Oversupply in Iskandar and Ken Holding’s JBCC Launch in 2015

Most of everyone I spoke to about Iskandar has a similar opinion. ‘Iskandar? Sure or not. Bubbles building. Over-supply. The Chinese developers are building like there’s no tomorrow, how to buy now?’ Then I read about a developer whose project I visited before in Shah Alam. Ken Holdings Bhd. It said that their biggest development to date in terms of GDV, the Ken JBCC will be launched next year, 2015. First to be launched would be one block of the serviced suites. The whole Ken JBCC carries a GDV of RM1.2 Billion. The plan is to make the development a green district and thus the aim is for the top rating in the BCA Green Mark scheme. Ken JBCC comprises of residences, commercial units, a shopping mall, serviced suites, hotels and offices. The size of the land is 22 acres (960,000 sq ft)

In the article in The Star, its managing director Sam Tan said that while popular opinion says that there is an oversupply in Iskandar for residential he is not concerned. His main reason is that the ‘over-supply’ has more to do with the fact that the launches has become unaffordable for locals. Ad for Ken JBCC, they are focussing on “good value”, good location in the city centre as well as Ken’s construction and engineering experience.  The focus should always be on a product which is affordable for the locals. In this sense, demand will still be there.

I think he has hit the right spot with his assessment. Of course I must add that it is not just in Iskandar but also in some popular areas in Greater KL as well as the properties in the island of Penang. When we look at the launches from the year 2010 onwards, every developer was launching properties with ever increasing prices per sf. In Penang Island, within that few years, prices was changing monthly! Thats what I really feel. So much so that I told my wife, how can this ever be sustainable, this is crazy. Today, new launches are priced more affordably. RM500 psf which was unheard of previously are now available again and the momentum of ever increasing prices has stagnated. Few years ago, in KL, I told my wife that if my condo reaches RM300K I would sell it. It was in 2010. Suddenly my agent called and said I can get up to RM350K for you. I did not know what to do except to say, not yet. I was still renting it out at that time. Today, it will easily be 450K. Kelana Puteri’s size is 1055sf. In other words, still way below RM450psf which is no longer an available launching price for most projects.

I still believe demand is strong but only at the right prices with a location which is still acceptable. Of course, do a good marketing for it to get as many people to know about it as possible and not put up one or two-day newspaper advertisement and hope buyers would queue up for it. Not within these few months leading to GST anyway. Ken JBCC, I think I should be able to afford a flight ticket to be there for their launching next year. Happy investing.

written on 10th Sept 2014

Next suggested article: Nothing in Iskandar yet for me but does not mean it’s NOTHING to me.

6 thoughts on “Oversupply in Iskandar and Ken Holding’s JBCC Launch in 2015

  1. Hence we call it a bubble. Prices are not sustainable. Interest rates going up. Developers keep on building despite of all the signs. When we say there is an oversupply it has already taken into account the price factor that many locals can’t afford. I had a friend that tells me the best time to sell is when the local newspaper starts marketing it on your behalf. The time to buy is when the local newspaper starts painting a bleak picture of the situation. No point jumping into it now when every single property experts claims to know it all about Iskandar

    • Hi KJ, I am very sure you have your facts when said that. I do not believe there is just one view when it comes to properties. Personally, if you read back the older news, since 2012, there were already talks about a bubble. I seriously believe there are lots of crazy properties which are overpriced. Those condos which are small in size but over RM1.5 million or those which said they are so very luxurious, great views and thus deserves to be priced at RM1,600psf or higher. These are way overpriced and bubble should burst for them first. However, when we look back at Malaysia, the transactions has been going down beginning 2012 and has been continuing till today. Loan applications approval continue to be harder and LTV of 70% is pretty normal today. 84% of all mortgages today are for one property only. Cooling measures are making it ever harder to buy a home which meant that those who are not qualified just could not qualify for a loan. This is why I think ‘bubble’ has happened since 2012 for some property types and not about to happen later. However, go online, search for apartments / condos in lesser popular areas, there are still many below RM300,000 secondary ones. This is the reason why I think ‘bubble’ will not happen for these properties yet. As for newspapers, if we look at their circulation numbers, it has never failed to continue dropping since 2006, except for a few which dropped lesser. Thus, they have better do more for their developers or else, soon no one would be advertising there. In fact I will be publishing an article tonight, ‘seriously, do people still buy newspapers to look for properties’. It’s ironic that advertisement dollars are spent most on newspapers and yet majority of everyone of us are browsing and getting information online. I am not an expert in Iskandar. In fact I am also not an expert in anything. Haha. However, just like you, I have my personal facts which guides me. The amazing thing is I agree with your view that there’s a bubble. Yet, I disagree to label it on just interest rates or developers. I prefer to look at the actual property itself. Enjoy your weekend and thank you.

  2. Why ppl always lump Iskandar region as one? Iskandar got 5 flagships mah. Each flagships does different things so the demographic they attract also different. Hence, product offerings, price point and property investment strategies also different. Bubble in Danga Bay yes, but in jb still got plenty affordable ones. Saying the whole iskandar got bubble is like saying whole klang valley also bubble when it is only at klcc.

    Rental very good in jb u know, look at bkt indah. Below 400k family sized near amenities why cannot buy?

    • I like your comment. Agreed. I think the most important thing is until today, Iskandar is still thought of as one instead of a huge area the times Singapore. No way the growth is the same every where. Thank you.

    • Landed house in Nusajaya/Iskandar zone B or housing like Horizon Hills or East Ledang, is welcomed by expatriates and it is fetching good rental.

      • I like Horizon Hills too even though I am not expat. It’s really different from the typical developments. So much space and green.

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