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.
#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
Walk around Kuala Lumpur and you cannot help but feel a renewed sense of hope in the air among Malaysians post the 14th Malaysian general election. In fact, Malaysians appear to be smiling more than usual that even the notorious KL traffic has failed to put a dampener on their faces.
Call it a new Malaysia, if you will. However, this is indeed a watershed moment which saw a newly minted Pakatan Harapan government taking power and effectively putting an end to 61 years of uninterrupted rule under UMNO. With the promise to weed out corruption, the return of the rule of law by the Mahathir administration has ignited business confidence and renewed interest in the property market.
One area which has always been a perennial favourite among foreign investors is KLCC. Home to the iconic Petronas Twin Towers, it was Prime Minister Tun Mahathir Mohamad who had the foresight to build it that has led to Kuala Lumpur being known all over the world. As if signalling a new dawn for Malaysia, KLCC’s skyline is set to welcome a new iconic landmark come 2023. Here are our findings why properties in KLCC are now ripe for picking.
#1: A new iconic landmark
Oxley Towers Kuala Lumpur City Centre is a freehold mixed-use development that is located within walking distance to the the Petronas Twin Tower and Kuala Lumpur Convention Centre. Comprising an office tower, Jumeirah Kuala Lumpur Hotel with residences, SO/ Sofitel Kuala Lumpur Hotel with residences, and a retail podium, Oxley Towers Kuala Lumpur City Centre is set to be the next iconic skyline in KLCC with its sleek, ultra-modern architecture. At our recent site visit, construction work has already started and is making good progress with an expected completion date in 2023.
#2: Reputable Singaporean developer with a strong track record
When buying a property in Malaysia, the track record of a developer is of utmost importance. Oxley Towers Kuala Lumpur City Centre is being built by Oxley Holdings Limited. This home-grown Singaporean property developer has a wide and diverse property portfolio comprising development and investment projects in Singapore, the United Kingdom, Ireland, Cyprus, Cambodia, Malaysia, Indonesia, China, Myanmar, Australia, Japan and Vietnam. Some of its notable developments in Singapore include Oxley Tower, Oxley Bizhub and Oxley Edge.
The EdgeProp cites Oxley Holdings as having S$2 billion worth of land last year including en bloc site. This makes it one of the biggest landbanks held by a property developer in Singapore. Despite the recent cooling measures, Oxley Holdings is going ahead to launch at breakneck speed this year with a total of 3,000 units already launched during the first six months of the year. And another 900 units underway.
Not only is Oxley Holdings rich in landbanks, it is also financially strong. For 2018, so far, Oxley Holdings has sold a total of 948 units and delivered $1 billion in residential sales in Singapore.
#3: First SO/ Sofitel residence in the world
If you like fashion and enjoy the buzz of city life, then you are in for a real treat. The SO/ Sofitel hotel and brand is a playful mix of sophistication and the dynamic style of each locale. Highly creative and fashion-led, the SO/ Sofitel residences in KL will reflect the rich, multi-cultural tapestry that Kuala Lumpur is known for. The SO/ Sofitel tower is set to offer 210 hotel rooms and 590 residences. Designed for those who break the rules and are ahead of the curve, this is the place to see and be seen. To ensure your ultimate privacy, the hotel and residences lobbies will be separated. Did we also mention that SO/ Sofitel Kuala Lumpur Residences will feature the highest residential swimming pool in Malaysia overlooking KLCC?
#4: Get more bang on your bucks in a branded residence
The difference between staying in a branded versus a non-branded residence is as different as day and night. In keeping with its lifestyle luxury and playful theme, investors can expect only the best while living life at the top. Staying at SO/ Sofitel Kuala Lumpur Residences will mean access to a plethora of luxury services and some of the most happening parties the city has to offer.
For starters, residents will enjoy 24-hour residence concierge, bell/valet services and the Mixo Resident’s Lounge. This is where you can let your hair down with its resident DJ or take those #OOTD Instagram-worthy shots with complimentary Wifi access overlooking the famed twin towers as you sip a cocktail or two from its Resident Mixologist. It’s not all about partying though. SO/ Sofitel Kuala Lumpur Residences will also offer fitness enthusiast access to its SoFIT residence fitness centre, including personal attendant, towel service and water. To ensure you stay ahead of the curve, residents also get a press reader subscription with digital access to 2,000 plus daily newspapers and magazines. AccorHotels offers an Industry Leading Ownership Benefits Program, including top-tier status in Le Club AccorHotels Loyalty program.
