Iskandar: Boon or bane for Singapore real estate?

http://www.todayonline.com/Business/...e-real-estate?

Iskandar: Boon or bane for Singapore real estate?

by Tan Chin Keong

04:45 AM Dec 28, 2012


Iskandar Malaysia was launched in November 2006 with the aim of developing the southern Johor region into a strong and sustainable metropolis of international standing.

With a total area of 2,217 sq km, the region will have five flagship zones including the Johor Baru City Centre, Nusajaya and Senai-Skudai, and will incorporate work, live and play elements. A number of key projects have been planned to attract investments into Iskandar, and some have been successfully completed, such as the Johor Premium Outlet and LegoLand.

According to recent reports, as of last September, Iskandar had recorded nearly RM100 billion (S$40 billion) in investments, about 40 per cent of which came from foreign sources.

A number of Singaporean companies such as Ascendas and Raffles Education, and even Singaporean billionaire Peter Lim, have invested in Iskandar-related projects -proof that it is gaining momentum and critical mass.

Given Iskandar's rising prominence and proximity to Singapore, one cannot help but wonder what impact it may have on the property market here.



Industrial real estate to get hit



In my view, the impact will be felt most keenly in the industrial property sector.

Due to the recent shift in government policy, Singapore's immigration and foreign worker rules have been tightened, resulting in rising wage costs, especially for labour-intensive industries such as manufacturing and construction.

In addition, industrial property prices have hit a new record high, driven by low interest rates and buoyant investment demand.

And while industrial property rentals have not risen as much as sale prices, the almost 40 per cent increase in rentals since the third quarter of 2009 has significantly increased tenants' cost base.

With the higher labour and occupancy costs here, industrial firms in Singapore may increasingly find Iskandar to be a good relocation destination.

While this may be a good option for tenants, it could be negative for industrial property demand and prices.

Besides industrial property, Iskandar could also have an impact on Singapore's housing sector.

Current record-high home prices, coupled with the Government's cooling measures and the risk of further curbs if prices continue to rise, could sap potential investment demand for residential property.

Instead, such demand may be diverted towards Iskandar, given the increasing buzz there and the fact that Iskandar's home prices are currently only a fraction of Singapore's.

And if Iskandar's transportation network and security situation are further enhanced, it could add to the attractiveness of residential properties in the region.

Currently, engineering studies are being conducted on the proposed MRT link from Woodlands to Johor Baru that would significantly enhance the convenience of commuting between Iskandar and Singapore.

Indeed, we have recently seen evidence of more Singaporeans investing in residential properties in Iskandar, either for rental income or as a second home.



Long-term gain, short-term pain



Thus, Iskandar Malaysia may be a boon for industrial property tenants and residential real estate investors in Singapore looking for lower-cost alternatives.

It may also be a boon to the Singapore Government's cooling efforts by helping divert investment demand away from the red-hot residential market.

In the long term, with the recent improvement in bilateral relations between Singapore and Malaysia, Iskandar could become a natural hinterland for Singapore, helping the Republic overcome its land constraints.

In the near term, however, Iskandar could be a bane for Singapore industrial property landlords and residential property developers, as it could divert demand away from these two market segments.



Tan Chin Keong is an analyst at UBS CIO Wealth Management Research.

short term pain,
long term pain pain!

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Originally Posted by richwang

short term pain,
long term pain pain!

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hmm...
you mean bad? :47:

People who bought Horizon Hills at $200K RM are sitting on properties that have appreciated 3x-4x their original price. Its painful ....to those who dismissed the potential just a few years ago....

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Originally Posted by richwang

short term pain,
long term pain pain!

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I think its healthy for the Singapore property market to have a pressure relief valve. A diversion of sorts... deflate the market a bit.

Unlike bigger countries, Singapore does not have a hinterland. This means we don't have a kampung or village to retreat to when times are bad. Prices will continue to soar.

Instead of harsh cooling measures implemented by the government, this is a much healthier and natural way to moderate prices.

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Originally Posted by dare2

People who bought Horizon Hills at $200K RM are sitting on properties that have appreciated 3x-4x their original price. Its painful ....to those who dismissed the potential just a few years ago....

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Sitting on the profit may not mean eventually the profit will be realised.
The resale market is not as good as Singapore. Have you already seen success stories of people who manage to sell 3-4x higher?
Ask yourself, would you buy knowing that it already increased 3-4x higher?
Most smart investor will not buy when is already high.

I have a colleague who try to sell 2x higher after some years, two very potential buyers pull out last minute. He is still holding to the unit now.:scared-5:

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Originally Posted by virzone

Sitting on the profit may not mean eventually the profit will be realised.
The resale market is not as good as Singapore. Have you already seen success stories of people who manage to sell 3-4x higher?
Ask yourself, would you buy knowing that it already increased 3-4x higher?
Most smart investor will not buy when is already high.

