTee International Real Estate Investors Club, both Singapore and Johor Bahru have entered into a symbiotic relationship not unlike that of Hong Kong and Shenzhen, a model where both sides leverage on each other to further their respective development agenda.
“I feel that globalisation is the driver behind the formation of such bilateral geographical co-operation which shall pave the way for rapid growth not only in JB, but the whole of Malaysia.”
Iskandar‘s arrival was in line with the trend towards a borderless world and will seed the growth of JB’s real estate development. Like China’s economic development over the past two decades, the Malaysian government’s efforts, planning, and financial support are key to revitalising JB’s sluggish market to enable the state to compete in the global market.
“Iskandar — a stroke of genius”: “The launch of Iskandar was a stroke of genius and the government has shown its determination by announcing to the world the formation of Medini,” stresses the property consultant.
He adds that first impressions are the game changer, and the large infrastructure investment and open policies helped massively in attracting foreign direct investment. Investor-friendly policies and an open real estate market paved the way for expatriates and foreign properties buyers.
In addition, healthcare, creative-based education and business activities are strongly encouraged and these efforts have resulted in explosive growth in Iskandar. Despite many Johoreans‘ initial pessimism of the project, Iskandar has taken off in a big way and has managed to grab the world‘s focus on this up and coming economic hotspot.
“The biggest foreign involvement comes from our southern neighbour and the rise of Iskandar saw unprecedented levels of involvement from Singapore. Investments started flowing in from the island republic and the Singaporean government actively encourages its people to invest in the region,” Tee reveals.
Other major investors include South Korea, Japan, China, and Europe, making JB a truly global city. The rise of JB in the international circuit is beyond the wildest dreams of Johoreans in the past, but the reality is now and many are hoping for Iskandar to remain open and innovative so as to keep in pace with global developments and become an integral part of the global system.
“Many people in Kuala Lumpur do not understand the situation and the level of interest shown in Iskandar. My own interest in Iskandar is due to the number of enquiries I get from Japanese and Chinese investors on whether they should put their money in Kuala Lumpur or Iskandar,” reveals Tee. “The sheer volume of interest prompted me to start studying Iskandar region actively some six months ago and my investigations led me to conclude that Iskandar is the real estate hotspot for next year.”
“I personally believe that JB is poised to take the crown as the investment hotspot for 2013 and the sleeping dragon is ready to move.”
“Sleeping dragon ready to move”: According to figures from REHDA (Real Estate and Housing Developers‘ Association Malaysia), the real estate prices in JB has rose by merely 0.6 per cent over the past 20 years and the past decade was particularly slow with barely any appreciation. Tee believes that the prices will boom soon and the prices will rise to unprecedented levels rapidly.
Other than the overall trend towards globalisation acting as a crucial external push factor, the various investment friendly policies by the government also serves to pull in investments. The government has invested significantly to improve the infrastructure as lack of proper infrastructure, including roads and communication network are major stumbling blocks to development.
“World class infrastructure has enabled Iskandar to compete with other established investment hubs across the region and it is the single largest investment of its kind in Southeast Asia.”
Iskandar‘s success hinges on some keys components and Tee believes that the main challenge is to attract people to stay here for longer periods of time. One of JB‘s biggest problems is that many Singaporeans come here for the cheap food and petrol, but do not usually stay for long.
“This ‘come-and-go’ approach significantly slows down the development potential and there is a need to attract them to stay for at least two or three days.”
Challenge to attract talent: The other challenge is to attract talent to set up homes in Iskandar and the government‘s plan is very simple yet effective. Other than encouraging healthcare, education, and innovation-based industries, the entire Medini region was conceived as an open market without FIC (Foreign Investment Committee) restricting foreign buyers from buying houses here, and this 100 per cent ownership will serve as a huge draw for international buyers.
Educity has also successfully attracted many prestigious universities from around the world, including those from Singapore and the United Kingdom, to set up campus here.
“Currently many Malaysians are leaving the country for further education and many of them stayed on after graduating. Educity is set to reverse the trend and to draw in talents from around the world and to make Iskandar their home after they complete their studies.”
The rise of the medical industry will create many jobs for the graduates of MMU and other medical colleges while other major developments such as Legoland and Pinewood Studio will create jobs for those in the service or creative industries.
“Such well thought-out development plan and the positive feedback cycles are chief reasons for my optimism of the Iskandar region. The region will not only attract talent, but groom them, and provide the jobs to retain them. We encourage them to set up base here and to call Iskandar home.”
There is a pressing need to draw in settlers and not just tourists, people who call this place home instead of merely a workplace. The idea goes beyond any single economic or social objective, but signals the birth of a truly global metropolis.
Focus on tourism in 2013: As far as investments are concerned, next year promises to be a good year for regions that target foreign investors and those with a strong focus on tourism.
“Personally I would like to invest in regions with a tourism focus and Iskandar fits the bill perfectly as it was conceived from the onset to attract investments and such global focus lends it a robustness as even if one (investing) country faces problems, another will step up to fill the gap thus making me feel great confidence,” says Tee, citing this as the primary reason for his optimism.
He also cites the government‘s efforts in entering into agreement with many heads of state and investors as confidence boosters knowing that the big boys are committed in bringing in results.
The third reason cited is the generally low price of JB‘s real estate and he believes that the depressed prices in JB properties means huge room for growth and next year‘s focus will be on investments in the area which will propel it to the top.
Huge room for growth: Tee is quick to warn however that despite the rosy picture, the investments are not without caveats and investors need to be wary of pockets of oversupply that might occur in regions which might require time for adjustments.
“This is where investors need to be cautious and properly study the viability of each investment. At five times the size of Singapore, Iskandar is huge and therefore investors need to be prudent in picking the right spot for growth.”
He adds that although Nusajaya is the latest darling for investors, there are still much room for growth in the matured JB Central. Foreigners staying in Iskandar need their food and entertainment and this is where the developed area can cater to their demands. One Terbau and Setia88 are two matured districts with the biggest growth potential, he indicates.
The highways linking Iskandar and JB Central have eased up traffic massively but there is still risk of traffic congestion as the population grows. He hopes that a modern rail service linking Woodlands and the proposed high speed rail between Singapore and Kuala Lumpur can be completed soon as this will truly cement JB‘s position as a metropolis.
Read more: COVER STORY: Johor Bahru — a metropolis in the making - RED - New Straits Times http://www.nst.com.my/red/cover-story-johor-bahru-a-metropolis-in-the-making-1.146219#ixzz2718ryL00
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