No oversupply of homes in Iskandar: Johor Crown Prince

ISKANDAR PUTERI — Johor Crown Prince Tunku Ismail Ibrahim has refuted claims that there is an oversupply of homes in Iskandar Malaysia, amid concerns that rampant development by foreign investors has led to a decline in housing prices.

“I have been following the development of Iskandar Malaysia and we are now halfway into the 20-year plan since November 2006. With a population of 1.7 million that is expected to increase to three million in 2025, we need 666,000 houses, so it is not true that there is an oversupply of 410,000 houses,” the New Straits Times cited Tunku Ismail as saying at the unveiling of the design of Fastrackcity, Asia’s premier motorsports city, at Pinewood Iskandar Malaysia Studios.

Bloomberg reported last month that China’s developers are swamping the market in Johor, pushing prices lower with a glut of hundreds of thousands of new homes and hurting local developers.

Chinese firm Country Garden is investing US$100 billion (S$142 billion) to build its massive Forest City project on four artificial islands, on an area four times the size of New York’s Central Park. The project is expected to add 160,000 homes over its 30-year construction period, according to Bloomberg estimates, based on the projected 700,000 population.

Forest City is the biggest of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, where developers have a pipeline of more than 350,000 private homes planned or under construction in the state, according to data from Malaysia’s National Property Information Centre.

The influx has contributed to a drop of almost one-third in the value of residential sales in the state last year, with some developers offering discounts of 20 per cent or more. Average resale prices per square foot for high-rise flats in Johor Bahru fell 10 per cent last year, said property consultant CH Williams Talhar & Wong.

The influx of Chinese competition has also affected local developers such as UEM Sunrise, Sunway and SP Setia, who have been building projects around Johor Bahru for years as part of a government plan to promote the area. First-half profit slumped 58 per cent at UEM, the largest landowner in Johor Bahru.

In a property outlook forum organised by real estate portal PropertyGuru last week, the Real Estate and Housing Developers’ Association Malaysia (Rehda) appealed for a more level playing field for local developers, saying that while it was natural for Putrajaya to welcome developers from China, incentives should be given to local developers too.

“Let’s be honest, everybody needs foreign investment, but it’s really a delicate balance and I hope the government will be fair, will have a level playing field,” said Rehda president Fateh Iskandar Mohamed Mansor. “And if you are to give incentives to the foreigners, please, we Malaysians should get the incentives first.” AGENCIES