I have a colleague who try to sell 2x higher after some years, two very potential buyers pull out last minute. He is still holding to the unit now.:scared-5:

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Your colleague will be very thankful that the deal didnt go through 2 years ago. I am sure the price of his/her property must have appreciate by more than 50% over the last 2 years. Perhaps you could give him or her a call to confirm if what I am saying is correct.

The situation in Iskandar today is very very different from 2 years back. It might be good to take a drive down East Ledang office to have a look at the development plan in that area.

nuff said. Dont want to leak too much info...:D

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Originally Posted by Ringo33

Your colleague will be very thankful that the deal didnt go through 2 years ago. I am sure the price of his/her property must have appreciate by more than 50% over the last 2 years. Perhaps you could give him or her a call to confirm if what I am saying is correct.

The situation in Iskandar today is very very different from 2 years back. It might be good to take a drive down East Ledang office to have a look at the development plan in that area.

nuff said. Dont want to leak too much info...:D

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got details put on internet to read ?
:o

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Originally Posted by Ringo33

Your colleague will be very thankful that the deal didnt go through 2 years ago. I am sure the price of his/her property must have appreciate by more than 50% over the last 2 years. Perhaps you could give him or her a call to confirm if what I am saying is correct.

The situation in Iskandar today is very very different from 2 years back. It might be good to take a drive down East Ledang office to have a look at the development plan in that area.

nuff said. Dont want to leak too much info...:D

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Many have asked before, why buy resale at high price since Iskandar potentially still has many projects yet to be launched.

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Originally Posted by property_finder

Many have asked before, why buy resale at high price since Iskandar potentially still has many projects yet to be launched.

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Agree totally!

By the way, my colleague who try to sell his Bukit Indah property is not two years ago. It was 2 months back.

One thing for sure is that with all these speculations in JB, developers are the ones make the most money. If you have spare cash, buy the stocks of those Iskandar's developer. :)

as i mentioned before, now it is like penny stocks climbing but be careful....

Eg, SZ cannot compare to HK and maybe it will take years to come....i doubt... so ppl work there, go back home after work. so who stay in SZ? you can learn about this yourself...:o

So next time when transport network is up or further enhanced, who stay there?? think again. Today, some go batam to work and then at night go home to Sg mainland. if everything is smooth, the boat ride is even faster then passing thru the woodland custom :D

the reason why it is more popular now it because we can just drive in anytime, so called convenient.

your own call...

just my opinion. :o :2cents:

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Originally Posted by virzone

Agree totally!

By the way, my colleague who try to sell his Bukit Indah property is not two years ago. It was 2 months back.

One thing for sure is that with all these speculations in JB, developers are the ones make the most money. If you have spare cash, buy the stocks of those Iskandar's developer. :)

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earlier you were saying some YEARS back, now its 2 months. anyway, how long have your friends been holding on to this property?

Developers in Malaysia is no difference to those in Singapore or other part of the world. They are in the business of making money. However in % return, it is not true that developer always generate higher return than property speculators.

Based on your reasoning for buying property stock, the stock price of property developer will always rise because they will always have property to sell. Do also note that when you buy stocks, you cant leverage, but property you could.

the developer is setting higher and higher prices with each phase of launch. but finding a buyer to buy your resale unit is the elusive part.

Risk is much much higher in malaysia than in singapore. Land there are abundant and plentiful and malaysia cooling measures are very light or few if crash really will crash hard.

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Originally Posted by star

Risk is much much higher in malaysia than in singapore. Land there are abundant and plentiful and malaysia cooling measures are very light or few if crash really will crash hard.

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I think the biggest worry for investors is the flip flop government policy. Anyway, I think many investors are observing how the election with turn out.

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Originally Posted by Ringo33

I think the biggest worry for investors is the flip flop government policy. Anyway, I think many investors are observing how the election with turn out.

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policy risk isn't as prominent as the oversupply risk. the acres of space as I was going to Legoland. wow, how much housing can the whole area accomodate? developers who are going to sell you the houses in those areas will probably huat ah.

[quote=Ringo33]earlier you were saying some YEARS back, now its 2 months. anyway, how long have your friends been holding on to this property?

What i meant earlier is that he try to sell after some years. Meaning he bought some years back and tried to sell 2 months back. :doh:

He was holding to the Iskandar property for about two-three years and try to sell 2x higher about 2 months back...

Ringo, can you share with us some success stories of yours since you advocate Iskandar property so much?

Personally, i am not in favor of Iskandar's properties as a lot of people here knows that the crime rate is high and i think is all about speculations, no real fundamental now.

Totally agree...I could be wrong...I don't see concerted effort in town planning or whatsoever so, residents to-be, be aware...
The individual developer would not be planning for amenities. Why should they, now it is hot...and furthermore, they will built and spread out as there seems no limit to the land space. Of course they will huat as long as they catch this fire. Once gone, it will be gone....demand currently is fuelled by speculation & and so called investment...:2cents: as I said, I could be wrong...