#5: Good tenant pool
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
Located approximately just 200 metres away, KLCC East MRT station is part of the RM32.5 billion Sungei Buloh-Serdang-Putrajaya (SSP Line) MRT project that was announced under Budget 2015. Measuring some 52.2km spanning from Sungai Buloh to Putrajaya MRT station, the SSP Line comprises 24 elevated and 11 underground stations (including KLCC East) When completed in 2022, the SSP Line is expected to generate a daily ridership of 529,000 while enhancing property values within its immediate vicinity.
Investment talk by Khalil Adis
Join Khalil Adis this weekend to find out what is in store in the Malaysian property market post GE-14.
Date: 18 & 19 August 2018
Venue: Oxley Gallery, 30 Stevens Road #02-01
*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
Is it on of off? We study each station and list down the good and the bad from the possible impact of its postponement in their surrounding areas.
With recent news of the High Speed cancellation, much remains to be seen if Bandar Malaysia will succeed or not. However, Bandar Malaysia North MRT station’s alignment has already been confirmed. Initially, Bandar Malaysia has been planned with a gross development value (GDV) of RM150 billion with a dedicated commercial district to support new start-ups as well as small and medium-sized enterprises (SMEs). In addition, Kuala Lumpur City Hall (DBKL) has said 30, 000 units of homes will be delivered housing some 120, 000 residents within Bandar Malaysia. Whether or not this will go ahead, remains unclear. The only glimmer of hope here is the Digital Free Trade Zone by Jack Ma which so far has not been canned by the new government.
The Bangi-Putrajaya HSR station is located in the south of Klang Valley and within the state of Selangor at Kampung Abu Bakar Bagindar. Putrajaya is the Federal Administrative hub of Malaysia. Major townships include Putrajaya, Cyberjaya and Bangi. There is a proposed connection to the Putrajaya Monorail that will connect this station to Putrajaya Sentral which will serve as an interchange station to the MRT station and the Putrajaya Sentral Express Rail Linl (ERL). The latter links you to KLIA and KLIA2.
The Seremban HSR station is located within the Malaysia Vision Valley area within the state of Negeri Sembilan. Sited within the Labu and Kirby estates, major townships in the vicinity include Bandar Enstek, Bandar Ainsdale Property and S2 Height. Seremban will be an interchange station to the Seremban Komuter Line and KTM Electric Train Service .
The Melaka HSR station is located in Ayer Keroh within the state of Melaka. Melaka is a hub for tourism and medical tourism. Major townships in the vicinity include Taman Tasik Utama, Kampung Baru Ayer Keroh and Taman Melaka Perdana. Many Indonesians and Singaporeans flock to hospitals such as Mahkota Medical Centre for medical treatment.
The Muar HSR station is located within the state of Johor at Bandar University Pagoh. Muar is a coastal town by the Straits of Melaka that is a hub for furniture manufacturing. Major townships in the vicinity Pagoh, Parit Jawa and Sungai Balang. The main economic drivers here are those in the education, trading, furniture manufacturing, historical tourism and agrotourism industries.
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.
The Iskandar Puteri HSR station is located within Gerbang Nusajaya in the state of Johor It is the gateway to Iskandar Malaysia and covers an area of 1,841-hectare. Gerbang Nusajaya features a number of catalytic developments including Nusajaya Tech Park and FASTrack Iskandar. Major townships in the vicinity include Gerbang Nusajaya, Iskandar Puteri and Medini. This will be the final leg of the Malaysian station before it enters Singapore, terminating at Jurong East. While the station in Nusajaya has not yet been announced, government officials have indicated that it will be located close to Motorsports City near East Ledang.
The Jurong East HSR station is located within the Jurong Lake District in Singapore. It is the gateway to Singapore and covers an area of 67-hectare. Jurong Lake District is the hub for commerce, retail, healthcare and tourism industries. Major townships in the vicinity include Jurong East, Teban Gardens, Lakeside and Taman Jurong. Jurong East will be an interchange station to the North South MRT Line, East West MRT Line and the proposed Jurong Region MRT Line.
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.
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.
An independent analysis from yours truly