Iskandar

Iskandar Malaysia: In an article by the Business Times, cracks are beginning to appear in the property market in Iskandar Malaysia, with bellwether UEM Sunrise recently slashing its sales target for 2014 to RM2b from RM3.2b, attributing the weakness to lower home sales in the economic corridor south of Johor. This comes amidst the onset of a slew of other high-rise apartments by China developers which are set to flood the market. Analysts’ guides that about half of the 9,000 condos in Country Garden Danga Bay launched last year remain unsold, and Chinese developers appear desperate to unload these units by lower unit prices. Country Garden have so far not raised its maximum discount beyond 21%, although this looks increasingly set to change, with China’s Greendland group set to launch 2,478 units next door and R&F’s Princess Cove project which will add about 3,000 extra units in phase 1, with another 30,000 plus units scheduled to come on stream later. Property consultants highlight that while demand remains strong for affordable housing, which costs below Rm400,000, most of the new units are skewed towards higher prices. With more expected high-rise projects in the pipe-line within the Danga Bay region, this has led to a visible slowdown over the past year, with most investors preferring to take a wait-and-see attitude. Maybank-KE believes that sentiment could worsen going into 2015-16, as most of the high-rises sold during the 2012 and 2013 period are handed over. Sandwiched by fears of oversupply, and competition from other larger foreign players, we opine that S’pore developers with Iskandar ambitions (eg. Albedo, Rowsley, CapitaLand, Tat Hong) could be faced with a more challenging outlook going forward.