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Reclaiming an area 3% of Singapore.

Posted in Iskandar / JB Property

Yes, this is as per what the title says. Country Garden Holdings Co Ltd, with Kumpulan Prasarana Rakyat Johor (PRJ) have planned a development of over 5,000 acres of reclaimed land. This is 3% the size of Singapore today!

Remember Country Garden? The developer which launched 9,000 units of condo in one go and announced that they have already sold 5,000 units? What about the rumour that it offered steep discounts as well as a buy one get one free offer? Even when I was with my former company, I do not believe such a case because unless the gross margin is so huge that it allows the developer to do so. Most of the time, the margin would not even allow for a heavy discount. Just look at the net profit for listed developers and you would see why.

This project is so huge that it is envisioned that it will take over 30 years to fully develop it. The project even includes a man made island which will be near the second link in Johor. The island is for luxury homes. The man made island has started work and recently raised some concerns about its environmental concerns. There has been a slight delay in the announcement of the project when MH370 went missing. Country Garden is a top 10 developer in China with over 20 years of experience in township development.

Today, my colleague said, what will happen to Iskandar. All these new developments, every developer is there and everyone is building. Would there not be a bubble? Truth is, before any developer builds, they have no choice but to do a study about the potential of the area. It is very improbable that any developer would just rush into a new place and develop without first understanding what it is getting itself into. Country Garden has certainly come into Malaysia in a big way and Iskandar is not its only development. It is also in the Klang Valley too. If we believe what their internal analysts say, perhaps Iskandar is just beginning to show its potential. No matter what, buy with the right objective in mind and you should be ok.

written on 16 June 2014

Next suggested article:  Iskandar Malaysia – medium term prospects concern

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2 Comments

  1. Kj
    Kj

    Developers do make mistakes sometimes. In China there are plenty of cities that are built exactly like Paris but they eventually turn into ghost towns. I am sure Iskandar will grow with so much money being poured into it. However we need to look at the affordability of the condos being built by these foreign developers. They are priced beyond the locals affordability range and the only ones that can really afford to buy now are the foreigners. To the foreigners, Johor will still be part of Malaysia. There are risks and instability, crime rates, political instability etc. so, how many Singaporeans will eventually end up buying all these condos that runs in thousands of numbers. It is not cheap anymore. Nusajaya rm1300psft. At this rate and pricing, it is certainly a bubble in the making with so much land still left undeveloped.

    June 16, 2014
    |Reply
    • QUite agree. Developers would make mistakes. However, in terms of Singaporeans buying into Iskandar,I think this is still a huge possibility. If there is at least one more bridge and MRT in Singapore goes one round into Iskandar. In %, even if we are talking about 1%, that’s 55,000 and if a ratio of 1 to 3, that’s 18,000 units. Only time decides. Note, without new links / MRT, it will be tough to get more Singaporeas (esp. middle income) to buy.

      June 17, 2014
      |Reply

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