​As the air and sea territorial dispute enters a second week, it could negatively impact investor sentiment in the already lukewarm property market in Iskandar Malaysia. 

By Khalil Adis

The simmering tension brewing in the Straits of Johor between Singapore and Malaysia has now entered its second week.

In fact, it is like watching history repeating itself.

Growing up during the Lee Kuan Yew era, I recall how both countries would often trade barbs over water to territorial issues.

The relationship between both countries is best described as testy then.

However, much like brothers and sisters, we would soon kiss and make up.

Post the Lee Kuan Yew-Mahathir era, bilateral ties between both countries warmed up significantly under the leadership of Lee Hsien Loong and Mahathir's successors, Abdullah Badawi and Najib Razak.

While the later remains highly unpopular among Malaysians, several win-win deals were concluded between both countries which arose from the land swap deal.

They included the joint development of DUO in Bugis and Marina One by M + S Pte Ltd (Malaysia and Singapore, in case you don't know)

Over in Iskandar Malaysia, Singapore agreed to develop two wellness centre called Afiniti Medini and Avira. 

Subsequently, CapitaLand invested in A2 Danga Island.

Until today, the project has yet to be launched.

With bilateral relations going from cold to warm and back again to cold, we analyse how this will impact the property market across the causeway.

#1: Investors will likely adopt a ‘wait-and-see' approach to Iskandar Malaysia 

This is almost similar to the pre-Iskandar Malaysia era under Abdullah Badawi's leadership when the special economic zone was first announced.

I recall covering a few stories on Iskandar Malaysia then where I had interviewed several Singaporeans.

During that time, many had expressed scepticism on Iskandar Malaysia and avoided buying a property at Horizon Hills.

Back then, it was then launched within the minimum investment threshold of RM250,000.

However, that changed once the land swap deal was concluded in 2010.

As our bilateral ties improved, so did investors' confidence.

As a result, properties in Iskandar Puteri and Medini began selling like hot cakes.

Meanwhile, units at Horizon Hills was transacted at almost three times the launch price as developments at Legoland Theme Park, EduCity and Puter Harbour were gathering pace.

With both countries now embroiled in a maritime dispute, investors are most likely to adopt a similar approach until the issue is resolved

#2: Market sentiment in Iskandar Malaysia  the most affected

July's property cooling measures have made it even more difficult for Singaporeans to buy a private property in the Lion City as the loan-to-value (LTV) limit has been reduced from 80 per cent to 75 per cent if the loan tenure does not exceed 30 years for the first property.

Logically, this makes Iskandar Malaysia much more attractive due to its close proximity to Singapore as we share many similar customs, culture and speak similar languages.

However, the property market is very much sentiment driven as described above.

With Iskandar Malaysia being the closest to Singapore, this will be the property market that will be the most affected.

#3: Developers will face an uphill task in marketing their units

The property market in Iskandar Malaysia is already facing a challenging time due to the oversupply in the residential sector.

According to the first quarter of 2018 data from the National Property and Information Centre (NAPIC), Johor has the second highest number of existing stock of residential units at 795,363 in Malaysia.

The current political climate will no doubt be a double whammy for developers who are already struggling to move unsold units in their inventory.

With the High Speed Rail project now postponed, only the brand name of the developer will be able to win investors' confidence.

As such, developers who have a good reputation among Singaporeans and local buyers will stand to win.

Word-of-mouth marketing will be the way forward.

#4: Possible spillover impact in tourism and retail sectors

The allure of Malaysia is the affordable holiday destination, the many scenic nature and food trails it offers, its close proximity to Singapore and the strength of the Singapore dollar.

Thus, December is typically a busy month at the checkpoints as many Singaporeans go for a short break to Johor and beyond.

As the tension escalates, Singaporeans are likely to stay away this holiday season unless absolutely necessary.

In such a scenario, the tourism and retail sectors in popular malls in Johor Bahru like City Square and KSL will be affected.

In addition, many reservist units and national servicemen are being recalled for mobilisation exercises. 

Many will have no choice but to stay in Singapore.

#5: Malaysians will also be affected

​The current situation affects not just Singaporeans but also Malaysians living in Johor.

In fact, many brave the causeway in the wee hours every morning just to feed their family back home.

As we speak, Johoreans have expressed their concerns that their livelihood in Singapore may be impacted and hope the issue can be resolved amicably.

​2018 is a watershed moment for Malaysia's politics and the subsequent impact on the property market. We list down the key highlights in our 2018 property market roundups and our outlook for 2019.

By Khalil Adis

May 10 2018 was a watershed moment in Malaysia as it marked the first change of government in the country's history.

Since 1957, it had enjoyed an uninterrupted reign from the ruling Barisan Nasional (BN) coalition.

However, the high cost of living, falling Ringgit, the lack of affordable homes in the market, high unemployment among fresh graduates, the unfettered check on power and the 1MDB scandal proved to be the undoing for BN as Malaysians far and wide casted their protest vote in the ballot box

The message from Malaysians is clear - they have had enough and want a new, clean government to lead the way.

