House prices in Iskandar Puteri have been declining 20% to 30% compared to the mean price at its peak

by FARA AISYAH/ pic by BERNAMA

HOUSE prices have plummeted as much as 40% from their peak in Iskandar Puteri and the lavishly marketed posh development is turning into an attractive hunting ground for bargain seekers, but a financial bane for speculators.

The continuous glut and a very low demand from locals are turning many completed developments, especially high-rise condominium and apartment blocks, into an almost ghost town.

Overdevelopment, high prices and excessive focus on foreign buyers have caused many residential units in Iskandar Puteri, Johor, unoccupied. Speculators of the properties are beginning to see them as a possible financial ruin.

VPC Realtors (JB) Sdn Bhd Asia Pacific property consultant Bruce Lee said it is currently a buyer’s haven for those looking for properties in Iskandar Puteri and buyers can bargain for good deals.

“The house prices in Iskandar Puteri have been declining 20% to 30% compared to the mean price at its peak.

“Developers’ projects will take three to five years to complete. So the prices from the first phase at the peak would be around RM800 to RM1,200 per sq ft, and average price of RM1,000 per sq ft.

“From the mean price of RM1,000 per sq ft, the house prices have gone down 20% to RM800 per sq ft — back to the level when the first phase was launched,” he told The Malaysian Reserve recently.

National Property Information Centre’s first six months of 2019 report showed overhang in residential units rose by 1.5%, shops added 13.9%, small office and home offices increased 24.3%, and serviced apartments jumped 59.9%.

Figures for the January through June 2019 period also showed the total value of all unsold properties in the country rose to a stunning RM41.72 billion.

The total unsold properties in the first six months of 2018 was RM35.75 billion, Residential and serviced apartments were the largest contributors to the glut, accounting for RM19.76 billion and RM14.57 billion in total value respectively.

Johor registered the highest overhang for residential properties. There are a total of 6,195 of unsold residential units in the state, accounting for 18.8% of the national overhang.

The situation is worst for serviced apartments as 11,371 unsold units were registered during the January-June 2019 period, accounting for 70% of the country’s total unsold units in that category.

Lee said the price drop would be higher if the current price was compared against the peak price of RM1,200 per sq ft, pushing the value of the houses by 40%.

“It is easier for the general public to understand the comparison against the mean price. It is true that house prices in Iskandar Puteri have declined, but not too bad.

“If you compare 40% from the mean price, then the house price would have fallen to RM600 per sq ft which is not happening in Iskandar Puteri. If it happens, it is already like selling at a loss,” Lee added.

He also said developers in the southern region are making very tiny margins in today’s market.

The situation, Lee said, had resulted in new launches in Iskandar Puteri.

“The scenario is the same even for the special international zone Medini Iskandar Malaysia, a suburb in Iskandar Puteri, in which rules like Bumiputera quota do not apply,” he said.

Lee said the Iskandar Puteri’s developments comprise 60% high-rise properties including serviced apartments and condominiums, and 30% landed homes.

Despite the glut, Lee said the rental market in Iskandar Puteri is not very encouraging as well.

“Rental demand in the area is very soft due to a lack of population. Out of 100% of rentable area, demand is only 20%.

“That is why some owners are giving free rental for six months to one year to get tenants, hoping for the next one year, the population will increase and the rental will go back to the normal level,” he said.

Lee said Iskandar Puteri needs a lot of government’s assistance as the private sector will take a longer time to develop the city.