Iskandar

Iskandar: The Business Times reports that Malaysia's Real Estate & Housing Developers Association (Rehda) is cautioning that the looming supply glut in Iskandar, could weigh on rental yields in the economic zone. Rehda expects some 30,000 homes to be completed by 2016 or early 2017, and highlighted that if these homes are sold to buyers mainly outside Malaysia and Singapore, then we will probably see many empty units and once they are put for rent, the heightened supply will inevitably put pressure on rental yields. The latest comments come amidst the onset of a slew of other high-rise apartments by China developers which are set to flood the market. Analysts caution 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 cutting unit prices. CapitaLand has also been recently rumoured to be cutting down the number of high rise units from its original plan, with an expected huge backlog of upcoming supply putting a dampener on the appeal of Iskandar’s housing developments. With more high-rise projects in the pipeline, this has led to a visible slowdown in sales over the past year, as most investors adopt to take a wait-and-see attitude. Sandwiched by fears of oversupply, and competition from other larger foreign players, we opine that S’pore developers with Iskandar ambitions (eg. Rowsley, CapitaLand, Tat Hong) could be faced with a more challenging outlook going forward.