At least it’s not boring
Landed residences could offer a sliver of hope to the embattled property market in Iskandar Malaysia, the vast economic growth corridor in the state of Johor with thousands of condominiums under development.
Although there was a 5 to 10 percent downward adjustment in landed home prices last year, “the worst is over” for this segment, according to Tan Ka Leong, a director at CBRE-WTW in Johor Bahru. “I believe we will not see much further downward adjustment this year.”
On the flipside, demand in the high-rise residential segment will be diluted by an incoming supply of 19,000 units this year, the consultancy warned. The existing supply in Iskandar Malaysia stood at 43,898 units last year or a 16 percent increase from 2015.
Absorption of the resulting oversupply in the region could take around five to six years, leading to an adjustment of as much as 30 percent in high-rise home values. “That’s assuming there is zero additional supply going forward — so high-rise segment would not stabilise so soon,” Tan said. The glut in the supply of high-rise apartments may eventually reach 30,000 units.
Total transaction value for Iskandar Malaysia properties reached MYR10.57 billion (USD2.4 billion) in the first nine months of 2016, a 5.3 percent year-on-year drop, according to CBRE WTW, citing data from the state-run National Property Information Centre. This represents 15,119 units in transaction volume or a 20.1 percent decrease over the same period.
“The overall soft market is the result of the general economic conditions and cooling measures,” CBRE WTW researchers stated in its 2017 outlook report. “Whilst general slowdown in terms of transaction activities and take-up within new development are observed, especially for higher-end product, particularly in residential sub-sectors, developers have diversified their plans to offer more affordable products to meet the present market needs.”