And let's face it, high crime rate will always be an issue and is always not easy to handle especially when there is a lot of spaces to hide...:scared-4:
Just to offer my opinion...:2cents:

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Originally Posted by kane

policy risk isn't as prominent as the oversupply risk. the acres of space as I was going to Legoland. wow, how much housing can the whole area accomodate? developers who are going to sell you the houses in those areas will probably huat ah.

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Quote:

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Originally Posted by virzone

He was holding to the Iskandar property for about two-three years and try to sell 2x higher about 2 months back...

Ringo, can you share with us some success stories of yours since you advocate Iskandar property so much?

Personally, i am not in favor of Iskandar's properties as a lot of people here knows that the crime rate is high and i think is all about speculations, no real fundamental now.

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As you already highlighted. your friend is expecting a 100% returns within 2 to 3 years. thats more than 60% per year. wat other success stories do you need. There is no need to speculate, just take a drive across to Iskandar to find out for yourself.

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Originally Posted by lajia

Totally agree...I could be wrong...I don't see concerted effort in town planning or whatsoever so, residents to-be, be aware...
The individual developer would not be planning for amenities. Why should they, now it is hot...and furthermore, they will built and spread out as there seems no limit to the land space. Of course they will huat as long as they catch this fire. Once gone, it will be gone....demand currently is fuelled by speculation & and so called investment...:2cents: as I said, I could be wrong...

And let's face it, high crime rate will always be an issue and is always not easy to handle especially when there is a lot of spaces to hide...:scared-4:
Just to offer my opinion...:2cents:

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Obviously you have not been over to JB to look at their new township, Bukit Indah is probably as well provided as our typical HDB township accessible by major link to other business and industrial zones, the main issue is not so much their town planning but the crime rate which is somewhat exaggerated. Land may be aplenty but the various developmental nodes are valued because of their connectivity. There are also niche lifestyle development like Senibong Cove estuarine living. IDR is unlike SZ, they have planned residential, business and industrial zones....and also various entertainment parks....all they need is a casino.....and MBS will sweat....I guess you are also questioning the billion dollar international investment in IDR? Hahaha, are these people pouring money into the drain? I guess there are more experts here than those MNCs......

Iskandar property may become a success in the future and all those skeptics are left behind, including myself... that is the lost of opportunity cost i have to accept.

But until then, there are still some risks that fellow investors should be aware of. I think this article sum it up nicely. The author is not against the investment in Iskandar, he just list out the factor to be considered, that's all.

http://sg.news.yahoo.com/blogs/prope...090413664.html

Sg & MNCs are considering it as an extended arm for manufacturing base whereby lands and labour are abundance...residential is a by product, to me.... What do you think why a traffic network is so impt which is being considered and even a MRT link has been brought up a few times, it's because it will be convenient for u to work there and then come back after work...:D

It is anybody's guess and above is just base on my guess as well. :2cents:

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Originally Posted by dare2

Obviously you have not been over to JB to look at their new township, Bukit Indah is probably as well provided as our typical HDB township accessible by major link to other business and industrial zones, the main issue is not so much their town planning but the crime rate which is somewhat exaggerated. Land may be aplenty but the various developmental nodes are valued because of their connectivity. There are also niche lifestyle development like Senibong Cove estuarine living. IDR is unlike SZ, they have planned residential, business and industrial zones....and also various entertainment parks....all they need is a casino.....and MBS will sweat....I guess you are also questioning the billion dollar international investment in IDR? Hahaha, are these people pouring money into the drain? I guess there are more experts here than those MNCs......

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I was looking at a jb blog. The people living in JB really car-pool to come to singapore to work.

Quote:

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Originally Posted by lajia

Sg & MNCs are considering it as an extended arm for manufacturing base whereby lands and labour are abundance...residential is a by product, to me.... What do you think why a traffic network is so impt which is being considered and even a MRT link has been brought up a few times, it's because it will be convenient for u to work there and then come back after work...:D

It is anybody's guess and above is just base on my guess as well. :2cents:

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The upcoming Raffles American School permanent campus, classes already started in temporary campus

http://www.btinvest.com.sg/personal_...site-20120920/

http://www.btinvest.com.sg/system/as...20_172508e.jpg

As I said land is the most valuable ...

http://www.btimes.com.my/Current_New...1203235316.pdf

MRT connectivity to JB ??? You can wait another 10y .... plan is to connect to Republic MRT station at TSL ... so wait for TSL to be up first lol

EduCity has a good start ... growth is ?

More than 100 children from Singapore travel to Johor daily to go to school in Malaysia's new education hub, Iskandar Educity.

