5 reasons to be careful when buying residential property in Johor and Iskandar

1. The looming supply

The Monetary Authority of Singapore board member Lawrence Wong told Parliament on May 11 that nearly 336,000 private residential units are in the pipeline in Johor, more than all the private homes currently standing in Singapore.Most of these units are coming up in Iskandar.

Malaysia’s National Property Information Centre (Napic) said in its report released last month that “”incoming supply” of housing units in Johor state – units that are being built – total 142,567 units.

There are another 193,271 units under “planned supply” – with planning approval but awaiting construction.

Added together, they total 335,838 units.

This is nearly half of existing residential stock in Johor, which totals 719,421 units.

2. Even more supply from reclaimed land

The new units of homes coming up in Johor do not include another 1,400ha of reclaimed land near the Tuas Second Link that will come on stream from 2020, Mr Wong said.

The project he was referring to is the raising of four giant islands in the Strait of Johor off Tuas, that is named Forest City.

The master developer, Country Garden Pacificview said that when fully completed in 20 to 30 years’ time, Forest City could have total residents of 700,000. The first phase of reclamation is to be ready in about five years’ time.

Assuming one residential unit contains six people, it means that 116,666 homes would be built on Forest City over the next two decades or so, adding to the new supply of nearly 336,000.

3. Falling property prices

Johor property prices weakened the most in Malaysia in the last quarter of 2014, the latest period where data is available.

Johor prices dropped by 1 per cent in the September to December 2014 period, compared to the same quarter a year ago, according to a Maybank research report in April.

This is worse than the drop of 0.2 per cent for property prices in Kuala Lumpur, and a drop of 0.1 per cent in Penang during the same comparative period, Maybank said.

Kuala Lumpur, Penang and southern Johor are three most active property markets in Malaysia.

Mr Wong told Parliament that the number of Malaysian properties – not just in Johor – bought through real estate agents in Singapore fell from 2,609 in 2013 to 838 last year.

4. Curbs on foreign home buyers

Malaysia early last year doubled the minimum price of homes that foreigners can buy to RM1 million, thus reducing the number eligible to buy units in Johor.

In a move to curb then rising property prices, it also raised the capital gains tax to 30 per cent for properties sold by foreigners within five years of purchase. It taxes them 5 per cent thereafter, except for the Medini township in Iskandar. Medini is to be the downtown area for the Nusajaya flagship zone.

5. Danger of projects being abandoned

With the looming oversupply, there is the usual concern that sharp price falls could follow, and lead to some developers from completing their projects if their funds run dry as buyers stop coming in.

This is a remote possibility now in Iskandar. But there are signs of stress for developers already.

Maybank said in its report, that developers with land in the region are deferring their launches, or changing their property mix “so to avoid direct competition with the Chinese developers”. They have also lowered their sales expectations for Iskandar, the bank said.

See more at The Straits Times

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10 things to look out for when buying property in Malaysia

10. Landscaping

We are not just talking about the landscaping of the landed property or the compound the condominium sits on. It goes without saying that your property must be at least pleasant to look at and well kept.

Managing Director of Knight Frank, Sarkunan said the area or neighbourhood where the property is located has to be taken into account as well. He said if the landscaping of the area is done right, it is a sign the local council is proactive. They will probably be on the ball when it comes to other issues as well.

9. No unplanned vacant land around

He also warned that buyers should be wary of all vacant land in the vicinity of the property, and find out if future construction will affect either road access or the view from your property. If there are no plans for the vacant land yet, he said it is best to stay away. “Investigate, don’t be caught by surprise after you have moved in,” he said.

8. Gated or guarded community

Both real estate lawyer Roy Teo and Property Hub Senior Real Estate Negotiator Chris Tan said gated communities are in demand. Very.

“It ties back to the fact that people have a fortress mentality. These days, people want to keep the riff raff out… Desa Park City is a good example,” Teo said, referring to the much sought-after enclave in Kepong.

According to Iproperty.com, some of its units (Safa) which were previously priced at RM450,000 are now going for RM1.2 million. He said previous generations used to aspire to owning bungalows, a house in the middle of a big piece of land.

Today though, he said, those properties are much lesser in demand while he sees a rise in either condominiums or gated communities, which mostly have smaller plots of land, but with bigger build-ups.

7. Near international or high-performing Chinese schools

Teo said having a Chinese school in the neighbourhood adds “huge value” to properties nearby. For example, he said a Chinese school that has relocated to a new development that his company has recently launched in Cyberjaya has been its “biggest selling point.”

He said more non-Chinese families are also looking to move closer to these vernacular schools. Tan, meanwhile, said that people want to be nearer to schools not only because they want to send their children there, but also to have a good support system among parents.

“If you want to do home schooling, you are better off in a neighbourhood where there are people with the same interest, for example.“Another example, a popular Chinese school — Lai Meng —  recently moved to Bukit Jalil from KL. If you want your kid to go to Lai Meng for example, you would move closer because you stand a better chance of getting a place in the school,” he said.

