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Thread: Iskandar developers: China buyers will mop up excess units

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    Default Iskandar developers: China buyers will mop up excess units

    http://www.straitstimes.com/archive/...units-20150221

    Iskandar developers: China buyers will mop up excess units

    Published on Feb 21, 2015 1:02 AM

    By Marissa Lee In Danga Bay (johor)


    BIG-NAME Chinese property players in Iskandar say fears of a property glut in the development zone may be overblown.

    These developers argue that they bring with them fresh demand for the burgeoning number of new Iskandar homes from China's rising middle class.

    Said Country Garden Holdings sales and marketing general manager Nicholas Hum, referring to the company's projects: "We have one million owners in China, and it's like a fan club. Wherever we go, there are just buyers that buy without any questions."

    The Hong Kong-listed company has drawn some flak over its vast Forest City island project, being built on reclaimed land near the Second Link off Tuas.

    At a separate project in Danga Bay, across the water from Singapore's Sungei Buloh Wetland Reserve, Country Garden has invested in a condominium project it hopes will replicate the success of its projects in China's satellite cities.

    In 2013, Country Garden Danga Bay stunned the market when it announced that 6,000 of a total of 9,400 units had been booked within a month of the project's launch.

    Since then, some unqualified buyers have been filtered out through the loan process but once subsequent sales are factored in, the 6,000 figure has remained the same, Mr Hum said in an interview.

    This year, 200 units have been sold so far, and the developer is banking on more support from buyers in China.

    New numbers show that the Chinese have surpassed Malaysians as the largest group of buyers at the project, holding some 35 per cent of units. Malaysians make up 30 per cent of buyers and Singaporeans, 25 per cent.

    Mr Hum said some of the Chinese buyers have applied to join the Malaysia My Second Home long-stay visa programme.

    "They're trying to come here more frequently and without restrictions. So it's not just a summer home, it's a second option."

    He added that buyers are also attracted by the strong educational offerings at nearby EduCity and popular British boarding school Marlborough College.

    "A lot of them are concerned about their kids. They plan quite far ahead," said Mr Hum.

    If the Chinese look to Iskandar as a second home, they just might help create the critical mass that the special economic zone needs to kick off. The target is for a population of three million by 2025, from about 1.9 million last year.

    Mr Hum also said that most Singaporean buyers tend to take out a 70 to 80 per cent property loan, while Chinese buyers tend to borrow only 50 per cent, with some borrowing as little as 20 to 30 per cent.

    Buyer profiles are important, consultants say, as unsold units combined with investors who do not intend to move in could turn Iskandar's many townships into ghost towns.

    Mr Hum agrees that speculators should be worried, but not long-term buyers: "If you ask me, most of our investors are buying for the long term," he added.

    The bulk of Country Garden's Singaporean buyers are in their mid-30s to early 40s and, unlike "pure investors", they plan to hold the units rather than flip them.

    Even if the project is across the Causeway, Singapore buyers might not feel that they have left home. One sales representative noted that residents can receive signals from "Channel 5, Channel 8, Singtel, M1 and StarHub" from their Johor Baru homes.

    Affordability is also a huge factor for Singaporeans. A looming oversupply of units in Iskandar has made it "standard practice" for developers to offer huge discounts to move sales, Mr Hum said.

    After the controversy over Forest City, Country Garden has been on an aggressive branding drive. Even among Iskandar's Chinese giants, reputations are varied. Hong Kong-listed Guangzhou R&F got its credit rating downgraded last year on weak global sales.

    "We noticed after one year that there are concerns about Country Garden being a Chinese brand," said Mr Hum: "We are working on it."

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