Before everyone gets overwhelmed with debates talking about 700,000 new units coming up in Iskandar, let’s look at it based on a yearly perspective, shall we? I read an interesting article entitled, ‘Both good and bad news for Iskandar Malaysia in property-report.com. According to CBRE-WTW Director Tan Ka Leong, the existing supply in Iskandar Malaysia stood at 43,898 in 2016. It grew 16 percent from 2015. (Yes, double digit growth is indeed high) Typical population growth without any catalysts are nowhere near even half of the growth in terms of new high-rise units. How many are coming soon? CBRE-WTW said that for high-rise residential there would be an incoming supply of 19,000 new units into the market in 2017. In other words, this will contribute to the oversupply of high-rise units which may take five to six years to clear.
Due to the oversupply, the potential property price adjustments could be as much as 30 percent for these high-rise units. (Please always NOTE that property price adjustments would always be based on an average number and thus may not paint the right picture for all developers or projects. Some would definitely far better than the rest. In fact the oversupply of the high-rise apartments may eventually reach 30,000 units. He then shared a different scenario for landed homes. Tan shared that there were a 5-10 percent downward adjustment in landed home prices last year. However, Tan said ‘the worst is over’ for this segment. There should be no further downward adjustments for the landed homes for 2017. CRBE-WTW also shared, “The overall soft market is the result of the general economic conditions and cooling measures.”
Yes, it’s clear that the catalyst that we are waiting for was not reported, yet. I would hope for Rail Transit System (RTS). I would hope for more news about new manufacturing plants being planned within Iskandar too. Ease of connectivity is vital if we are talking about Iskandar growing faster. To ensure more people are working within Iskandar instead of Singapore, we need more high-valued new manufacturing plants which will provide employment opportunities. One thing on Iskandar’s side is the fact that the Singaporean economy is slowing down and the unemployment rate has gone up. Overall, only 2.2 percent (Malaysia’s 3.3 percent and the U.S is nearly 5 percent). If the prediction of price correction comes true, it should increase the attractiveness of such properties, especially those with full facilities. Happy following.
written on 28 Jan 2017
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