18 April 2015

Caution advised on Iskandar residential, commercial property: Maybank

  18 April 2015

SINGAPORE: The property oversupply situation in Iskandar Malaysia, Johor, is "likely to get worse before it gets better", said Maybank Investment Bank's research wing in a report, with property values in an increasingly crowded development space possibly declining over the medium term.

In a research note issued by the Malaysian bank on Tuesday (Apr 14) urged investors to be cautious about the region, noting that property transactions and prices in Iskandar have been dropping.
The value of property transactions in Johor had fallen by 33 per cent quarter-on-quarter in the Q4 2014, underperforming the country (-7 per cent) and other major cities such as Kuala Lumpur (-12 per cent) and Penang (8 per cent).

Property prices in Johor were also weaker than that of other cities, with the House Price Index (HPI) contracting 1 per cent quarter-on-quarter. In contrast, property prices in the whole of Malaysia dropped 0.2 per cent, the research paper said.


The research note said that Malaysian developers have scaled back their launches and shifted their product mix to avoid direct competition with Chinese developers, and have lowered sales expectations for their projects at Iskandar.

"Judging from the number of approved high-rise projects, the Iskandar property market could be hit by too much supply of high-rise mixed development projects if there is still no coordinated planning and control - this will induce price volatility," Maybank analyst Wong Wei Sum said in the research.

"The oversupply situation will be exacerbated by the huge incoming supply in 2015/2016, where units under construction have risen 18 per cent year-on-year in 2012 and 2013, respectively."

READ MORE: http://www.channelnewsasia.com/news/singapore/caution-advised-on/1790094.html

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