A GLANCE OF JOHOR BAHRU PROPERTY MARKET

Overview
The overall property market in Johor has experienced moderately slow growth in the first half of 2007. The focus and concentration of local and foreign investors are largely centred on the Iskandar Development Region (IDR). The Johor government expects to capitalize on the prospects of IDR and consequently secure firm commitment from investors. In conjunction with the government’s role to drive and promote IDR, some key promoters of the project such as UEM World and Danga Bay have also shown their commitment and enthusiasm by speeding up their catalysts projects. One notable project that has been added to the Johor market recently is the RM1.4 billion Asia Petroleum Hub (APH) developed on a 40-hectare reclaimed island off Tanjung Bin Petrochemical Area. The APH, to be completed by 2009, provides integrated bunkering services to ships and forms part of the petroleum trading network and bulk-gateway to regional and domestic markets.

Nevertheless, despite effort and incentives from the government as well as local players, the IDR has received relatively lukewarm response from foreign investors since its launch. Property players, consultants, and analysts have maintained a neutral stance on IDR and reiterate their caution on both the business viability and project execution. JP Morgan, in its Asia Pacific Equity Research (Issue 05 July 2007), states that the IDR is still rather conceptual in the short-term and will take over 20 to 30 years of execution to achieve the “end-state model”. In view of the massive scale of IDR and the huge undeveloped land bank, the impact of IDR towards the Johor property market in the short term will not be significant. Furthermore, Johor is currently experiencing an oversupply of property. The CIMB Research Report (Issue 19 March 2007) highlights Johor’s massive property glut, which remains one of the toughest markets in Malaysia. The spillover effect of oversupply in the Johor property market will substantially affect the IDR as well as the overall property development of the state.

Residential
The 2007 second quarter Property Market Status Report Quarter released by Valuation & Property Services Department (JPPH) reveals that Johor continues to have the highest number of overhangs in the country (8,043 units), which make up 30.4% of the market share. The value of these units stands at RM1.44 billion. The district of Johor Bahru accounts for 77.8% (6,261 units) of the overhang in the state. Most of these units (5,487 units) have been in the market for more than 24 months after their sales launch. Johor continues to account for the bulk of the unsold residential properties in the market comprising 23.7% (12,521 units)

Transaction levels on conventional properties such as terraced and semi-detached units have not experienced significant movements. The bulk of the overhang completed terraced units in the country is still from Johor. There are 3,189 units of 2-3 storey terraced and 1,576 units of single storey terraced properties overhang in Johor. Some of the pricings of the completed terraced properties need to be reduced in order to improve their sales status. For instance, the pricing of the completed double-storey terrace houses at Tebrau Development Corridor has been reduced from RM280,000 to RM250,000 to stimulate sales. The oversupply condition for condominium/apartment components is also relatively serious. For ongoing constructions, there are 7,047 unsold terraced units and 2,250 unsold condominiums/ apartments units.

Shop-Offices
Generally, Johor has registered the highest number of overhang shops in the country as of the second quarter of the year (2,279 units), which accounts for 46.9% of the national share. About 65.0% (1,483 units) of the overhang shops in the state are located in the district of Johor Bahru. Similarly, Johor also registered the highest number of unsold under-construction shops in the country (1,703), which account for 37.0% of the total. About 57.1% (973 units) of these unsold units are located in the district of Johor Bahru.

Purpose Built Office
Demand and supply of purpose-built office space in Johor, particularly Johor Bahru, have remained stagnant compared to the previous year. The same status quo applies in respect of occupancy and rental rates. As of 2nd quarter of 2007, there is 9.46 million square feet office space available in Johor and approximately 7.08 million square feet (75%) is situated in Johor Bahru. There will be an additional 1.31 million square feet office space added to the Johor market (1.28 million square feet in Johor Bahru) in the near future. The average occupancy rate in Johor and Johor Bahru hovers around 74%. The prime space is let at an average of RM2.30 per square foot gross per month whilst offices at secondary locations average RM1.20 per square feet gross per month.

Retails
In comparison to the year 2006, there has been no substantial change in the retail sector with regards to demand and supply. The existing supply of retail space as of 2nd quarter of 2007 is estimated at 11.3 million square feet (8.57 million square feet from Johor Bahru) and approximately 62.9% is occupied (64.3% for Johor Bahru). Prime gross rents of shopping centers which are doing well (with occupancy rates in excess of 85%) range from RM15 to RM25 per sq ft per month. Some notable retail centers located in Johor Bahru area:

Johor Bahru City Square
Johor Bahru City Square is a shopping centre located in the Central Business district of Johor Bahru. The Government Investment Corporation of Singapore owns 70% of City Squares shares. The remaining shares are divided between the Johor Bahru City Council and MBJBT. Like Komtar, city Square is located on Jalan Wong Ah Fook. Due in part to its proximity to the Johor-Singapore Causeway, City Square attracts many shoppers from Singapore. The building interior consists of five storeys of shopping malls, including a thirty-six storey office block, which is divided into lower, middle and upper zones. The car park occupies three levels of the basement. The building is the tallest in Johor Bahru.

