This article first appeared in City & Country, The Edge Malaysia Weekly on May 29, 2023 - June 4, 2023

Johor’s real estate market appears to be on an upward trajectory, prompting developers to launch more projects this financial year, according to industry experts.

Attesting to the optimistic outlook, S P Setia Bhd plans to grow its presence in the southern region with a slew of launches worth a total gross development value (GDV) of RM618.76 million in FY2023.

The property group has been making its mark in Johor with its diversified high-rises, townships, mixed-use developments and commercial centres since 1995. As at December 2022, the group had 8,489.16 acres of land bank in the state with a total GDV of about RM28.1 billion.

Its well-known projects there include nine masterplan townships and developments in Bukit Indah in Taman Bukit Indah, Iskandar Puteri; Setia Eco Cascadia in Tebrau; Setia Eco Gardens in Gelang Patah; Setia Indah Johor; Setia Tropika; Setia Business Park I and Setia Business Park II; Taman Perling; Taman Rinting; Taman Pelangi; Taman Pelangi Indah I; Taman Industri Jaya; Mukim Tanjung Kupang in Iskandar Puteri; and Mukim Serkat in Pontian.

“There has been a tremendous change [in the southern region’s landscape] since we entered the Johor market with Bukit Indah,” recalls its divisional general manager Saniman Amat Yusof, who himself is a resident of Bukit Indah.

“Back then, especially in the early 2000s, things were very different, and values have since appreciated … prices were roughly RM200,000 for landed homes back then but now, they are priced at RM700,000 [on average]. We didn’t have good internet connectivity, had limited accessibility [but are now connected to a network of highways, including the Eastern Dispersal Link (EDL), Lebuhraya Persisiran Pantai (Coastal Highway), PLUS Expressway and the Second Link Expressway], and it was not as vibrant as it is today in terms of retailers and facilities,” he tells City & Country during a Microsoft Teams meeting.

“I hardly leave the township for anything else because everything is easily available here. My family is quite pleased as well and my children’s schools are nearby. We would like our customers in Johor to experience the same level of convenience at all our townships, aligning with our tagline of ‘live, learn, work, play’.”

In 1995, S P Setia acquired 900 acres of land from UEM Land (now UEM Sunrise Bhd) and developed it into a planned housing estate. In 2000, the group bought another 300 acres of land for development purposes. Previously an oil palm estate, Bukit Indah has grown into a vibrant and green settlement spanning 1,521 acres with a total GDV of RM5.2 billion. The township is now home for about 60,000 people, who live in more than 10,000 houses.

“This was our first project in Johor, even before Iskandar Malaysia was mooted. It proceeded to win the Johor State Landscape Award 2001, the National Landscape Competition 2001 and the Best National Landscape Award 2005. Bukit Indah is strategically located in Iskandar Malaysia and is only minutes away from Johor Baru,” says Saniman.

The property group plans to build on this momentum and establish more developments in their masterplans in the southern region over the short and long term.

Saniman says S P Setia’s plans to roll out a few projects in FY2023, namely Adonis at Taman Rinting; Hazelton and Clymer at Setia Eco Cascadia; Palmwood at Taman Pelangi Indah; and Maple & Pine (Phase 2) at Setia Eco Gardens.

Appearing sanguine about the upcoming launches in the southern region, Saniman elaborates on the group’s overall plans. “We are focused on rolling out our bread-and-butter products in the region, which are mainly landed residential properties [priced from RM600,000], and we are confident they will perform well. The key is to price the products well, even though we are mindful of the rising construction costs [which remains a challenge] and other market factors.”

He adds that a way to overcome this is by simplifying the design of the units. “We have been injecting more eco-themed, sustainable elements and smart home features, and even allocated spaces for solar panels, rather than adding more elements that are costly. There are alternative smart ways to enhance a home while minimising the overall cost and maintenance.

“So far this year, we have launched cluster homes, Calliandra in Setia Tropika; we also plan to launch Longevia at the same township next month. The response has been really good as they are fully booked. We have also launched super link terraced units in Taman Pelangi Indah, which are also fully booked, followed by Clymer and Hazelton (Phase 2) in February and more units in Taman Rinting.”

Saniman also mentions details of upcoming launches, particularly Adonis, which is sprawled on an 831-acre parcel in Taman Rinting and comprises 2-storey terraced houses and semi-detached homes.

“We are launching 60 units of Desiran 2 (20ft by 70ft) at Adonis, which have a total GDV of RM43 million, in October. The units will be priced from RM720,000,” he says.

“We will launch 2-storey terraced homes Clymer and Hazelton (specifically subphase Alluvia Phase 3 and Phase 4) in Setia Eco Cascadia, which will account for a total GDV of RM147 million, in 1Q2024. The units will be 20ft by 70ft and 22ft by 70ft, and be priced from RM754,800.”

In September, S P Setia will unveil Palmwood — specifically Palmwood 2 (51 units) — in Taman Pelangi Indah that will have a total GDV of RM45 million. The 28ft by 65ft units will be priced from RM845,200.

“We will also launch Maple and Pine (Phase 2) in Setia Eco Gardens. They will comprise 124 units on 765 acres of land and have a total GDV of RM69 million. Maple 2 [20ft by 65ft] and Pine 2 [18ft by 65ft] homes will be priced from RM616,000 and RM533,000 respectively.

The group observes pent-up demand from those living in Johor and neighbouring Singapore. Due to the strategic location of the group’s developments in the southern region, such as Bukit Indah, they attract buyers from neighbouring townships such as Tampoi Utama, Taman Sutera, Nusa Bestari and Taman Perling, as well as from Singapore.

“Our buyers in Johor are predominantly locals, as opposed to foreigners [or Malaysians working in Singapore]. Most of them are first-time homebuyers and/or upgraders,” says Saniman.

“Demand has improved since the reopening of borders, especially for landed residential units. We anticipate the projects to perform well and we would like to acquire more land in the short term. The same applies to high-rises. Despite reports of property overhang, the overall situation has improved.”

KGV International Property Consultants (Johor) Sdn Bhd executive director Samuel Tan concurs. “The pent-up demand that has built up over the past three years should support house prices. Coupled with the fact that the development cost has been increasing due to the record inflation rate, there are cost pressures for developers to increase the prices of new developments.

“All these factors are affecting the resale property market. [For example,] Taman Bukit Indah saw a marginal increase from RM950,000 to RM1 million.”

He adds that the yield of high-rise properties (such as serviced apartments and condominiums), as well as cluster and terraced homes, has increased almost across the board. “This is attributed to increased rents with stabilised prices. This is expected since the demand for high-rise properties has increased since the reopening of borders, as a lot of Malaysian workers opted to rent in Malaysia rather than in Singapore in view of the escalating accommodation cost in the island republic.”

Landlords are taking the opportunity to revise rents upwards as the economy recovers after the pandemic, he notes.

Saniman is optimistic about the outlook for the Johor market and describes the property group’s overall vision. “Moving forward, we foresee more pockets of opportunities, especially on the industrial side, and plan to acquire more land.

“We have another undeveloped parcel in Taman Pelangi Indah 2 [of more than 900 acres]. We also have a 300-acre tract in Tanjung Kupang that has been earmarked for industrial development in the long term.”

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