With the Pakatan Harapan government now in power, all eyes are on the newly elected old Prime Minister Tun Mahathir Mohamad and his team to solve the pressing bread and butter issues.

Here are the top five property market roundups for 2018 and our top five outlooks for 2019.

Roundups
#1: Demand-supply mismatch has resulted in an increasing number of unsold homes

​According to Bank Negara, 80 per cent of homes or 146,196 units priced above RM250,000 remained unsold as of end March 2018. 

In comparison, 130,690 units were unsold during the same period last year.

"Imbalances observed in the property market continue to persist," Bank Negara had said in a statement.

#2: Rent-to-own scheme being rolled out

To help ease the entry for the first time property buyers, the private sector has come up with a few initiatives.

Some private developers like Ayer Holdings have introduced a ‘Stay & Own' scheme for their Epic Residence and Foreston projects whereby part of the rent will be converted to the downpayment.

This not only provides a temporary solution for those who urgently need a home but also a form of security.

Meanwhile, Maybank has rolled a similar initiative called HouzKEY which they have called as "a rent-to-own solution that helps you to own your dream home."

The scheme involves zero per cent downpayment with the monthly rental forming part of the home financing. 

#3: Ministry of Housing and Local Government studying Singapore's HDB model

In July, Zuraida Kamaruddin, the Minister of Housing and Local Government paid an official visit to Singapore to study the HDB model.

Singapore has succeeded to build demand driven homes under its Built-to-Order (BTO) scheme to house 80 per cent of the Singapore population.

This is especially useful in Malaysia where there is currently a demand-supply mismatch as in point number one.

#4: Malaysia looking into having a single housing government agency

In Malaysia, there are so many affordable housing programmes being rolled out by the state and federal governments such as Rumah Milik Mampu, Rumah Selangorku, PR1MA, My First Home, Program Perumaha Rakyat and the list goes on.

This confuses the public.

The Malaysian government is currently looking into having a single housing agency to streamline the whole process much like the HDB model.

If implemented, this could solve the current Malaysian housing woe.

#5: More help for the B40, M40 and first-time homebuyers under Budget 2019

More help is on the way for these group of property buyers as announced under Budget 2019.

The measures included the Real Estate and Housing Developers' Association (Rehda) agreement to cut prices by 10 per cent for new launches, the exemption of the Real Property Gains Tax (RPGT) for properties that are priced below RM200,000 and the stamp duty exemption for properties priced in the first RM300,000 up to RM500,000 as well as those priced from RM300,000 to RM1 million.

Outlook for 2019 
#1: Affordable homes to continue driving the market

​There is currently a strong pent-up demand for affordable homes but where the supply is lacking.

As such, the affordable home segment will continue to be in strong demand for 2019.

However, there needs to be concerted efforts from both the government and private developers.

Under Budget 2019, the federal government has pledged to spend RM1.5 billion on such homes via the 1Malaysia People's Housing (PR1MA) and Syarikat Perumahan Negara Bhd (SPNB).

Meanwhile, Rehda has agreed to cut prices as stated above.

#2: South KL to be the growth area

There are many infrastructure projects and economic drivers that are in the pipeline that will further boost property prices in Southern KL.

One such project is Bandar Malaysia will serve as the terminus station for the Kuala Lumpur-Singapore High Speed Rail (KL-Singapore HSR) project linking both cities in 90 minutes flat. 

The development for the project has been postponed to two years and will now commence construction in 2020 instead of 2018. 

Meanwhile, the express service will only commence by 1 January 2031 instead of 31 December 2026, as originally planned.

Bandar Malaysia has been designated as a site for the Digital Free Trade Zone (DFTZ) initiative by Jack Ma. Home to the Satellite Services Hub, DFTZ is expected to create some 60,000 direct and indirect jobs. It will also possibly serve as the interchange to the MRT Line 3, which has now been postponed.

Another economic driver in the vicinity is Tun Razak Exchange (TRX). 

TRX will be a mixed-use development comprising a Grade A office space as well as residential and commercial precincts. 

To be developed in several phases over a period of 15 years, the first phase will comprise four investment grade A office towers, a lifestyle retail mall, two 5-star hotels and up to six luxurious residential towers with a target completion date by 2019.

In addition, Bandar Malaysia will house two MRT stations - Bandar Malaysia North and Bandar Malaysia South which will form part of the alignment for the Sungai Buloh - Serdang - Putrajaya Line (SSP Line).

#3: Properties along Sungai Buloh - Serdang - Putrajaya Line (SSP Line) will  be sought after

Speaking of the SSP Line, properties along the alignment, particularly those situated in the growth areas of Sungai Besi, Bandar Malaysia and Cyberjaya City Centre are worth looking into.

Bandar Malaysia will house two MRT stations as stated above and located a few stops away from Tun Razak Exchange MRT station.

Meanwhile, Sungai Besi MRT station is an interchange station to the Sungai Besi LRT station. 

It will serve as an interchange to the upcoming High Speed Rail station located in Bandar Malaysia, also in Sungai Besi. 

