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Thread: Iskandar: Boon or bane for Singapore real estate?

  1. #1
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    Default Iskandar: Boon or bane for Singapore real estate?

    [url]http://www.todayonline.com/Business/Property/EDC121228-0000026/Iskandar--Boon-or-bane-for-Singapore-real-estate?[/url]

    [B][SIZE="5"]Iskandar: Boon or bane for Singapore real estate?[/SIZE][/B]

    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.



    [B]Industrial real estate to get hit[/B]



    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.



    [B]Long-term gain, short-term pain[/B]



    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.



    [I]Tan Chin Keong is an analyst at UBS CIO Wealth Management Research.[/I]

  2. #2
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    short term pain,
    long term pain pain!

  3. #3
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    Quote Originally Posted by richwang
    short term pain,
    long term pain pain!
    hmm...
    you mean bad?
    [B]I took the road less traveled by, and that has made all the difference.[/B] - Robert Frost quotes (American poet, 1874-1963)

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    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....

  5. #5
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    Quote Originally Posted by richwang
    short term pain,
    long term pain pain!
    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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    Quote 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....
    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.

  7. #7
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    Quote 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.
    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...

  8. #8
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    Quote 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...
    got details put on internet to read ?
    [B]I took the road less traveled by, and that has made all the difference.[/B] - Robert Frost quotes (American poet, 1874-1963)

  9. #9
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    Quote 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...
    Many have asked before, why buy resale at high price since Iskandar potentially still has many projects yet to be launched.

  10. #10
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    Quote 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.
    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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