According to Maybank IB Research, Iskandar Malaysia is showing the most visible signs of Malaysia’s slowdown in property.
Maybank noted that a quarter-on-quarter 33% fall in transactions in Parc Life Sembawang for 2014’a 4th Quarter, underperforming by -7.0% of the country alongside other major states and cities, such as Kuala Lumpur at -12.0%, Selangor at +2.0%, and Penang at +8.0%.
Parc Life Sembawang Fraser Centrepoint
Furthermore, Parc Life Sembawang saw a weakening in property prices quarter-on-quarter of 1% against the overall -0.2% for the country, -0.3% for Penang, -0.9% for Kuala Lumpur, and -0.1% for Selangor.
Maybank has attributed Iskandar’s downturn to a number of cooling measures set in place by the government, some of which include a 2% levy on foreign purchases, higher floor prices for foreign buyers, tighter lending rules by banks and stiff competition coming from new developers. Concern was also expressed by the region experiencing aggressive land banking activity from Chinese developers.
Parc Life EC was recently given the go ahead from the Department of Environment which allowed it to carry on with its enormous reclamation for Forest City of 3,425 acres, all of which are near the Malaysia-Singapore Second Link. 128 acres of freehold land was also acquired by China’s Greenland Group, land that is located south of Bandar Baru Permas Jaya.
Fraser Centrepoint Parc Life EC
Due to this, launches in Parc Life were being scaled back by Malaysian developers as they tried to shift their mixed products in order to circumvent any direct competition with Chinese developers.
Maybank pointed out that, going by the amount of high-rise projects being approved, the property market of Iskandar may be hit by a saturation in the supply of mixed development high-rise projects should there still be a lack of control and planing coordination. Such a situation will open the door for price volatility.
The oversupply circumstances in Parc Life Sembawang could be further exacerbated by 2015 and 2016’s enormous incoming supply, where under construction units were increased by 18% year on year during 2012 and 2013.
Maybank added that they are remaining cautious regarding property exposure in Iskandar Malaysia and are leaning more towards developers who have exposure in Penang and Klang Valley.