Last but not least,  Cyberjaya City Centre MRT station is a transit-oriented development (TOD) project to be developed by Malaysian Resources Corp Bhd (MRCB). 

With its experience in building the transport hub in KL Sentral, MRCB will be developing a new city that will be integrated with the MRT station. 

Phase one is expected to generate a gross development value (GDV) of RM5.35 billion. 

It will feature a 200,000 sq ft convention centre, a 300- to 400-room business hotel, low and high-rise office buildings and a retail podium. Cyberjaya City Centre will have a development plan spanning 20 years. 

The MRT station is located just opposite Lim Kok Wing University of Creative Technology.
 
#4: Penang to get a boost from Phase 1 of Penang Transport Master Plan (PTMP)

With Lim Guan Eng as Malaysia's Finance Minister, Penang's property market will get a further boost.

Just this month, Phase 1 of PTMP was approved.

It will comprise the Bayan Lepas Light Rail Transit (LRT) project, Pan Island Link 1 (PIL1) project and several main highways.

The proposed Bayan Lepas LRT line will be about 30 km in length with 27 stations running from KOMTAR to the future reclaimed islands in the south.

There will be three interchange stations - KOMTAR, Sky Cab Station linking it to the Sky Cab line across the Malacca Straits and The Light Station linking it to the George Town-Butterworth LRT line.

The LRT Line will also be integrated with the Sungai Nibong Express Bus Terminal at the Sungai Nibong Station.

Meanwhile, PIL 1 is a new 20km highway that will be aligned along the mountainous terrain of the island and will take around 15 minutes from between Gurney Drive to the Second Bridge.

There will be six interchanges in all - Dr Lim Chong Eu Expressway (LCE), Awang, Relau, Paya Terubong, Utama and Gurney.

#5: Johor Bahru to get a boost from the Rapid Transit System (RTS) Link

​Meanwhile, over in the southern state of Johor, Iskandar Malaysia's muted property market will get a boost as the RTS Link will commence construction next year.

The RTS Link will link Bukit Chagar station in Johor Bahru to Woodlands North MRT station in Singapore when completed in 2024.

There are also plans for a Bus Rapid Transit (BRT) system within Bukit Chagar station to link it to the different areas of Iskandar Malaysia.

The BRT will feature a dedicated bus lane with three lines -  BRT Line 1 will span from Bukit Chagar to Tebrau, BRT Line 2 from Bukit Chagar to Senai and finally, BRT Line 3  from Bukit Chagar to Iskandar Puteri.

However, based on market talk in the ground, there is a possibility that the BRT system will be upgraded to an LRT system instead.

With the dust from the 14th Malaysian general election now settled, the newly minted Pakatan Harapan government has renewed investors’ confidence and sparked hope in the otherwise lull property market. We list down six reasons why KLCC is now attractive to foreign investors. 

By Khalil Adis

Buying a unit at SO/ Sofitel Kuala Lumpur is not just about all play. This is the address for those who have arrived that is within walking distance to Pavilion Bukit Bintang, Suria KLCC, KLCC Park and The Petronas Twin Towers, just to name a few. Shopping, entertainment and dining options are also aplenty ranging from the award-winning Nobu’s to your local mamak coffeeshops. For investors, this is where you can have access to some of the most sophisticated tenants at your feet. There are a high number of industries here ranging from government offices and embassies at the nearby Embassy Row to the petrochemical and MICE industries within KLCC. Take your pick.

#6: Enhanced connectivity via KLCC East MRT station ​

Join Khalil Adis this weekend to find out what is in store in the Malaysian property market post GE-14. 

Details below:
Date: 18 & 19 August 2018
Time: 3pm
Venue: Oxley Gallery, 30 Stevens Road #02-01
RSVP here

*First 10 to RSVP on each day (10 copies on Saturday, 10 copies on Sunday) will each receive a copy of Khalil Adis's best-selling book 'Property Buying for Gen Y 

The Batu Pahat HSR station is located within the state of Johor at Pura Kencana, Seri Gading. Batu Pahat is a hub for garment and textile factories. Major townships in the vicinity include include Rengit, Yong Peng and Semerah.  The main economic drivers here are those in the the furniture manufacturing, food processing and agrotourism. However, isnce 20011, there has been a notable growth in small and medium industries such as textiles, garments and electronics. 

​#6: Impact

Also known as MRT Line 3, this is the final line that will comprise of a “wheel and spoke” system to connect to MRT Line 1 and SSP. Line 3 is expected to be completed in 2025. Collectively, all three lines will be integrated with the current trains systems forming the Klang Valley Integrated Train System. However, this project has been postponed by the new federal government when it took power in May 2018 owing to budget cuts.

#9: Impact
The impact for this postponement will be marginal as this MRT Line will still need to be constructed to connect the SBK Line and SSP Line. 

We will most likely see speculators staying away from the market.

This presents good opportunity for genuine homebuyers to start looking in and around the station.

Homes in the secondary market will be the most ideal as they are priced cheaper than new launches.