KUALA LUMPUR, Sept 30 ― The looming oversupply of homes in Johor’s Iskandar Malaysia economic region is expected to result in a dip in rental yields from the area, according to the Singapore Business Times.
Citing Malaysia's national organisation of developers, the Real Estate & Housing Developers Association (REHDA), the paper said Malaysia’s federal government is looking at the issue seriously.
Some 30,000 homes in the region could be completed by 2016 or early 2017 and if they had been sold to buyers outside Malaysia and Singapore, are likely to enter the rental market at the same time, putting pressure on rental yields, it quoted REHDA president Datuk Seri Fateh Iskandar Mohamed Mansor as saying.
“In the past 12 to 18 months, the deluge of homes launched or in the pipeline by China developers, including Country Gardens and Guangzhou R&F Properties, has stoked concerns over a looming housing glut in the Iskandar region, which encompasses an area of more than 2,000 square kilometres in Johor,” the paper said.
Most buyers are Chinese nationals who will not be using the properties as their main home, the paper further quoted Iskandar as saying.
He added that many Singaporean buyers prefer to buy from local or reputable Malaysian developers.
Previous news reports have asserted that a lack of data may be complicating the problem of oversupply in the Iskandar region, which was built to attract investment from neighbouring Singapore.
“Basic data such as the volume and value of home sales, average transaction prices and average rentals are not easily available. Neither is information on the homes being built, launched or completed in Iskandar alone,” according to a Singapore Straits Times report in July.
It argued that there is a dire need for more public and timely data on the market situation.
Citing Malaysian government data, the paper said as at the fourth quarter of last year, there were 118,191 homes under construction in Johor, and another 168,371 planned.
It also cited various property developments in the area made by mainland Chinese firms as evidence of an oversupply.
“Units being built now will be ready in about three to five years’ time. But investments that create jobs may take years longer. Who will live in the homes then?” the paper asked.
Separately, current projects also face falling demand in the wake of property cooling measures introduced by the Malaysian government last year.
The curbs include property gains taxes as well as minimum purchase amounts and stamp duties for foreign buyers.
Unlike in Singapore, property developers in Iskandar are not required to disclose sales or rental updates. Often, they simply refuse to reveal how many units they have sold at their launches, so it can be hard to estimate the success of their projects, according to the report.
