This article first appeared in City & Country, The Edge Malaysia Weekly on January 13, 2025 - January 19, 2025

Johor Bahru’s residential sector remained active in the third quarter of last year (3Q2024) with transaction volume and value on an upward trend, says Olive Tree Property Consultants (Johor) Sdn Bhd CEO Samuel Tan when presenting The Edge Malaysia | Olive Tree Property Consultants Johor Bahru Housing Property Monitor 3Q2024.

Tan elaborates that the volume of residential transactions had increased 8.7% from 17,000 units in 3Q2023 to 18,477 units in 3Q2024 while the value had increased 14.4% from RM8.97 billion in 3Q2023 to RM10.26 billion in 3Q2024.

As at 3Q2024, the existing supply of landed properties stood at 307,410 units — translating into about 64% of the total supply — while there were 171,058 high-­rises (36%).

Incoming supply of landed properties stood at 14,608 units (32%) while that of high-rises was 30,946 units (68%). In terms of planned supply, landed homes excluding affordable housing stood at 22,092 units (43%) and high-­rises, 29,098 units (57%).

As indicated by the data, the future supply of high-rise residential properties outweigh that of landed properties — a trend seen since 3Q2023, says Tan.

“In view of increasing land and construction cost, the trend of more high-rise residential properties appears irreversible. This is especially so because of first-time house buyers or those who prefer to live near central or established locations. They may opt for strata high-rises due to affordability,” he adds.

In September last year, the government announced highly anticipated incentives for the Forest City Special Financial Zone (FC-SFZ). The key incentives, Tan says, include a concessionary corporate tax rate of 0% to 5% compared to the current 24%; a tax rate of 0% for family offices for 20 years, which requires minimum assets under management of RM30 million (target to be operational by 1Q2025); and a tax rate of 5% for up to 20 years for financial global business services, fintech and foreign payment system operators, including mid-office and back office.

In addition, there will be a special individual income tax rate of 15% for knowledge workers and Malaysians who work in FC-SFZ compared to the current 30% for the highest tax bracket; regulatory flexibilities for locally incorporated foreign banks that open additional branches within the FC-SFZ to benefit from foreign exchange flexibilities for offshore borrowing in foreign currency and investments in foreign currency assets; special deductions on relocation costs of up to RM500,000, enhanced industrial building allowances of 10% and a 10-year withholding tax exemption for services; as well as real property gains tax at 0% for foreign buyers after five years.

“The incentive package announced is a good start to attract family offices, businesses, investors and knowledge workers. High-net-worth individuals based in Malaysia who have not reached the ultra-high-net-worth status will likely be the initial target keen to set up their family offices in Forest City.

“Nevertheless, just taxation incentives alone are not enough to attract quality family offices, business investors and talents. We need to adopt a holistic approach to facilitate the setting up of business and obtaining of licences and permits, as well as [have] clear policies and rules and avoid policy flip-flops,” Tan stresses.

“It takes time to develop a financial hub with a robust ecosystem. Even though Johor does have its advantage in terms of lower business costs, it still faces many challenges in attracting a critical mass of quality family offices, fintechs and knowledge talents. More office spaces and other supporting facilities like conference facilities, F&B, retail and hotels will be needed.”

Apart from FC-SFZ, Tan says nearby areas such as Gelang Patah, Pontian, Medini and Iskandar Puteri are also anticipated to enjoy the spillover effects of these upcoming incentives.

“There will be increased business opportunities and job creation in the retail, entertainment, healthcare, education, hospitality, tourism and F&B sectors. We have a strong feeling that the Johor economy is poised to leapfrog to the next sustainable height. The property market will benefit as a result, albeit at uneven growth across locations,” he adds.

Besides that, Tan highlights the possible revival of the Kuala Lumpur-Singapore high-speed rail (HSR), which will enhance the connectivity between Singapore and west Johor Bahru.

“It was reported that our King is planning to seek funding from Chinese investors to revive the HSR project. Following the current government’s stance not to fund the HSR project using public funds, a private consortium could invest in it and operate it for a predefined period to recoup its expenses before handing it back to the Malaysian government.

“The HSR will serve as another main spine connecting Malaysia and Singapore. This should make Forest City and the surrounding areas like Gerbang Nusajaya and Iskandar Puteri more attractive. Consequently, demand for houses and commercial and industrial properties will increase,” he says.

Commenting on the ongoing construction of the West Coast Expressway from Banting in Selangor to Gelang Patah in Johor, Tan opines that the plan to revive this project is heartening and lists some of its benefits.

“First, it will relieve the congestion on the North-South Expressway, especially during the festive seasons. Second, it will enhance the value of land along the proposed highway, creating new development potential. The underdeveloped areas along the western peninsula will thrive. Third, this highway will create job opportunities in the construction industry.”

