By Pavither Sidhu
Iskandar Malaysia, the nation’s southern growth corridor, has been making headlines with concerns of a slowdown of late.
However, Iskandar Regional Development Authority (IRDA), the statutory authority mandated to plan, promote and facilitate the development of Iskandar, has downplayed fears of a looming property glut.
The company’s chief executive officer Datuk Ismail Ibrahim said it had already received RM3 billion in new investments in the first quarter of the year. Coming from the manufacturing, services and property sectors, an official announcement on the breakdown of the investments would be made by the end of the month.
However, IRDA did mention that there has been a lower rate on the number of launches.
Since January, there have been very few launches across Iskandar amidst speculation of an oversupply, where too many high-rise residential projects have been approved within such a short span.
According to the 2015 property market report by CH Williams Talhar & Wong, between 2009 and the first half of 2014, 76,000 high-rise residential units were approved by the local authority. With the existing 31,322 units reported by NAPIC as of the second quarter of 2014, there will be
around 107,000 units by 2017/2018.
“The performance of high-rise residences has slowed down since cooling measures were in effect in 2014. Average take-up rates which hovered between 60% and 70% during the good times (2011 to 1H13), has dropped to about 30% or 40%t in 1H14,” it said.
It also reported that the high-rise residential sector is expected to face additional challenges as any of these new units will be completed in the next few months to a year. Whether the market is sustainable enough to provide sufficient rental returns to cover loan repayments, or garner demand for resale units, is uncertain.
The oversupply, especially within Medini – the designated central business district of Nusajaya, drove Medini Iskandar Malaysia Sdn Bhd (MIMSB) to stop its land sales.
According to MIMSB’s managing director and chief executive officer Khairil Anwar Ahmad, the board decided to further develop the commercial plots instead which accounts for 50% of the 55 unsold plots.
He said that the last thing to do is to cannibalise the market as most of the developers which previously bought land in Medini are developing residential properties there.
On another note, the high-profile project, Forest City, which has seen its gross development value cut by 25% to RM450 billion, has recommenced after a halt since June last year.
The acreage of the development has been reduced from its original 4,888 acres to 3,425 acres after the approval on the detailed environmental impact assessment in January and the environmental management plan last month.