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Iskandar: UMNO, DAP MPs agree

In Malaysia, Property on 02/05/2015 at 4:24 am

It’s in deep trouble. They all have constituencies in the area.

Picking up on a warning by Malaysia’s largest bank of the risks of a housing glut in Iskandar, Johor lawmakers have cautioned against foreign investors’ optimism about the development corridor’s economic boom and population growth, saying that demand for premium homes in Iskandar has lagged far behind supply.

“There is a misconception about the demand market here … there is a clear mismatch between supply and demand,” Mr Shahrir Abdul Samad, Member of Parliament (MP) for Johor Baru, told the Malay Mail Online.

“There is an oversupply of premium properties, (but) the demand … is for medium- and low-cost ones, owing to people’s incomes,” added the former Domestic Trade and Consumer Affairs Minister.

Mr Shahrir said it was only natural for developers of premium residential properties in Iskandar to be hardest-hit by the dip in prices and secondary sales, as those projects were never the focus of the region.

“You have to be fair to Iskandar, as housing was never part of its main draft. The crux of its investment was more on services, hospitality and manufacturing, as well as allocations for small- and medium-sized enterprises. The investments we are interested in are not housing, and this is why we have called in Pinewood and Legoland to Iskandar,” said Mr Shahrir, referring to South-east Asia’s largest integrated studio facility and the popular theme park, respectively.

“That is the main investment strategy, but because of all these, foreign developers think there is a demand for their properties, and that is not happening. This is what’s happening, and they have to live with it. If they are willing to take the risk, then we can’t stop them,” the senior lawmaker from United Malays National Organisation (UMNO) said.

Dr Boo Cheng Hau, Johor opposition leader and Skudai assemblyman, noted that these residential projects were launched without sufficient supporting services or industries in place to make them viable in the near term.

The Democratic Action Party (DAP) MP said the region was not yet able to accommodate a surge in tourism or fulfil the needs of foreign investors seeking to take advantage of Malaysia’s second-home schemes.

“There will be a sustainable demand for properties here, but not in the near future. It will take another five to 10 years to see a boom in sectors such as manufacturing, services and so on, (and) a more steady increase in demand for properties,” Dr Boo said in an earlier email interview.

Mr Liew Chin Tong, DAP’s Kluang MP, stressed that the rapid pace of property development in Iskandar had no real legs on which to stand, a situation that is not helped by the nationwide slowdown in the property market.

“Johor is a case of killing the golden goose too fast, too greedily. The property market is not sustained by a genuine working population with income to support their investments, while borrowing rates are surging, waiting for the bubble to burst,” Mr Liew said when contacted.

But here’s one UMNO optimist:

However, UMNO’s Pulai MP, Mr Nur Jazlan Mohamed, believes the upcoming RM53 billion (S$19.7 billion) Pengerang Refinery and Petrochemicals Integrated Development (RAPID) project will provide the needed jobs and spending capacity to revive the region’s flagging property market.

“Property in Iskandar is experiencing a down cycle, but (sales) will pick up once corporate businesses like RAPID kick-start. Once corporations set up businesses in Iskandar, things will pick up. When businesses come in offering higher job opportunities, only then will the supply (of residential property) be taken up. (Iskandar) will not become a white elephant,” he said. MALAY MAIL

(20 April Today)
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