Developers unveil plans but 'many pulling the brakes and may cancel'
By Reme Ahmad, Assistant Money Editor And Rennie Whang In Kampung Pok, Johor, The Straits Times, 21 Feb 2105
MALAYSIA'S biggest reclamation project is raising concerns over a potential oversupply of homes in Johor, marine environmental damage in the Strait of Johor and the effect it may have on the livelihood of hundreds of fishermen.
At Kampung Pok, tucked under the Second Link that connects Johor to Singapore, some residents are making known what they think of Chinese developer Country Garden's ambitious plan to raise four islands that total nearly three times the size of Sentosa at their doorstep.
The massive site will house thousands of luxury homes, if artists' impressions provided by the developer are any indication.
"Villagers protest that the route to Forest City passes through our area," reads a banner in Malay hung along the only road in the area.
Millions of tonnes of sand to shape the four islands will be transported by barges from eastern Johor. Lorries preparing for the mega project have already begun plying the narrow two-lane road in the village to the edge of the reclamation project.
"Why are they using our only road to do this? Everything is dusty and busy, and things will get worse," said villager Mohamad Zain.
The project is to resume at full speed after the Chinese New Year, now that the Department of Environment has given its go-ahead. That is likely to mean a clogged village road as trucks and vans deliver workers, bricks and metal bars, food and cement.
Acting village chief Abu Bakar Mohd Ali, who has a restaurant beside a jetty lined with fishing boats, said the project has caused unhappiness and uncertainty among fishermen and villagers, but he also sees it as "inevitable development catching up with the area".
The villages are bordered by mangrove swamps and the Strait of Johor on one side and hectares of mostly empty land in Nusajaya on the other.
The edge of the Port of Tanjung Pelepas, Malaysia's biggest container port, is just 1km away.
"Sure, there are concerns about the environment and the future, but things have cooled down as the developer has talked to us," said Mr Abu Bakar.
Mr Abdul Malik Sabtu, head of the fishing community in southern Johor, said about 245 full-time fishermen received between RM3,000 (S$1,120) and RM6,200 last year through a government agency to compensate them for a drop in their earnings after reclamation work began last year.
"We have been affected, so the compensation has helped," Mr Abdul Malik said. "We don't know what the future holds."
The future, as gleaned from the rush of developers into the southern Johor investment zone Iskandar, is one of luxury homes in gated communities.
The projects are targeted at the wealthy, including Singaporeans, and some units have been sold to buyers from China.
"With all the new projects, I don't think it will be as easy to get tenants as before," said a Singaporean resident of Causeway View, an estate just 600m from the Causeway. He had previously bought a condominium unit in Johor for RM250,000 and rented it out, but he has since sold it.
Recent changes to the vehicle entry permit, toll charges and the minimum property purchase price of RM1 million for foreigners are also a put-off, he added.
Statistics on the number of housing units coming up are not kept by a Johor or federal government agency, as building approvals are granted by the local authorities, such as the Johor Baru City Council and the Central Johor Baru Municipal Council.
A Malaysian real estate consultant said the JB authorities have approved the construction of 80,900 high-rise units, of which 8,000 are being built.
Mr Samuel Tan, executive director of KGV International Property Consultants, said about 90,000 units are expected to be built by 2017. "Many developers in the area are already pulling their brakes. Some may cancel their plans," he said.
The Forest City developers envision four islands totalling 1,386ha that will be joined by roads to one another and to mainland Johor. Artists' impressions on the website of the master developer, Country Garden Pacificview, show dozens of towers of luxury condominiums and landed houses.
The project is a partnership between China's Country Garden Holdings and a company linked to Johor's Sultan Ibrahim Ismail.
Country Garden's Danga Bay project had set off alarm bells over a potential glut of units when it launched a whopping 9,400 homes for sale in 2013.
Since then, more Chinese developers have unveiled plans for mega projects.
On the JB side of the Causeway, China developer R&F Properties is reclaiming both sides of the Strait of Johor for its development.
The 47.1ha project offers what it calls a "hopsca" lifestyle - hotels, offices, parks, shopping malls, clubhouses and apartments. Dozens of tower blocks are being planned.
China's Greenland Group, which has a development in Danga Bay, recently announced another large project.
The Tebrau Bay Waterfront City in eastern JB is expected to be built partly on land already reclaimed at the mouths of two rivers. The first phase promises a snow world theme park, an opera house and a hospital specialising in traditional Chinese medicine.
However, Johor MP Liew Chin Tong from the opposition Democratic Action Party said: "There is already massive oversupply of high-end housing in Iskandar.
"This massive reclamation is going to accelerate the burst of the bubble... it doesn't make economic sense."
Two Malaysian developers with projects in southern Johor declined to comment on whether the large projects are building up to a glut. One said things still remain murky as developers of some coastal projects have not confirmed how many units they plan to launch.