City Square also enjoys a trendy and stylish reputation amongst youngsters in Johor Bahru, similar to shopping areas in Bukit Bintang, Kuala Lumpur and Singapore’s Orchard Road. Prominent names which operate their business in City Square include financial institutions such as Maybank, Affin and RHB Bank. TOPS supermarket, previously located at Basement 1, was declared bankrupt in 2002, and replaced by Kapitan Mart. The Mega Pavillion Cinema has also been upgraded recently to Cathay Cinemas with new theaters at both level 5 and level 7.

The Johor Bahru City Square is currently enjoying nearly full occupancy rate and the average rental fall in the region of RM18psf to RM20psf.

Kompleks Tun Abdul Razak
Kompleks Tun Abdul Razak or KOMTAR is also located along Jalan Wong Ah Fook. KOMTAR is probably the oldest shopping complex in Johor Bahru. Officially opened on March 11, 1979, by the third prime minister of Malaysia, Tun Hussein Onn, KOMTAR consists of a two-storey shopping centre and a 25-storey office tower block. Currently the Komplek Tun Abdul Razak is temporarily closed down for refurbishment and renovation.

Plaza Kota Raya
Plaza Kota Raya is located along Jalan Abdullah Ibrahim next to Puteri Pan Pacific. The mammoth Plaza Kotaraya covers an 11-acre site. The big players include Mun Loong's, a local department store, and Shop 'n Save supermarket, which enjoys regular patronage despite its limited stock. The complex also houses a mosque; hence it is port and alcohol free. The Plaza Kota Raya is also enjoying nearly full occupancy rate and the average rental fall in the region of RM 8psf – RM12psf.

Hotel
With the launching of the Visit Malaysia Year 2007 Campaign by YAB Dato’ Seri Mohd Najib bin Tun Abdul Razak, the Deputy Prime Minister of Malaysia, various tourism promotion activities have been introduced by the Malaysian Tourism Board. The success of the marketing and promotion activities have significantly increased the number of tourists visiting Malaysia. Cumulatively, tourist arrivals recorded from January to August 2007 are 14,047,276, representing an increase of 22% compared to 11,518,288 in 2006.

The increased of tourists to Malaysia has also improved hotel occupancy rates and leisure businesses in Malaysia. A glance of the hotel industry in Johor reveals that the total number of hotel guests recorded has slightly increased from 2.83 million in 2005 to 2.99 million in 2006. According to the statistics provided by Tourism Malaysia, the ratio distribution of total hotel guests in Johor between domestic and foreign guests is 68:32 in 2006. Together with Kuala Lumpur and Selangor, Johor forms the top three domestic hotel guests, consisting of a mix of leisure and corporate guests.

The total existing supply of hotel rooms in Johor stands at 12,811 rooms from 273 hotels. Amongst them, approximately 4,305 rooms are recorded from hotels in Johor Bahru. The table below shows the distribution of hotel rooms in Johor Bahru in terms of star-rating.

The average occupancy rates of hotels in Johor, particularly in Johor Bahru and Johor Bahru CBD are found to be satisfactory compared to other states in Malaysia. The table below shows the average occupancy rate of hotels by locality in year 2005 and 2006:

Some notable hotels located within Johor Bahru include:

Malaysia Property Market 2008 - The Times Ahead

What has happened in 2007?

The Year 2007 was a significant year for Malaysia as the country celebrated its 50 years of independence. The Malaysian property market enjoyed a flying start in 2007 as it inherited the spill-over effects of strong market sentiments after the launching of the ninth Malaysia Plan (9MP) and the establishment of the Iskandar Development Region on 4 November 2006. The government has also introduced several incentives and implemented numerous measures to enhance competitiveness, spur economic activities, and improve the country’s attractiveness to foreign and domestic investors. These incentives have directly and indirectly affected the property market especially in the first half of the year. Among the notable measures pursued by the government are inclusive of the following: -

a. Establishment of Economic Corridors
- The Master plan for the Northern Corridor Economic Region (NCER) was launched on 30 July 2007 and encompasses Kedah, Perlis, Penang and northern Perak.
- The East Coast Economic Region (ECER) which covers states of Kelantan, Terenganu, Pahang and the north of Mersing district of Johor was launched on 30 October 2007.

