Although it was reported that authorities in Johor approved over 80,000 high-rise residential units, the Malaysian state is unlikely to see an oversupply.
This is because only 10 percent of the approved units are currently under construction, said KGV International Property Consultants executive director Samuel Tan.
“The general feeling is that there will be too many. But not all are being built simultaneously,” shared Tan.
Since 2013, developers in Johor have been rolling out mainly high-rise projects. In fact, China’s Country Garden Holdings launched 9,000 units at one go in Danga Bay that same year.
Given the incoming supply of high-rise properties, the Johor government issued a freeze on new applications to build serviced apartments.
But an industry watcher believes the freeze should only apply to certain locations and not “across the board”.
“There is still demand for high-rise developments, especially affordable ones.”
In agreement, Tan noted that some established areas such as Bukit Indah and Tebrau still see demand for affordable properties priced from RM300,000 to RM400,000.
“Those that can’t afford landed residential properties will look to affordable high-rise units. So the freeze by the state government should be selective, otherwise it would create pent-up demand,” he added.
Looking ahead, Tan feels the perception of an oversupply of high-rise residential units in the state could lead to a slowdown in transactions this year.
“Last year, transactions within this sub-segment did not slow down,” he said.
In its 2015 property market report, CH Williams Talhar & Wong (WTW) revealed that the existing supply of high-rise apartments increased 2.51 percent to 31,322 units in 2014 from the year before.
“The average transaction values of condominiums in the sub-sale market increased from RM400 per sq ft in 2013 to RM450 per sq ft in 2014, up 12.5 percent,” added the report.
Image: Johor Bahru skyline.
Farah Wahida, Editor of PropertyGuru Malaysia, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
