Discover the positive shift in Johor’s real estate landscape with a growing demand for high-rise apartments. Explore the catalysts driving this trend and potential challenges ahead.
KUALA LUMPUR, 8th Jan 2024 – In a noteworthy resurgence for Johor’s real estate market, 2023 witnessed a commendable performance, setting the stage for promising developments in the coming year. While landed homes maintained their characteristic resilience, a remarkable upswing in demand for high-rise apartments emerged after years of decline.
Samuel Tan, Executive Director at KGV International Property Consultants, highlighted the growing interest in high-rise and service apartments near the causeways since the border reopening in April 2022. Anticipating a spill-over of positive sentiment into 2024, Tan identified potential catalysts, including designating Forest City as a Special Financial Zone (SFZ), upcoming Special Economic Zone (SEZ) announcements, progress on the Rapid Transit System (RTS), potential revival of the Kuala Lumpur-Singapore high-speed rail, and substantial foreign direct investments (FDI).
Tan emphasized the sustained demand for industrial properties, especially build-to-suit factories of medium to large scale. He noted the rise of super warehouses and distribution centers as a new class of industrial properties in Johor Bahru. Selected areas, notably those designated as SFZ and SEZ, may also experience increased demand for offices.
Highlighting an evident surge in high-rise apartment prices and rentals, Tan attributed this to strong demand from Malaysians working in Singapore and investors capitalizing on the positive sentiment. He also pointed out the promising prospects for industrial properties, specifically data centers, electronic and electrical (E&E) clusters, and logistic warehouses, driven by the strategic locational choices of multinational corporations (MNCs) adopting a “China + 1” strategy.
Tan predicted a conservative 10% to 15% average increase in transaction volume and prices, given the optimistic sentiment. However, he cautioned against potential challenges, such as international geopolitical risks, a US-China trade war, and domestic political surprises.
One notable concern is the burgeoning supply pipeline of high-rise serviced apartments. Tan emphasized the importance of managing this supply to prevent overhang issues that could impact the property market negatively. Additionally, he raised concerns about escalating compliance costs, particularly development premiums and charges, urging authorities to reevaluate their rationale, basis, mechanism, and quantum to ensure sustainable development for the property industry.