6. Who are your neighbours?

Tan, who is a regular speaker at property forums, said the neighbouring township is an important consideration when buying a home.“Why Cyberjaya can work, it’s because it is next to Putrajaya. Why PJ can work because the neighbour is KL and why Iskandar Malaysia can work because the neighbour is Singapore.

“In that sense, the neighbour does play a part because you want to have the best of both worlds. Perhaps lower expenses on one side and high income on the other side,” he said.Just as important, find out the racial composition as well as the job backgrounds of your neighbours, he added.

Whether you prefer a culturally mixed neighbourhood, or one that speaks only a particular language, or what kind of jobs your neighbours do, and if they are mostly tenants or owners… you need to do your homework.

5. Population growth

Tan also said it is important to observe if the population trend in the area is on an upward trend.“At the end of the day, real estate is meant for human consumption.  So the bigger the population, the higher chance of you getting a better return from your property investment,” he said.He pointed out that with a bigger population, there will also be better supply services such as hypermarkets, clinics, laundry services and restaurants.

4. Central location or conveniently located

You don’t need to be a rocket scientist to figure out that the more centrally located a piece of property is, the higher in demand it is. Teo also noticed that the trend has shifted and condominium units attached to malls are back in demand again because people want that sort of convenience.

“When you have strata properties on top of shops, those used to be cheap properties, you can see some in Chow Kit, Bukit Bintang…  people didn’t want to stay in that kind of environment,” he noted. He said the trend is back and is especially popular among the younger crowd who are looking for smaller units, about 1,000 square feet or studio sizes.

3. Infrastructure/connectivity

The real estate negotiator said connectivity is extremely important as more people move further away from central locations. People are moving to townships like Cyberjaya and Setia Alam because of the highways that now connect to the city.

Tan noted that most people do not want their homes to be too close to business activities but they do not want it to be too far away either, because they need the supply and services to be close. People are willing to accept if their workplaces are slightly further away, as long as they are well connected by highways or LRT, MRT stops.

2. Reputable developer

Sarkunan said it is extremely important to buy from developers with a good track record and a practice of delivering on time with quality. “It also must have a good following and someone who does not price their products to the maximum and allow for reasonable returns,” he said.

1. Location branding

Tan said branding of location can change, driven by “visionary developers” or plans.“For example Sentul, many years ago, when we talk about Sentul, we have a certain perception about it. YTL changed the perception of that area and for all intents and purposes, Sentul is very arty farty now because of KLPAC, and it’s actually a very nice location because it is very close to the centre of action,” he said, referring to the KL Performing Arts Centre that is along Jalan Ipoh.

The property lawyer said that now would be the best time to buy with the launch of a slew of affordable housing schemes and the fact that home prices will not fall, especially when the country is only five years away from its ambition of becoming a developed nation.

 Read full story at Malay Mail
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Malaysia Experience Softer Housing Market 2015 ?

Concerns about rising household debt and the introduction of a goods and services tax (GST), which came into effect on April 1, are likely to contribute to a cooling in the residential segment of Malaysia’s property market.

However, the slowdown is partly seen as a welcome respite given the rapid expansion of mortgages and personal loans since 2008.

Residential property prices have increased by 60 per cent since then, according to the IMF, outpacing income and rental growth, with a corresponding surge in debt levels, particularly among young adults and low-income families.

As a result, measures have been introduced in recent years to curb the growth of household debt, with the implementation of the GST slowing appetite further. However, many. think that this could be a temporary slowdown, with momentum expected to build again in 2016.

GST set to bite

The introduction of the new GST, which will see a six per cent levy imposed on most transactions, is also contributing to a drop in activity. While house sales themselves are exempt from the GST, factors contributing to housing prices, such as the labour and materials used in construction, are not. Increased costs will inevitably affect overall prices. Analysts expect the GST to push up house prices by around four per cent, while Redha in March puts the increase at more than six per cent.

Siva Shanker, the president of the Malaysian Institute of Estate Agents, believes the residential segment of the property market is set for a slowdown this year, with activity rising in 2016.

“2015 will be a bit flat, but better for the secondary market. In 2016, the market will start climbing a bit,” he told local media in April. “In 2017, we’ll see serious interest and 2018 can be the next property high.”

Some analysts have suggested that the introduction of the GST could boost interest in older properties since these are less likely to be affected by higher costs, while for new builds there is likely to be a greater emphasis on affordability.

Tong Seech Wi, CEO of integrated property developer MCT, said his firm was looking to maintain revenue flow and earnings by sharpening its focus on more moderately priced units, with more than half of its output to be priced at RM500,000 or below.

“This is what this market needs,” Tong said “We believe with this right product and pricing, we should be able to ride through this difficult period.”

Read full story at Borneo Post

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4 Factors Affecting Property Prices in Malaysia

4 Factors Affecting Property Prices

Property prices capture some of the main talking points among fellow Malaysians these days. After all, the sky high prices do pose a problem to those seeking to buy.

