Thursday, 14 November 2013

Is Iskandar Malaysia overpriced?

Every conversation about Iskandar Malaysia (IM) revolves around three related topics. One, the launch price for residential properties and land prices have doubled in the past two years. Two, the huge supply of completed residential units that will come into the market in the next two to four years from projects launched in the past two years. And lastly, what is the impact of the cooling measures announced in the recent Budget and other specific measures contemplated by the State Government.         

Although we have also seen a major push to create economic activities and jobs, these new developments cannot rely on domestic take up alone.

Can the current prices and demand for properties in IM be sustained? We believe it depends on the following two questions. 1) Is the IM growth story secular or cyclical? and 2) Can IM be an integral suburb of Singapore? Will workers in Singapore (Singaporeans or Malaysians) make IM their home?
 Read the answer to the question in The Edge this week.

48 comments:

  1. I think u miss out another very important Questions? Can IM provide sense of security to their residents & proper social system in place. Hearing Johor is plaining to change Sunday to Friday as public holiday. One things smart & rich investor always concern is not really the price factor, but sense of security of environment and proper system in place. If JB still ranking No.4 the top crime city in the world, I think all the investment in IM will turn sour...it will attract mafia/brainless people instead quality residents. Btw, Mr. Tong, would u like to stay in IM or Singapore?

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    2. Those countries like Somalia, Mexico, even US (yes, you dont expect JB ppl playing handgun in school) cities not on the list because 1.those area too backward even internet isnt there yet 2. they dun bother to vote. JB proudly got that honour because it is not only supported by the local, but also singaporean. Secondly u insult mafia ppl as brainless ppl. They cant b brainless when they able to build up their organised crime world. Thirdly, Mr Sim, when you retiree, would you like to retire in IM or singapore, assuming u r ordinary singaporean folks. Asking this cause you wrongly assume that IM is competing with sg for foreign talent and rich ppl. How quality will the those singaporean retiree that cant afford to retire in sg be? Anyway, i dun c IM able to attract quality residents compare to sg.

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  2. Mike Sim,

    Nusajaya at Iskandar is one of the safest place in M'sia at the moment. I know because I stay there. We hardly lock our house and our kids can go from houses to houses without any adults supervision.

    Go and check out places like Horizon Hills, East Ledang or Leisure Farm

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  3. Mike Sim,

    Do you know that the biggest group of people moving from S'pore to Nusajaya are the expats?

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    1. hmmm... really? When did you get your information from? What's the percentage compared with the overall expats population in SG?

      Info from Local MY papers that interview a few expats that's staying in Nusajaya?

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    2. I stay there. I know. I can see it from the new neighbors that coming in. I've lived in S'pore for years but decided to move to Nusajaya because it is simply too expensive to stay in S'pore. A expat family of 4 can easily save a few hundred thousands MYR a year by staying in Nusajaya....and yet get better education for their kids (check out Marlborough College) and can own multiple cars.

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  4. Lots of attractions for folks in S'pore (not necessary S'porean) to live in Nusajaya. Below are some main push and pull factor that's pushing folks out of S'pore and pull factor that's attracting folks into Johor
    1. Big family - which means the need for a bigger space
    2. Big gap in property price - do you know that a 916 sqft leasehold condo in S'pore cost SGD1.2m? With the same amount, you can buy a nice property (maybe with private swimming pool) in Nusajaya. The distance is only 30min drive during peak hours
    3. International school - check out Marlborough College, Nusajaya. Folks from S'pore are sending their kids here
    4. Car price - COE in S'pore is at SGD80k. This price for this piece of paper can buy you 2 nice cars in Malaysia
    5. Education system - not everyone like S'pore system. Some S'porean/PR are 'running' away by staying in Nusajaya

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    1. Hi Malaysian Constitution,

      Are you a real estate agent? Or a promoter for the IM development? Or do you have stakes in the development of this area?