Iskandar developers: China buyers will mop up excess units
By Marissa Lee In Danga Bay, Johor. The Straits Times, 21 Feb 2015
BIG-NAME Chinese property players in Iskandar say fears of a property glut in the development zone may be overblown.
These developers argue that they bring with them fresh demand for the burgeoning number of new Iskandar homes from China's rising middle class.
Said Country Garden Holdings sales and marketing general manager Nicholas Hum, referring to the company's projects: "We have one million owners in China, and it's like a fan club. Wherever we go, there are just buyers that buy without any questions."
The Hong Kong-listed company has drawn some flak over its vast Forest City island project, being built on reclaimed land near the Second Link off Tuas.
At a separate project in Danga Bay, across the water from Singapore's Sungei Buloh Wetland Reserve, Country Garden has invested in a condominium project it hopes will replicate the success of its projects in China's satellite cities.
In 2013, Country Garden Danga Bay stunned the market when it announced that 6,000 of a total of 9,400 units had been booked within a month of the project's launch.
Since then, some unqualified buyers have been filtered out through the loan process but once subsequent sales are factored in, the 6,000 figure has remained the same, Mr Hum said in an interview.
This year, 200 units have been sold so far, and the developer is banking on more support from buyers in China.
New numbers show that the Chinese have surpassed Malaysians as the largest group of buyers at the project, holding some 35 per cent of units. Malaysians make up 30 per cent of buyers and Singaporeans, 25 per cent.
Mr Hum said some of the Chinese buyers have applied to join the Malaysia My Second Home long-stay visa programme.
"They're trying to come here more frequently and without restrictions. So it's not just a summer home, it's a second option."
He added that buyers are also attracted by the strong educational offerings at nearby EduCity and popular British boarding school Marlborough College.
"A lot of them are concerned about their kids. They plan quite far ahead," said Mr Hum.
If the Chinese look to Iskandar as a second home, they just might help create the critical mass that the special economic zone needs to kick off. The target is for a population of three million by 2025, from about 1.9 million last year.
Mr Hum also said that most Singaporean buyers tend to take out a 70 to 80 per cent property loan, while Chinese buyers tend to borrow only 50 per cent, with some borrowing as little as 20 to 30 per cent.
Buyer profiles are important, consultants say, as unsold units combined with investors who do not intend to move in could turn Iskandar's many townships into ghost towns.
Mr Hum agrees that speculators should be worried, but not long-term buyers: "If you ask me, most of our investors are buying for the long term," he added.
The bulk of Country Garden's Singaporean buyers are in their mid-30s to early 40s and, unlike "pure investors", they plan to hold the units rather than flip them.
Even if the project is across the Causeway, Singapore buyers might not feel that they have left home. One sales representative noted that residents can receive signals from "Channel 5, Channel 8, Singtel, M1 and StarHub" from their Johor Baru homes.
Affordability is also a huge factor for Singaporeans. A looming oversupply of units in Iskandar has made it "standard practice" for developers to offer huge discounts to move sales, Mr Hum said.
After the controversy over Forest City, Country Garden has been on an aggressive branding drive. Even among Iskandar's Chinese giants, reputations are varied. Hong Kong-listed Guangzhou R&F got its credit rating downgraded last year on weak global sales.
"We noticed after one year that there are concerns about Country Garden being a Chinese brand," said Mr Hum: "We are working on it."
'Sultan's presence needed' to draw investment to Johor
By Marissa Lee. The Straits Times, 21 Feb 2015
THE mega property projects being developed in Johor have drawn attention to the involvement of its sultan, but his presence is needed to bring the investment dollars to the region, a senior executive has said.
Referring to Sultan Ibrahim Ismail as "Tuanku", Country Garden Pacificview (CGPV) executive director Md Othman Yusof said in a recent interview that the ruler wants his state to develop faster.
"We need Tuanku to lead as a delegate in order to convince investors to invest here," Mr Othman said.
"Convincing investors is not an easy task for people like me. But because of Tuanku, Country Garden said they would develop this area."
CGPV itself is an investment vehicle with shareholders that include Country Garden, the Johor state investment arm and Sultan Ibrahim.
The export of Chinese capital has been buoyed by new rules since last October that no longer require outbound investments above US$100 million (S$135 million) to be approved by China's Ministry of Commerce.
The Sultan, 56, is involved in several Johor projects, such as Guangzhou-based R&F Properties' Princess Cove. The Chinese developer paid RM4.5 billion (S$1.7 billion) to buy six sites in Johor Baru from the Sultan, R&F Properties told the Hong Kong stock exchange in a statement in December 2013. Just outside the Sultan's Serene Hills palace is the beachfront Danga Bay project involving several developers, including Country Garden Holdings and Hao Yuan, both from China. Some of the seafront land used to belong to the Johor ruler.
The Sultan is also involved in Country Garden's Forest City project in the waters off Tuas, where four giant man-made islands will be raised on reclaimed land.