They include Singaporeans as well as children of expatriates based in Singapore.

Some families have also moved to Johor so the children can be closer to school, and the parents commute to Singapore for work.

The education centre in the Nusajaya township, just across the Second Link in Tuas, has a cluster of schools of various levels, from pre-school to university.

Three have Singapore operators - the Management Development Institute of Singapore, Raffles University Iskandar and Raffles American School.

Others include Newcastle University Medicine Malaysia, the Netherlands Maritime Institute of Technology and the University of Southampton.

Marlborough College Malaysia, which opened two weeks ago, is a branch of Britain's well-known Marlborough College, which counts Kate Middleton, the Duchess of Cambridge, among its alumni.

Principal Robert Pick said half of its 350 students aged between four and 15 commute daily from Singapore. He declined to give the breakdown, but said expatriates outnumbered Singaporeans.

The children are picked up by a fleet of buses from their homes in Singapore from 7am to make the commute to Malaysia via the Second Link.

They are "fast-tracked" across the border using a Malaysian Automated Clearance System pass that does not require their passports to be stamped, and the children do not have to get off the buses.

The journey takes about 40 to 50 minutes on a good day and over an hour if there is heavy traffic.

The school declined to give contacts of Singaporean parents, and those approached by The Sunday Times did not want to be interviewed.

But one British expatriate who commutes daily with her three children is Ms Joanna Ackerly, an events manager at the college. She drives her three children aged six, eight and 10 from their home in central Singapore to Johor and back every day.

She said she was attracted to Marlborough's small class size of 18 pupils, academic reputation and holistic philosophy, as well as its sprawling campus.

The long twice-a-day commutes were better than she expected, she said.

To save on travelling time, some parents have moved to Johor.

Ms Daphne Ashford-Smith, 35, a partner in a wealth management company who lived in Singapore for eight years, moved to Johor last month with her husband, managing director Robert Smith, 34, and their two daughters aged 41/2 and 18 months.

The couple commute daily to Singapore for work, while elder daughter Tahliah attends Marlborough College. The younger daughter is in a childcare centre near Mrs Ashford-Smith's workplace.

They decided to place Tahliah in Marlborough because she could not get a place at the international school of their choice in Singapore.

"Tahliah had been on the waiting list for two years and they had no space for her until 2014 at the earliest. We had also tried to look at other schools but found that they also had long waiting lists or were simply not aligned with our requirements," she said.

She visited Marlborough College and liked the emphasis on extra-curricular activities.

"We would never find the time to take Tahliah to any classes ourselves. They have been offering the children opportunities to try different classes and decide which they like," she said.

Other schools in the Iskandar area have also drawn Singapore students.

Newcastle University Medicine Malaysia launched its Bachelor of Medicine/Bachelor of Surgery degree course in 2009 and moved into its new campus last year.

Its 120 undergraduates include a handful of Singaporeans. When the new term begins at the end of the month, a few more will be among the intake of 100.

Adiel Haqiq Hussien is studying at Newcastle University Medicine Malaysia. Half of the 350 children aged between four and 15 at Marlborough College Malaysia commute daily from Singapore.

Singaporean Adiel Haqiq Hussien, 23, enrolled in the five-year medical course after completing his national service last year, and starts his second year at the end of the month.

He said he chose the university's Johor campus over several others in Britain because the tuition and accommodation costs were considerably lower.

He stays on campus during term time. His parents, a doctor and a housewife, live in Johor and his siblings study in Singapore.

Another school in Iskandar which opened recently, Raffles American School, now has just nine students, two of whom are Singaporean siblings aged 11 and 14.

Their family moved to Johor, said school superintendent Rob Mockrish. The school can take in 120 for now and will eventually have boarding facilities for 450 students.

Raffles University Iskandar and the Netherlands Maritime Institute of Technology now have only Malaysian students but plan to take in international students next year.

Lots of people know Legoland JB, here is a blog about Hello Kitty theme park @ Puteri Harbour with photos

http://www.jaynechua.com/review-hello-kitty-town/

Quote:

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Originally Posted by lajia

Sg & MNCs are considering it as an extended arm for manufacturing base whereby lands and labour are abundance...residential is a by product, to me.... What do you think why a traffic network is so impt which is being considered and even a MRT link has been brought up a few times, it's because it will be convenient for u to work there and then come back after work...:D

It is anybody's guess and above is just base on my guess as well. :2cents:

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As it is already a number of Singaporean are already commuting from JB, if one work in the relocated offices why would one want to come back here to stay? The cost of living is so much cheaper there. The only issue is education if one has school going children. A typical wage earner if based in JB work wise can rent out his HDB/PC and finance a second property over there.......why just come back and stay in a property that can earn you enough to buy a much bigger place there?

Assuming if rent out HDB for 2.5K, convert to RM almost 7K....can finance a million RM Semi-D already....