Property launches, land deals renew interest in Iskandar

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PETALING JAYA: The recent influx of property launches and land deals in Iskandar Malaysia has renewed investor interest in the region, said two research houses. But they had different views on the sustainability of the demand.

The more bullish view was expressed by Maybank IB Research analyst Wong Wei Sum. She expects the price momentum and demand for properties to remain strong, as foreign investments continue to rise, coupled with better connectivity by 2018 following the scheduled completion of the rapid transit system (RTS) link between Johor and Singapore.

Wong noted that Singaporean investors were impressed by the infrastructure development and visible incremental progress in the Iskandar region, from a year ago.

“Most of them are more bullish on Iskandar’s long-term potential post site visit and believe that it would benefit from skyrocketing property prices in Singapore given its close proximity,” she said in a note after a recent visit to the region.

She said the focus was currently on lifestyle landed property projects in Nusajaya, including Medini, as Danga Bay was still undergoing massive reclamation works.

Wong pointed out that UEM Land Holdings Bhd‘s Teega @ Puteri Harbour, a high-end condominium project, was close to being fully taken up in just three months since its official launch. The average selling price for Teega @ Puteri Harbour is between RM850 and RM1,100 per sq ft.

Wong also highlighted that SP Setia Bhd‘s Sky Breeze at Bukit Indah, a condominium project priced at RM550 per sq ft, was fully sold in a month.

“Landed properties continue to do well in both the primary and secondary markets. In a private preview, all 24 semi-detached units priced between RM650 and RM700 per sq ft in East Ledang were snapped up in a day,” she said.

However, PublicInvest Research, in a note, questioned the sustainability of demand flowing into the region.

“Notwithstanding Iskandar’s potential, we are of the view the sheer size of Iskandar Malaysia (measuring 2,217 sq m or three times the size of Singapore) would mean demand should normalise despite the recent brisk sales,” said PublicInvest Research analysts.

The research house added that the recent cooling measures in Singapore sparked the interest in Iskandar.

However, based on its estimates, the demand for Iskandar properties might take longer than expected to achieve the sales in Kuala Lumpur and Selangor.

“We note that currently for properties above RM500,000 per unit, Johor is selling circa 1,000 units (from 300 units in 2008) as compared with 18,000 units in Selangor and 10,000 in Kuala Lumpur,” it noted.

Should rental yields fail to meet the benchmark prices recorded in recent launches, eventually the fundamentals might prevail in the long run and hence, the strong price momentum might struggle to continue, PublicInvest said.

The key drivers that sparked investors’ interest of late were the completion of attractions such as Legoland, Johor Premium Outlet, Puteri Harbour Family Indoor Theme Park, universities and other upcoming big profile projects such as Pinewood Studios.

In addition, warmer Malaysia-Singapore government ties may lead to possible collaboration, in particular high-impact infrastructure projects such as the high-speed rail linking Kuala Lumpur and Singapore, RTS connectivity linking Johor and Singapore and other highway projects.

Recent land deals from Singapore included established names such as Temasek, CapitaLand and Ascendas Land.

“Ultimately, we believe the key is still tapping the demand from Singapore,” PublicInvest analysts said.

Property launches, land deals renew interest in Iskandar