Will Iskandar flourish in the next 10 years or will it flounder in a sea of oversupply? Scepticism still abounds as exemplified by a very critical opinion piece entitled “Avoid Malaysian property, especially Iskandar” penned by respected analyst in Singapore, Ku Swee Yong. Asian Property Review finds out if his opinion is justified.
Text by Jan Yong
Many consider Iskandar Malaysia, a 10-yearold special economic zone as a ‘work-inprogress’, and rightly so as large swaths of the region are still underdeveloped. Often jokingly referred to as another district in Singapore or the ‘hinterland’ of Singapore, and regularly compared to the synergistic relationship decades ago between Shenzhen and Hong Kong, it has yet to stand on its own feet as an independently-driven region.
The fact that big Chinese developers advertise their massive developments there by referring to the distance of their projects to Singapore speaks volumes of how Iskandar is being positioned – and how it is being perceived. One would be forgiven for thinking that without the ‘Singapore’ brand attached to it, Iskandar would be a godforsaken place.
The perception of Johor has been carefully cultivated over the last decade – and with many big developers, both foreign and local, putting their bets in the area three times the size of Singapore, Iskandar has seen solid take-up rates amid a frenzy of overdevelopment in the more popular spots and the accompanying speculative buying. Busloads of foreign purchasers are known to descend upon Iskandar, some with cash for the full purchase price.
‘To buy or not to buy?’ is a question that has taken on more urgency in recent months due to the economic slowdown in both Singapore and Malaysia. And when the Memorandum of Understanding to build the High Speed Rail (HSR) linking Singapore and Kuala Lumpur was finally signed on July 19 by both countries’ governments, the hype broke out once again with forums and seminars enthusiastically examining the impact of the HSR on property investment. The date of completion? In 10 years’ time.
Ku’s article was timely – although he did use the word ‘avoid’, the full phrase was ‘avoid for now’, like what a market analyst would normally say. This gives room for a change in direction or even a U-turn in the future if certain conditions are met, for example, the relaxation of the cooling measures (implemented to clamp down on speculation) or less volatility in the ringgit. A few salient points from Ku’s article published in todayonline.com will provide food for thought and explain why he came to his ‘avoid for now’ conclusion.
“In a drive around Nusajaya [in July], we observed that the pace of construction seemed slow, with several projects that were fully sold years ago still under construction. One large billboard proclaimed “Akan Datang” and “Coming Soon” above a construction site hoarding for a luxury condominium project that failed to launch after the 2013 peak of the Iskandar hype. Needless to say, construction has not started.