      I agree with most of your points and it all seems like a white-picket-fence scenario for S'Poreans and Expats alike. But the truth is this; can the foreigners be able to live in an environment where the locals will discriminate against?

      It is a known fact that many of those staying in JB are blaming foreign and local speculators for the property price hike and the general increased cost of living in the last 3-4 years. Not to mention there is an underlying current of tension between the 2 nationalities. I'm sure, if you are a resident of JB, you will notice this behaviour on the roads and/or in the "kopitiam" or "mamak stall" chit-chats.

      My personal believe is that IM will definitely be a economic hub in the next 10 years as the land constraints of S'pore drive local singaporean companies to expand to our shores as well as the many plans the government and other stakeholders have in place to drive the development of the region. However, i definitely do not see the region being able to sustain its appreciation/achieve its development goal by being supported by residential properties.

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    2. Sir Grump-A-Lot - probably a promoter for IM :)

      BTW, driving from SG to Nusajaya is not 30 minutes during peak hours... that's probably from Tuas (after clearing immigration)... jam from CBD in SG on AYE probably takes another hour or more.

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    3. I'm not an agent. I'm just a very happy resident after staying in S'pore for a few years. The commute is 35min from my house (Horizon Hills) to Jurong Point. I do it everyday.

      http://www.channelnewsasia.com/tv/tvshows/documentaries/iskandar-a-livable/795270.html

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    4. Jurong Point? That's like the west end of SG... not the CBD area where most people work. Try driving from CBD to Nusajaya during peak hours and see how long it will take :)

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    5. It will take 1 hour. But I rather park my car in Jurong Point and take the MRT there because the parking at Raffles Place (that's where my office is) is rather expensive.

      Please view the video below especially the 4th minutes.

      Malcolm, do you commute daily?

      http://www.channelnewsasia.com/tv/tvshows/documentaries/iskandar-a-livable/795270.html

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    6. Well, I don't commute by public transport nowadays after i moved away from the city area.

      I drive to work daily to Raffles Place, where my new company provides me with a parking lot. So I save on the parking charges... I used to pay about S$280 a month for parking (increased by now).

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    7. Not everyone is fortunate enough to have free parking... but here are some alternatives....

      For parking nearer to the city, might want to consider park-and-ride near queenstown MRT - S$3 for the whole day.

      Or park opposite SCO - about S$180/month, then take a short bus ride to Raffles Place or a MRT stop.

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  5. To all IM supporters, IM is under Johor, if Johor gov and royalty gazetted it as 'prime areas' and under SAR like HK, probably it will turn to gold. The only reason if compare to Singapore people shift in to IM is the 'cost of living', given a choice, there are still lot of Singaporeans and Malaysian PR are willing stay in HDB Sg rather than big space in IM. It is the sense of security towards the environment, system and authority.

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    1. Yes, you are correct Mike Sim... it's the sense of security towards the environment, system and authority rather than the relatively cheap property prices compared to SG.

      Also, would you want to travel more than 1.5 hours (3 hours - 2 way) during peak hours between SG CBD and Nusajaya? Or you rather spend it with your family in SG?

      Noted that there are a lot of Malaysians (and some Singaporeans) who travels daily between SG and MY... but given a choice, they would rather moved to SG if they can afford the properties in SG....

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    2. 1.5 hours commute to S'pore???? I wonder who told you this incorrect information. Strange that people here comment without any personal experience.

      Please go to 4th minute of the below video (which is a documentary made by Singapore Media Corp) and see how long it takes to travel to S'pore CBD from Nusajaya. It is much better than commuters in KL/PJ

      http://www.channelnewsasia.com/tv/tvshows/documentaries/iskandar-a-livable/795270.html

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    4. Based on my personal experience.... driving everyday from my condo at Upper Bukit Timah to CBD during peak hours to my free parking in the office. :) Takes me about 45 minutes during peak hours...

      I wonder what time the guy wakes up to travel to CBD in SG? 5am? That's probable.... but then again that's no peak hour...try starting the journey at 8am....


