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Tuesday, July 8, 2014

Iskandar Malaysia - 'New land of opportunity' for CHINA developers

Iskandar Malaysia - 'New land of opportunity' for CHINA developers
Chinese developers are zeroing in on Iskandar Malaysia, spurred by the tough market at home and the promise of rich rewards in the booming Johor Baru zone.
Their preference for building huge "township-style" projects has got some locals' backs up, but others cheer the job growth that the Chinese cash is generating.
Altogether, five mainland developers have about 150ha of land and reclamation should add a further 2,000ha.
Three companies have already announced projects that could yield at least 13,000 homes by the end of 2017.
Beijing-based Zhuoda Real Estate Group led the way in late 2011 with two deals with Iskandar Investment to build mixed residential and commercial projects in Medini. Iskandar Investment is owned by sovereign wealth firm Khazanah, the Johor state's investment arm Kumpulan Prasarana Rakyat Johor (KPRJ) and the Employees Provident Fund.
The first phase, the 382-unit Paradiso Nuova, was launched in January and is 50 per cent sold, with Singaporeans comprising 80 per cent of the buyers. Prices start from RM550,000 (S$215,000) for a one-bedroom unit with study.
Guangdong-based Country Garden soon followed, snapping up an initial 11ha of prime waterfront land in Danga Bay in late 2012 from Iskandar Waterfront Holdings (IWH). IWH, a strategic partnership between KPRJ and businessman Tan Sri Lim Kang Hoo, is Danga Bay's master developer.
The first phase of its Danga Bay project was launched last August. About 6,000 of 9,400 units have been sold at average prices starting from RM720 per sq ft. About 70 per cent of the buyers were from Malaysia and Singapore, a spokesman said.
Two other developers set up shop last December.
Guangzhou R&F bought about 46.9ha along the coast near the Causeway from the Johor Sultan. Hao Yuan Investment, which is controlled by mainland China parties, purchased about 15ha in Danga Bay from IWH.
Guangzhou R&F opened its Singapore sales gallery in East Coast Road last weekend to showcase the first phase of about 3,200 units.
Some Singaporeans are understood to have registered their interest in the project, which will be launched next month. Indicative pricing is about RM1,000 per sq ft or RM1 million for a 1,000 sq ft three-bedder.
Greenland Group is the latest Chinese developer to join in. Last week, it launched a preview for Greenland Jade Palace, a 759,609 sq ft residential site at Danga Bay.A spokesman said prices will average RM800 per sq ft, with an initial launch in September next year.
Mr Chris Koh, director of property agency Chris International, said increased competition at home could be prompting China's firms to look to Iskandar.
"Major cities like Shanghai and Beijing are already built up. Developers would incur high costs in building there," he noted.
"The overall Chinese market has been slowing down as well."
They also see the growth potential in Johor. As Ms Hoe Mee Ling, chairman of the Johor Real Estate and Housing Developers Association, pointed out: "The population growth in Iskandar is always higher compared to other states in Malaysia."
Chinese developers also note that their customers are interested in Malaysia.
The Malaysia My Second Home scheme, which allows long-stay visas for some foreign buyers, has attracted many Chinese, said Mr Johnny Chng, head of international projects at OrangeTee.
From 2002 to March this year, 5,511 Chinese nationals joined the programme - 21.9 per cent of the total number of participants. In March alone, 228 joined - a 165.1 per cent rise from a year earlier.
"It offers a great option for Chinese nationals looking for a retirement home in Malaysia," said Mr Chng, adding that rules limiting Chinese buyers to two properties each mean many are exploring other options.
"Hefty" stamp duty in Singapore has also led to Chinese buyers choosing Iskandar over Singapore, which has "always been attractive to Chinese nationals", said Mr Chng. Chinese developers like the sprawling "township style", said Mr Ryan Khoo, a consultant at research firm Alpha Marketing.
"In Malaysia, it is Iskandar, rather than Penang or Kuala Lumpur, which offers large tracts of land," he added.
Townships mean a huge number of units, which raises fears of a housing glut.
Greenland Malaysia's general manager, Mr Shaohua Wu, said there could be an oversupply in the short term but his firm is in for the long haul: "In the short term, the Johor and Singapore populations combined do have an upper limit, which will soon be reached.
"But when transport links come to fruition (MRT links to Johor, and the Singapore-Kuala Lumpur High Speed Rail), this upper limit will be raised."
Greenland intends to start developing its 51.8ha Jalan Tebrau plot in about five years.
Mr Brian Koh, head of research and consultancy at DTZ Malaysia, said the market could not support a flood of units "if they are launched too rapidly" but China itself is a huge source of potential buyers.
Mr Paul Khong, executive director of CB Richard Ellis Malaysia, added: "Every developer is commercially minded... It is unsurprising that Chinese developers have taken advantage of landbanking opportunities. If the market cannot support more units, they can take their time to develop."
Ms Hoe of Redha Johor said the Chinese developments have led to job growth. "There is also transfer of technology and knowledge. Malaysia always welcomes good foreign direct investment; it benefits the country as a whole."
Company director Mike Lim, 41, who booked a RM1.5 million three-bedroom unit at Country Garden@Danga Bay early last year, remains upbeat, saying: "At the time, it was clear that the development would be very big. I already had to consider the downside risk of potential oversupply.
"But I felt it was a rare property type - both seafront and an integrated development - and a reasonable price." -Asiaone

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