b. Amendment of rules and regulations in relation to the property sector
- The waiver of the Real Property Gains Tax (RPGT) effective from 1 April 2007;
- The introduction of a few measures to relax the forex rules by Bank Negara Malaysia effective 1 April 2007 has further liberalised Malaysia’s foreign exchange policy;
- The introduction of Certificate of Completion and Compliance (CCC) to replace the Certificate of Fitness for Occupation (CFO) with effect from 12 April 2007;
- The set-up of the new One-Stop Centre to ensure that development projects are given fast-lane approval within four months;
- The introduction to the Building and Common Property (Maintenance and Management) Act 2007 which was gazetted on 12 April 2007;
- The amendment of the Housing Development (Control and Licensing) Act 1966 to incorporate service apartments;
- The amendment of the Strata Titles Act 1985

c. Transport Infrastructure
- Expansion of the local bus route, RapidKL, in the Klang Valley
- Announcement of the Penang Monorail Project scheduled to take off in Year 2008 undertaken by Syarikat Prasarana Nasional Berhad (SPNB)
- Extension of the LRT network to be implemented in Selangor’s prime urban areas
- The announcement by the Cabinet Committee to revive the shelved Ipoh-Padang Besar double tracking project

The second half of the year has been relatively slow compared to the first half of the year. The property market was dramatically affected by some global issues toward the second half of the year. The US Sub-prime mortgages crisis has resulted in the decline of stock markets worldwide. The effects of this meltdown has spread beyond housing and disrupted global financial markets. Besides, crude oil prices have been creeping higher and higher in recent months. The persistently high crude oil prices have impacted the global economic performance significantly. Towards the end of the second half of the year, the market generally adopted a more cautious approach.

Market View on 2008 – Break the trend?
The Malaysian Property Market has shown some positive surprises in the past few years. Can this trend continue or will it be broken in the year 2008?

Generally, market analysts and economists have predicted that the year 2008 will have a tough start globally due to the twin Macro stresses of weakening US consumption and China’s policy tightening. The global economic outlook could be affected by the fallout of the US Subprime mortgage crisis. The excessive mortgage-related losses and the downturn in US housing market will potentially push the country into recession. In addition, economists also extend their worries over the possibility of China continuing to implement measures to tighten its national policy in order to rein in accelerating inflation. If China implements the tightening measures at the same time that the US economy is weakening, the risks of a sharper-than-expected deceleration in China’s growth are higher, which would also have ripple effects regionally. The two Macro impacts and the persistently high oil prices, which is another threat to the world economy, will create significant dampening effects towards the global market inclusive of Malaysia. These effects will also translate into the real estate sector in the form of slowdown in sales volumes, low confidence amongst investors and substantial price increase in construction material.

Notwithstanding the above mentioned risks, the global economy is anticipated to continue expanding at 5.2% in 2008 (5.2% in 2007) with Japan, Europe and emerging Asia, in particular China and India, counterbalancing a possible moderation of the US Economy. Malaysia is well positioned to take advantage of the growing external market as well as the increasing trade and investment opportunities, supported by continuous efforts to enhance national competitiveness and resilience.

Business Opportunities
In view of the potential global market challenges, we must adopt a very cautious strategy in any financial commitment. Having said that, there is also good potential magnitude, path and direction in the real estate market that we can seriously consider: -

a. High levels of equity capital particularly from Middle-East Countries continue to pour into the Malaysia property pool;

b. The practice of relocating corporate offices especially in the finance, insurance, real estate and business support services, from big cities such as New York and London to other cities which have lower operation costs;

c. The active promotion of Islamic Finance by the government being an alternative financial instrument offers both developers and investors a lucrative financing package in Malaysia real estate markets.

Sell Your Home Fast with High Profit

You want to sell off your property at a good price. How do you convince potential buyers that your house is an irresistible offer? Take some simple steps without spending a lot of money on renovation or advertising. The most effective steps can sometimes be overlooked because they are so simple.

Clear away the clutter in your house. This does not only make the house look spacious but also attractive. You might want to invest a little in your property by giving it a new coat of paint. Choose a light colour, when in doubt, because it makes the house look more spacious and breezy. Scrub your bathrooms ad kitchens for dirty tiles or walls may put off potential buyers and lower the value of your property.

Try baking homemade cookies or place lemons around the house to get a sweet smell. Play some classical music for the visitors or invite them to sit in the garden if you have a water fountain feature. The sound of water or soft music will soothe nerves and endear your house to the potential buyers.

