By Khairul Khalid
With all the problems Iskandar facing, such as a potential glut caused by Chinese developers flooding the market with high-end units, something needs to be done to prevent a further slide.
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Sales transactions of properties in Iskandar are down approximately 48% for the first half of 2014, a massive fall. Analysts aren’t too optimistic of a turnaround next year, considering an already sluggish property market.
What will it take to jump-start Iskandar’s fortunes?
Limit Chinese building frenzy
Pointing to the frenzy of overbuilding by Chinese developers, especially at the waterfront in Iskandar, some market observers have suggested a tighter leash on foreign developers.
Although foreign investments are important for Iskandar, many feel that the authorities are not doing enough to ensure that projects are developed apace with market requirements.
Faizul Ridzuan, a property adviser, feels that some degrees of control over foreign developments in Iskandar are needed to safeguard its long-term growth.
“Perhaps that is one of the solution. Like everything else, it’s all about supply and demand. It’s basic economics. Limiting availability of supply will result in premium pricing and vice-versa,” said Faizul
Shifting government policies
Khalil Adis
Another critical area that needs addressing is the constantly shifting government policies – both state and federal – that have confused foreign buyers.
According to Khalil Adis founder of Khalil Adis Consultancy Pte Ltd in Singapore, there needs to be more consistency and clarity in government rulings and regulations on foreign purchases in Iskandar. He points to the Malaysian government’s Budget 2014 last year as a prime example.
“There seemed to be a lot of questions when Budget 2014 was announced. It was not very clear. Singaporeans are used to things being in black and white, so we had to spend a lot of time doing outreach programmes to educate Singaporeans,” said Khalil.
Mixed messages to investors
The Singaporean property consultant also cited issues such as crime, safety, and track record of developers as prime importance for Singaporean investors.
“At the moment, Iskandar has a perception issue. It can be very difficult to manage as it involves various stakeholders. Issues like Forest City, the oversupply situation, the rapid transport system (RTS) location – Singapore has yet to receive an official confirmation from Putrajaya, but the location was reported and confirmed by the local press – and the toll hikes are sending out mixed messages on the overall sustainability of Iskandar,” said Khalil.
V Sivadas, executive director of PA International Property Consultants echoed this and is also concerned about the mixed messages that the government is sending to foreign investors.
“There have been changes such as the foreign purchase limit and levy, as well as supposed controls on developer launch pricings. On one hand we know that we need the support from Singapore for Iskandar to flourish, yet we seem to be sending all the opposite signals and actions to discourage them,” said Sivadas.
According to the executive director, after the general elections last year there were uncertainties about the new state leadership that resulted in an almost virtual standstill in key decision making for the property market up to almost middle of this year.
Sivadas says that although the Johor state adopted the federal government’s policy to limit property purchases by foreigners to the new RM1 million threshold, certain zones and projects were given exemption and reverted to the original RM500,000 limit or none at all for other projects.
State rushing high-rise projects
Sivadas also said that the state and local authorities have raised plot ratios, densities and height limits in many areas in the last few years, resulting in a substantial number of high-rise, high-density projects, particularly at waterfront zones.
“There appears to be a rush to carpet build and change the very character of Johor Bahru by boosting supply which for now appears not matched with boosting economic activities and increasing the population. This is predominantly led by a few major Chinese developers,” said Sivadas.
He hopes that future statements and proposed policies made to the public are considered and made only after careful thought.
“Any proposed projects and policies must be implemented within the announced time frames. There is a need to further improve the delivery system with more automation to remove the need for face-to-face interaction. Upon full compliance to requirements, approvals must be promptly issued,” said Sivadas.
Yesterday: Is iskandar slump spooking Singaporean investors?
Tomorrow: Iskandar’s silver linings
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