Johor's stormy property landscape

Johor's stormy property landscape

THE booming presence of developers from China in Johor has not only ruffled feathers among local developers but also sparked concerns of the Singapore government due to the massive land reclamation works.

Following the high-profile entrance of Guangzhou-based Country Garden Holdings Co Ltd, which launched 9,000 units in Danga Bay at one-go in 2013, all eyes are now on other developers from China who are expected to adopt carpet bombing kind of development.

Country Garden made the first move in Johor Baru. It is followed by Guangzhou's R&F Properties Co (R&F) that bought 116 acres near the first link in Johor Baru from the Sultan of Johor for RM4.5bil. R&F could be launching as many as 30,000 units over the next few years on land that is to be reclaimed.

Agile Property Holdings Ltd is another China-based developer that is expected to make its presence felt in Johor Baru after it bought 1.3ha from Tropicana Corp Bhd in Bukit Bintang, Kuala Lumpur.

A study by Khazanah Nasional Bhd, which has undertaken a comprehensive development plan for Johor estimated that the number of new condominiums coming up in Johor Baru is about 30 times over the number of units built in Mont Kiara.

"That is the number of new units coming into the market," says an official.

But what has caught the attention of the Singapore government is a project near the Second Link involving 5,000 acres (2,023 ha) reclaimed from the sea.

Country Garden, one of the Top 10 developers in China, has teamed up with a subsidiary of Johor's state-owned investment arm, Kumpulan Prasarana Rakyat Johor (KPRJ), to undertake the job.

Singapore's concern

The development has caught the attention of Singaporean authorities who felt that it would eventually have an impact on their shore line.

Towards this end, Singapore has sent a note to Wisma Putra expressing concerns over the project.

"It is being dealt with" says a source.

An addition of 5,000 acres also means that there will be much more land in the southern region, possibly impacting the sustainability of the supply-and-demand chain.

In an interview with StarBizWeek, Country Garden regional president for Malaysia project Kayson Yuen says the mega project "Forest City" will span over 30 years and the company had studied it more than a year ago before committing into it.

He said the land was bought at a "reasonable price" but could not furnish with details for Forest City's land cost.

As for R&F, a very high-density project is in the pipeline, with the company planning to launch 15 blocks in the first phase. The six plots it bought from the Johor Sultan last year came with a high plot ratio of 1:10.

Industry observers say the plot ratio can be further extended to 1:13.

R&F plans to develop high-rise residential units, retail properties, offices, hotel and a shopping mall, all of which will be on a saleable floor area of about 3.5 million sq m, which is close to 10 times the floor space of the Petronas Twin Towers in the capital.

Local developers are starting to feel the pressure following the massive developments by the Chinese developers.

But the developers from China are optimistic that Johor will be akin to Shenzhen and the units being built would eventually be taken up.

Says Yuen: "It takes Shenzhen 20 years to where it is today... so we expect for it to take some time for Johor to develop into the same status."

But Iskandar Malaysia, which is almost three times the size of Singapore, is already being positioned as the Shenzen of Hong Kong. Shenzhen is about twice the area of Hong Kong.

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