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    5. I wake up at 7:15am and start driving between 7:45am to 8am. Most of us in Nusajaya do that. I reach office (Raffles Place) at around 9am. Those of us who work near Tuas can reach their office in 35min.

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    6. Malcolm,

      From Horizon Hills or East Ledang to Jurong Point, there's only 3 traffic lights....near Jurong Point. Other than that it is ALL highways (110km/h in Malaysia) and (80km/h) in Singapore. Total distance is about 30km.

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    7. Hmmm....

      Let's calculate the time from point to point
      - Horizon Hills to Gelang Patah checkpoint - 10 minutes?
      - Clear immigration both MY and SG - 10 minutes?
      - from AYE to CBD - 30 minutes - under light traffic conditions

      That's a total of 50 minutes... under light traffic. Factor in the peak hours.... another 20-40 minutes depending on how bad the traffic is. Now that it's school holidays... AYE is much better now :)

      Therefore 30 or 45 minutes to CBD from Horizon Hills... is just marketing talk from Horizon hills website


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    8. Malcolm,

      It takes 1 hour if I were to drive from HH to Raffles Place during peak hour. Like I mentioned, I parked my car at Jurong Point and take MRT from there to reach my office.

      Btw, not everyone works in Raffles Places. I've a neighbor here who used to stay in Pandan and work at Tuas. She couldn't afford a car in S'pore so have to take bus/MRT/bus to get to work. Takes her 1 hour....plus walking and waiting. Now takes her less than 35min to drive (a Malaysian car of course) from Horizon Hills to office

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    9. The point I am trying to make here is that - driving to Singapore does not take 30 minutes (especially CBD) as claimed by some marketing tagline.

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  6. I think all the pointers raise up here are truely valid. But i think at the end of the day, if the transformation as promise by MY and SG Government were to take place, all the mentioned issues will be addresses. Therefore, it will be the Transformation that we are looking at .
    http://www.urproperty.sg/2013/09/iskandar-malaysia.html

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    1. I hope Nusajaya will not be like Putrajaya and Cyberjaya all over again... almost identical promotions and fanfare on the launch of Nusajaya :) Maybe, IM learned from Putrajaya and Cyberjaya?

      Oh... remember the Movie Park that was launch by Jackie Chan in Cyberjaya / Putrajaya? I think it's eaten up by the jungle already.... they going to launch another movie park in Nusajaya?

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    2. The success of Nusajaya depends on Singapore. At the moment lots of push factor in S'pore that's pushing people out to consider alternatives. Many expats prefer a nice bungalow with private swimming pool than a small condo in S'pore. Furthermore, price of COE is pushing expats to consider staying in Nusajaya and buying M'sian cars instead.

      Plus, Marlborough College. There are already so many S'pore residents sending their kids there. So why not just move the whole family to Nusajaya to enjoy what I've written above.

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    3. Sounds nice, with the facilities and a big space... the real issue on everyone's mind is security.

      My sister in KL have to employ a bodyguard/driver to ferry my nieces and nephews to and from school. What more in Johor?

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    4. Johor is 1,000 times safer than KL/PJ. I know because I stayed in KL half of my life. For folks from KL/PJ, Johor is almost like heaven.

      Fyi, at Horizon Hills, my kids (nad my neighbor's kids) are free to roam around (on their bicycle) the area and from 1 house to another without any adults supervision.

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    5. Really? Hmmm... I stayed in KL/PJ/SG all of my life... People in KL / PJ thinks that Johor is 1000 times worst :)

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    6. I understand what you mean. When I told my family and relatives that I'm relocating to Nusajaya, there were like.....

      Fyi, places like East Ledang doesn't even have fence between houses. And my American neighbor at Horizon Hills doesn't even close their doors at night when they go to sleep. I can walk straight into his living room.