The house price index graph below indicates a fall in housing index in the second quarter of 2014 with respect to the first.

1. Leasehold vs Freehold

Homeowners generally prefer living in neighborhood with a freehold tenure rather than leasehold. Ownership in freehold property remains intact with its titleholder with no time limit unless transferred legally to other party. Leasehold is a fixed asset with maximum lease period of 99 years. Eventually, it has to be returned to the government or if the current owner needs to forego a fee to lease it further.

For those interested, the formula below highlights the premium on the land excluding the building situated on it. According to, Section 7 entitled ‘Premium’ of the Selangor Land Rules 2003,

Example: For a 4000 sqft residential property in Damansara with 20 years remaining on lease, valued at RM150 per sq ft by the Authorities, the lease renewal fee will cost

Property prices under the freehold tenure may differ from the leasehold, i.e. it could be higher or lower regardless but it is well known that freehold properties tend to perform better in terms of long-term capital appreciation due to substantial lease fee amount.

2. Location

There are multiple factors that deem a good location for some individuals. Let’s take a look at some below.

a) Distance from School, Workplace & Retailing Outlets

Generally, the closer they are to the housing areas, homeowners are expected to fork out more for the luxury. Availability of shopping centres and hypermarkets nearby definitely adds value to the premise. After all, shopping is one of the top family activities for us, Malaysians!

b) Security

With the current rising crime rates in Malaysia, any housing with added security becomes a necessity. Gate-guarded and fully landscaped neighborhood with perimeter walls, security personnel and CCTV are desirable for the safe-minded individuals. A premium can be inserted in housing price if the community is fully secured.

c) Environmental qualities

The constant urbanization creates a shortage of green space views. Most individuals prefer the era with natural landscape and views of green space. The opportunity cost of planting native tree species around the area is the amount that the developer could have received from sale of more properties instead. This cost is reflected in the higher price of properties that has an acceptable threshold environmental quality.

3. Accessibility

Getting from home to city or around the city remains an issue for most Malaysians who are unable to afford private transport. They are obliged to take public transport such as trains and buses. Having LRT and MRT within a 20 minute walk from housing areas is convenient but to a certain extent. If located too close could result in congestion, noise and petty crime. A 20-minute walk may appeal to be long for some of us; thus, it’s crucial that bus stops are close to the properties.

Highways are definitely one of the fastest ways to get to the city. Knowing that Malaysians will most likely locate the fastest route possible, housing areas with easy access to highways such as the LDP or Kesas are higher in demand, therefore higher price.

For those with cars, we all know how frustrating a task of hunting for car parks are. Countless litres of petrol are wasted through searching for them. Ample car spaces make a particular area more attractive.

Other accessibility factors such as recreational facilities could drive up the property value. After a long day of studying and working, all we want to do is sit back and relax. What a better way to do this than having a swimming pool, gym and sauna, BBQ corner nearby. Obviously, this comes with a hefty price for the housing properties.

4. Future development

High-end areas with appreciative development in the future are obviously valued more. One example includes the rezoning of land in Section 13 of Petaling Jaya from industrial use to commercial use. As a result of this shift, the value of this location spiked up.

The availability of land for expansion plays a part in property value. With vacant land in urban areas diminishing, for example in Klang Valley and general increase in population, land prices are rising.

read more at loanstreet

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GST No Excuse to Raise Rent, Maintenance Fees

GST No Excuse To Raise Rent, Maintenance Fees

Implementation of the Goods and Services Tax (GST) must not be used as an excuse to raise house rents and maintenance bills for residential properties which are exempted from the tax, according to the Royal Malaysian Customs.

Senior assistant director of Customs II, Real Property, Construction and Professionals sector, Raizam Mustapha, said the development of land or buildings used for residential, agricultural land or for general purposes is not subjected to any GST.

“Any property in Malaysia categorised as residential is exempted (excluded) from GST.

“Whereas, buildings that are not deemed residential buildings are considered commercial and subjected to six per cent GST,” she said in a GST media briefing related to the property and housing sector here, Friday.

The GST will be implemented from April 1 at the rate of six per cent to replace the Sales and Services Tax (SST) totalling 16 per cent.

Commenting on maintenance bills, Raizam said they are also exempted from GST to prevent occupants, especially of stratified residential properties from being burdened.

She explained that any charges related to a building’s maintenance bill is determined by the Joint Management Body (JMB) or Management Corporation (MC) and it should not be associated with the implementation of the GST.

At present the JMB or MC is exempted from registering with the GST, therefore maintenance bills should not be increased, she added.

“For cleaning purposes, the JMB or MC may get the services of parties (companies) which are not registered for GST, which has a turnover not exceeding RM500,000,” she said.

Moreover, Raizam said under GST era, residential land developers can recover the costs for the construction of public facilities such as schools, housing estates, religious houses and roads from the government through the input tax.

However, she explained that the six per cent claim is only eligible if the developers surrender all the public facilities erected to the government.

published by BERNAMA

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