The Iskandar Malaysia region in Johor is now a real estate paradise for foreigners.
Singaporeans and Chinese nationals purchased over 6,000 units of real estate in 2014 alone in the area, but it is nothing compared to how real estate purchases by Chinese nationals have shot up by a staggering 477 per cent — from 436 units bought in 2013, to 2078 in 2014.
All this, in an area once earmarked as a Malaysia’s southern gateway, a premier city meant to bring wealth and income to locals.
Highlighting the plight of young Malaysians who may leave the prime location in Johor, Senai State Assemblywoman Wong Shu Qi claims that the private developers seem to be solely catering to foreign buyers.
Based on the Johor state assembly replies, over seven thousand purchases were made by foreigners in 2014, she said, about a thousand more compared to the previous year.
“The number of affordable homes built by the government is not enough compared to the homes owned by foreigners,” she added.
By the states’ own admission in the state assembly, affordable homes by the government in Johor from 2014 to 2015 only number 2,150 units. Wong added that that affordable home developments set for 2013 to 2016 are only 11,600.
From 2009 to 2014, she said, private developers have sold 21,797 units of luxury homes to foreigners.
These developers are mostly from China, such as Greenland’s Jade Palace and Guangzhou-based R&F Properties Co Ltd.
International news wire Reuters reported last month that China’s state-owned Greenland Group is buying a 128-acre prime waterfront land in Iskandar from Malaysian property developer Iskandar Waterfront City for RM2.4 billion — the second land purchase in the state by the Shanghai based company. The previous purchase was a RM 600 million 13.9-acre plot of land for residential and commercial use.
“Prime locations should not be sold to foreign developers who only build luxury homes for foreigners,” she added, urging the government to look at the needs of locals first,” Wong said.
She also said that those who earned a low-to-medium income would be forced to live far away from the city, where they work; and that they would have to purchase their own vehicle to get from their homes to workplaces, since there are insufficient public transportation facilities that connect these places to the more developed areas.
Buyer interest to purchase homes dipped last year based on a survey done by real estate portal PropertyGuru International (Malaysia), which showed that 68 per cent of potential buyers were not satisfied with the increase in prices.
“As a result, buying interest dropped and interest in owning condominiums/apartments declined by nine per cent, the desire to own terraced houses plummeted 23 per cent and the demand for ‘other landed/commercial properties’ slipped 16 per cent,” PropertyGuru country manager Gerard Kho reportedly said.
As prices continue to soar with housing developments catered for rich foreigners, hot spot properties in Johor such as Nusajaya, Medini, Danga Bay and Johor Baru have climbed into the price range of RM 600 to RM 1,000 per square feet. Nicholas Chan, a socio-political research analyst at Penang Institute said that an average price of RM 800 per square feet for a 1,000-square feet condominium would result in a higher unaffordability rating compared to cities like London, Sydney and also Hong Kong (that has the highest unaffordability index).
This index is derived from the World Bank and the United Nations, rating affordable homes as 3.0 and below, that translates to property prices being, at most, three times more than annual household salary. In the case of Johor Bahru, house prices are rated 4.5 or “seriously unaffordable”.
-The Rocket