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    7. G & G is extremely safe, but again dont overly confident. This is malaysia, anything can happen, even the guard may become the thief.
      Malcolm Gan: Same thing, ppl in johor think KL/PJ is 1000 times worst. Problem with jb so well famous for its crime is because of kiasi singaporean that make it famed. If sg nxt door not jb but KL, too KL will have the same fame as JB. actually JB KL the same...

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    8. JB and KL is NOT the same. KL is 1,000x more dangerous.

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  7. I think all the pointers raise up here are truely valid. But i think at the end of the day, if the transformation as promise by MY and SG Government were to take place, all the mentioned issues will be addresses. Therefore, it will be the Transformation that we are looking at .
    http://www.urproperty.sg/2013/09/iskandar-malaysia.html

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  8. Over Price is a relative statement. Depends on whether you are comparing to investment in IM or elsewhere eg. Singapore, Philippines etc
    Personally I agree it has risen by many folds, but as long as the promises made to the public by the relevant authorities & govt are fulfilled there is good growth potential in this area.
    However, if the promises are broken, no new investment , no human inflow into area, then all those ready units in the next few years will be left VACANT, and it gives a ghostly town effect to the area.
    Thanks

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  9. My issue with Iskandar is having the confidence to make long term decisions based on track record. They say the only two certainties are death and taxes this I can live with, however, retrospective taxes are draconian and a real confidence killer for the investor or international business entrepreneur.

    After consideration of the regulations at the time 2.5years ago, I purchased a twin villa in east ledang off the plan .I think the development and entire concept is excellent and I don't disagree with taxes or the logic of the PGTax, but the precedent of making this retrospective, penalising those that have taken the risk 2 or 3 years ago is hard to swallow. It has caused me to rethink my whole approach to investing and establishing a business here or, in applying for MM2H.

    How can I have confidence that once I have invested, there won't be another change on a whim, completely blowing my forecasts and plans to bits!





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    1. Mass,

      I agree with you. But then again, so are the policies of S'pore govt. Recently S'pore govt announced that SPR must be 5 years before they can purchase HDB. How about those who 'invested' 2-3 years and about to buy a HDB??

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    2. I wonder will Johor change the assessment rates from 100-1000% like in KL? :P

      Johor just changed the weekend... to Friday and Saturday...

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  10. Iskandar is overpriced la as there is so much supply of condo and land .. The buyers are spoilt for choice . And most of IDR doesn't have good infra like MRT or LRT .. It's very very big and no major job creation To sustain such prices

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    1. OS,

      Only certain projects (Horizon Hills, Leisure Farm and East Ledang) will make it. And these project will continue to go up in prices...easily touch RM5m because of it uniqueness. S'porean/expat who move over to Nusajaya will not simply just buy a house. They are buying a home.

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    2. Lots of property agents in SG are promoting Iskandar projects nowadays... received invites, emails and SMS everyday to push IDR projects...

      Some of them are promoting IDR projects and claims that they are not property agents here... :)

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    3. Not the whole Iskandar Malaysia is going to be successful. Iskandar Malaysia is HUGE, probably 3x the size of S'pore. Just stick to Nusajaya and stick to East Ledang, Horizon Hills and Leisure Farm and you can't go wrong. That's where all the S'pore residents (S'pore citizen, SPR and expats) are.

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    4. That is true, but the price for East Ledang, Horizon Hills and Leisure Farm had risen so much to the point where hoping further capital appreciation getting difficult, rental return suck (even hard to rent out), and still ongoing more new one coming out, maybe at least keeping value, not really a good investment choice if got alternative. But overall, it provide a living standard where you can only enjoy in singapore as a multimillionaire. So price for quality, buy for own use not that bad.

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    5. EL, HH and LF had risen so much and will continue to go up because it is simply too cheap compared to S'pore. Jurong is only 35min away and the leasehold condo in Jurong is selling at $1,600 psf. EL, HH and LF still have lots of room to go up.
      Hard to rent? EL is renting for RM6k and not easy to get, there are limited terrace units. As for HH, those who want to rent, have rented. Easily RM3k for a normal terrace house.

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    ReplyDelete
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