Place a plant or throw open a window to make your house look more attractive. You may have taken your house for granted but for the visitors, it’s a first impression that will make or break the deal.

Invest in the Best Location

Maximizing income and minimizing outgoings are the ultimate aim for all property investor. Choosing the right property will always help in this sense. There are a few tips shared by property expert, Glen Franklin, on how to choose good and potential properties.

Look for potential economic redevelopment zones
Watch the national and local news for areas that have been really run down but something big has happened. It could be the announcement of a new Super Casino, new high speed rail link into a big city, the creation of a large inward investment -- think of what happened to property investments in Atlanta,GA when that city hosted the 1996 Olympics.

The development of a town as a commuter hub, the re-development of inner city areas into fashionable places to live are all great places to invest. Once the development starts happening, the Starbucks, Borders, banks and bistros all follow. For today's urban professional these are places that they will want to live- delivering good demand forcing rents higher and reducing the rest of rental vacancy periods.

College Town
Places that are college or university towns are always high on any investors check list. Not only do they guarantee a regular influx of prospective tenants, the youth and energy of students rubs off on the rest of the town- they are happening places with loads of things to do, fun places to eat and good sports facilities.

University "towns" such as Columbus, OH (Ohio State), Tempe, AZ (Arizona State), or Austin, TX (University of Texas) represent solid places to invest as there will always be fresh potential tenants.

The one potential downside is that sometimes students may have difficulty in the transition from having good ole' Mom taking care of everything to taking care of that cleaning and cooking gig-- so check out your students to avoid high maintenance costs!

Commuter Towns
These towns may not be the prettiest but their very location means that they are always going to sought out by those workers who need to be within commuting distance of the work but either don't want to or can't afford to live nearer to their work. Places located near to Interstate intersections, great rail stations, local commuter airports, even ferry stations (think Staten Island!) are always going to be chosen by people who need to commute. The presence of the infrastructure allows them to commute further, quicker and more efficiently.

An additional investment benefit here is that as the prices of property nearer to the workplace rise, the value of your property will rise as workers look farther away to get the right accommodation for the money that they are prepared to pay.

The State Capital or a Regional Hub
The demand for property in a capital hub city is generally higher that the amount of property available for purchase or rent so although the costs of purchasing such a property may be high, you will be rewarded by high levels of demand, consistent levels of demand and good capital growth.

Look at neighborhoods within the city that have traditionally been seen as the poorer parts as renters will consider these areas which offer better value for money.

Your Own Stomping Ground
It's always worth considering places closer to home. Buying a place next door or just down the street from where you live may seem a strange idea but think about it- you know the place, the neighborhood, the facilities and the sort of people who would be your target market.

Having a place that you can literally keep an eye on and act as your own management agency will reduce your operating costs. Even if you decide to employ a management company to manage the property, a local property allows you to keep a watch on how they are taking care of your investment. Having a local property can be less stressful and time-consuming.

Tips to buy properties

Many people make money through property investment. To be successful in this industry, there are no hard and fast rules. You need to do a lot of homework and groundwork! There are five tips here shared by some property experts:

Tip 1:
Don’t forget property investment is a long-term investment. As an investor, you should focus on building your wealth over a long period of time. Short term fluctuations in the market should not concern you too much. Don’t believe too much on those get-rich-quick property schemes.

Tip 2:
Concentrate on income generating rather than capital appreciation while choosing your properties. Don’t forget, cash flow is important. To have a property that can generate immediate steady income is always better than getting a property pending for capital appreciation but can’t generate income.

Tip 3:
Don’t rush to buy if you haven’t done your homework. The market is getting stagnant; the days when you could make quick money by buying properties are over!

Tip 4:
Focus and specialize on what you plan to buy. Choose a niche and become an expert in it. Don’t forget, property market is an imperfect market. The information is not easy to get. Stay focus and choose a city suburb or even a street of shops or flats where you can get the information quickly.

Tip 5:
Big and expensive property is not always a good investment. Buying a big and expensive property also means paying larger monthly installment for your housing loan. It will make far more sense to buy a smaller dwelling that is easier to rent out rather than a big and expensive house that you need to find certain category of tenant.

We’ll perish if we do not change the way we build

As our population getting larger and larger, more and more cities, towns, neighborhoods and buildings are being built. Excessive buildings and developments have created a lot of social and economic problems. Developers or builders build for the sake of building. The original meaning of architectural beauty has been forgotten.

Saw this Crooked House somewhere. Pretty or pretty awful? Individual preference. Nevertheless, you have to respect the builder’s creativity.