Another potential growth catalyst for Johor Bahru’s property market is the realignment of Johor’s weekend from Friday and Saturday to Saturday and Sunday, effective Jan 1, 2025.

“The weekend realignment is definitely a pro-business move. Currently, different weekend off days adopted by the civil service and most private sectors in Johor are not administratively efficient. This is especially so for the private sector and foreign companies where consultation and communication with the authorities are more difficult to arrange. With new initiatives like the Johor-­Singapore Special Economic Zone and SFZ, we anticipate that there will be more foreign multinational corporations setting up in Johor.

“A common weekend across public and private sectors will enhance productivity and workflow efficiency, and minimise unnecessary confusion. The realignment of holidays also promotes better work-life balance. With the common weekend, family members working in the private or public sector or some who are still schooling would share the same days off. We expect the retail, F&B and hospitality sectors to benefit marginally from this weekend realignment initiative,” says Tan.

In the quarter under review, prices of most properties remained flat, says Tan. A similar trend was reported in the previous quarter.

While prices of 2-storey terraced and cluster homes remained the same as the previous quarter, a few semi-detached houses and serviced apartments saw marginal price increases.

At Austin Heights, a 3,595 sq ft 2-storey semidee saw its price increase from RM1.3 million in 2Q2024 to RM1.4 million in 3Q2024. The price of a semidee in Senibong Cove with a land area of 3,780 sq ft increased about RM100,000 to RM1.6 million during the same period. For serviced apartments, a 1,600 sq ft unit at Straits View Condominium went from RM450,000 to RM480,000.

Rental rates of semidees, cluster homes and serviced apartments also recorded marginal increases. The rent of a 3,595 sq ft 2-storey semidee in Austin Heights increased from RM3,800 per month in 2Q2024 to RM4,000 per month. A semidee in Taman Molek saw a slight increase from RM3,200 per month to RM3,300 per month, and one in Taman Ponderosa saw a similar increase from RM3,400 per month to RM3,500 per month.

The rent of a 2-storey cluster home at Horizon Hills increased from RM3,200 per month in 2Q2024 to RM3,400 per month in 3Q2024. Serviced apartments Straits View Condominium and Tropez Danga Bay, with built-ups of 1,600 and 958 sq ft respectively, saw their rental rate increase from RM2,000 per month to RM2,100 per month.

Similarly, yields remained mostly stable during the quarter under review, says Tan. “The yield for landed properties in the portfolio ranged from 2.7% to 4.5% while that of high-rises ranged from 4.4% to 5.8%.”

There were seven new launches, four of which were 2-storey terraced projects and the remaining three, serviced apartments.

In Iskandar Puteri, Aspira Hills (Phase 1) — developed by Sunway Iskandar Development Sdn Bhd — offers 272 units of 2-storey terraced houses with land areas of 1,300 to 1,540 sq ft and built-ups of 1,673 to 1,987 sq ft. The selling price ranges from RM680,000 to RM1.26 million. To date, the project has been fully booked, says Tan.

Also by Sunway Iskandar Development, the Sunway Maple Residence (Phase 1) at Iskandar Puteri has 156 units of 2-storey terraced houses with land areas of 1,800 and 2,100 sq ft, and built-ups of 2,200 to 2,585 sq ft. Priced from RM1.46 million and RM2.47 million, the units have been fully taken up.

Another landed project in Iskandar Puteri is Horizon Hill Greenville developed by Horizon Hills Development Sdn Bhd. It offers 147 terraced houses with land areas of 1,540 to 1,680 sq ft. This fully booked development has selling prices of RM900,000 to RM1.1 million.

Over at Kota Tinggi, Plenitude Hills Sdn Bhd launched Impian Hills (Astera) comprising 156 units of 2-storey terraced houses. Priced from RM786,000 to RM1.28 million, the units have a land area of 1,540 sq ft and built-ups of 1,939 and 2,141 sq ft. About 80% of the development has been sold.

In Permas Jaya, Parkland Group unveiled the Parkland By The River serviced apartment project comprising 1,078 units with built-ups of 562, 820 and 1,020 sq ft. The selling price is from RM410,260 to RM795,600. “We understand that about 20% has been sold,” says Tan.

Arden Serviced Residence by Astaka Kimlun Sdn Bhd at One Bukit Senyum has 618 units with three layouts — two bedrooms (797 sq ft), three bedrooms (1,130 sq ft) and four bedrooms (1,700 sq ft). The price ranges from RM1,300 to RM1,620 psf.

At Danga Bay, Tropicana Corp Bhd (KL:TROP) launched Skypark Kepler, an 848-unit serviced apartment, at Lido Waterfront Boulevard. With built-ups of 684 to 2,225 sq ft, the units are priced from about RM2,000 psf.

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