The demand for unsold properties that were originally built for foreigners has become almost non-existence
by SHAHEERA AZNAM SHAH / pic by BERNAMA
THE Johor property market is in for another bumpy ride this year with the absence of foreign buyers, particularly from Hong Kong and China, who seemed to be more cautious with their spending while waiting for the Covid-19 pandemic to subside.
The recent interest in residential units in the state, which was a result of the government’s initiatives in mitigating the property overhang issues, has dissipated since the beginning of the pandemic and all the restrictions that came with it.
VPC Realtors (JB) Sdn Bhd AsiaPacific property consultant Bruce Lee said most of the foreign buyers are currently observing Malaysia’s latest policies on the property market amid economic uncertainties.
“The majority of the overhang property in Johor is located in the Iskandar region, which includes Johor Baru, and the fundamental issue or root cause of it is that the units were originally built with foreign buyers as the target market.
“The pandemic outbreak is one of the elements that made matters worse. The demand for unsold properties that were originally built for foreigners has become almost non-existence,” he told The Malaysian Reserve (TMR).
Recent data from Rahim & Co International Sdn Bhd’s Property Market Review 2020/2021 revealed that Johor remained the state with the highest number of unsold properties at 33,000 units.
According to data from REA Group Asia (iProperty.com.my), similar sentiment was also seen in the sub-sale market as the demand for high-rise residential in Johor eased by 12.7% compared to the previous year.
Knight Frank Malaysia Sdn Bhd Johor branch head Debbie Choy said the downbeat demand is expected to prolong throughout 2021, especially with the continuation of the Movement Control Order (MCO).
“The asking price in the second half of 2020 (2H20) went down slightly because it had severely dropped in 1H20 due to the pandemic.
“With the resurgence of the Covid-19 cases, the five-year trend now is definitely looking downward, especially for the high-rise units, which contributed the most to the unsold properties in Johor.”
She said the oversupply is expected to continue with more contraction in demand for condominiums and service apartments.
“With the MCO and closed international borders, developers could not sell their units if people could not house-hunt,” Choy said.
As for properties that are sold particularly to Hong Kongers, she said those units are mainly high-rise residences ranging from RM500,000 to RM700,000.
“From our understanding, not all developers who promoted their units in Hong Kong were successful.
“However, there were some developers who claimed to have succeeded in getting booking fees. The success in getting interests from Hong Kong buyers is depending on what sort of units you are selling.
“The assets that sold quite well were probably in the Hong Kongers’ affordable range of RM500,000 to RM700,000 per apartment.”
Choy added that units that are in the prime range and luxury properties did not receive enough traction from prospective buyers from Hong Kong.
“Some of the developers who went in selling prime and high-end units told us they did not get any interest, especially the apartments.
“In Johor, foreign buyers tend to go for apartments and very rarely that they would go for landed properties.
“There are individual purchases of big bungalow units like in Leisure Farm in Iskandar Malaysia. Otherwise, the developments have received little interest in the past few years,” she said.
Hong Kongers’ interests in Malaysian properties picked up after a violent protest broke out in August 2019 as part of the ongoing demonstrations against the Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill proposed by the Hong Kong government.
If enacted, the bill would allow local authorities to detain people who are targeted in countries or regions that Hong Kong does not have extradition agreements with, including mainland China and Taiwan.
“After the riot, we saw an uptick in interest from Hong Kongers looking to buy properties outside of Hong Kong.
“Several developers in Johor took the opportunities to do roadshows and present their properties there,” Choy said.
Read our previous report here