Some description from Allcon (General contractor of the building):

"The building is situated in Sopot, at Bohaterów Monte Cassino Street. It is the compact settlement and it is an extension of the already existing shopping and service center which main entrance is at Haffnera 6 Street. Through booth building leads walking duration connecting service center between Haffnera and Monte Cassino Street. The building with its character refers to fabulous drawings of Jan Marcin Szancer and Per Dahlberg. Exterior elevation suits to very popular Monciak’s promenade style. The building with its floors refers to cornices and floors of neighbouring buildings. Colorful stained glass entrances, stone elevation decors and windows framed with sandstone make impression. There is also unusual roof covered with sheet metal with enamel roof tiles coloured with green shades, see blue and Parishian blue, which in the whole makes illusion of dragon scales. The building was projected as three-storey object with service attic. Communication between three storey assure the lift and allowed staircase freely available. Passage from ground-floor to storey is available thanks to perfectly demonstrated range stairs. Passage from first-floor to second floor leads through reinforced stairs and from second floor to mezzanine through steel stairs which are covered whole by wood."

World’s smallest state for sale

A former World War Two fort in the North Sea, which was settled 40 years ago and declared a state with its own self proclaimed royal family, is up for sale. The Times said yesterday.

The tiny Principality of Sealand, which began life as Roughs Tower in 1941, is a 550-square metre steel platform perched on two concrete towers 11km off the coast of Harwich, eastern England.

It is accessible only by helicopter and boat but according to its owners, who want offers of eight digits or over, boasts uninterrupted sea views, guarantees complete privacy and is a tax haven.

“We have owned the island for 40 years and my father is 85,” Prince Michael of Sealand was quoted as saying.

“Perhaps it is time for some rejuvenation.” – AFP

Top 5 Emerging Real Estate Markets For 2006

Rhiannon Williamson, a freelance writer on property investing and emerging real estate markets has commented on top 5 emerging Real Estate Markets for 2006.

Here with the article offers you an overview of each country so that you can choose where to make your next real estate purchase.

Costa Rica – The CIA World FactBook has recently begun listing Costa Rica as “a Central American success story” because the Costa Rican government have successfully established an economically and politically stable country in which more overseas investors are focusing their financial interests.

The retiree and second home markets in Costa Rica are growing as is tourism interest and the country offers visitors and expatriates a stunning climate, an abundance of rare and beautiful flora and fauna, it is bordered by both the Caribbean Sea and the Pacific Ocean and the standard of living is both high and affordable.
The real estate sector in Costa Rica offers investors an affordable platform and the Costa Rican government offer investors certain tax breaks and incentives to commit to the country.

Ghana – Located in West Africa Ghana is a stunningly beautiful country with palm fringed, white sandy beaches and an incredibly forward thinking and progressive government.
The government of Ghana are committed to improving the economic conditions in Ghana and are targeting foreign direct investment and making significant constitutional changes to allow for freer flowing investment which will in turn attract greater overseas economic interest.
The country has a growing tourism sector which requires accommodation units to let out to visitors offering a real estate investor an immediate opportunity for rental yield. And the long term economic prospects for Ghana are positive which should give a property purchaser long term capital growth prospects from any investment made.

Malaysia – Economically speaking Malaysia is built on very solid foundations and is benefiting from closer export ties to China, low inflation, a small external debt and good foreign exchange reserves.

The country also has a growing tourism sector and a vibrant city based young executive market - either of which a property investor could target for rental income. Real estate in Malaysia is affordable and economic indicators suggest that property prices will continue to rise steadily over the medium to long term giving an investor the chance to reap capital growth from any investment made as well.

Qatar – Forget Dubai for she’s a blown rose! The next big Middle Eastern real estate marketplace is Qatar where constitutional changes have been effected to allow for foreign freehold ownership of property in certain key geographic areas and where overseas investment is flooding in.

The Qatari government are actively targeting foreign investment into all business sectors and establishing an oil-independent economy that should be forever sustainable. The property sector is entirely secondary to the government’s focus, therefore an investor can rest assured that demand for real estate in Qatar will remain strong as the majority of buyers are purchasing for long term accommodation not purely for investment gain.

Turkey – In 2005 Turkey finally began the process for EU accession and immediately received substantial investment commitment from Dubai. The real estate market is already doing very well in Turkey especially in Istanbul and along the Turkish Rivera, but this investment boost will help to raise infrastructure standards in Turkey and has also already boosted worldwide interest in this vast and impressive country.

Real estate investors buying today will benefit from a growing tourism market, increased foreign direct investment as Turkey moves towards EU membership and also a property market that is currently under priced and that has massive room for price expansion.
Hopefully these hot tips will give you some food for thought and assist you with your next real estate property portfolio purchase.

By Rhiannon Williamson