PROPCAFE have read enough Johor property market over last few years, especially comes to oversupply issues in Johor. However, being PROPCAFE, we would not just absorb whatever we read to come out a desktop review.
So, this time we head down to Johor to check out the situation, hear from Johorean, feel the sentiment and find out any misconception and opportunities of Johor properties.
With the opening of one of the biggest and most prominent malls in Johor Bahru – The Mid Valley, South Key Mega Mall, PROPCAFE has more reasons to make our hands dirty this time. Stay with us, we will bring you there!
Johor Properties? What’s going on!
Let’s go back to the basic and solve two questions below. You will then know what to do next.
(1) Where are the oversupply clusters in Johor?
Johor’s new launches increased 17% in 2018 which contradicted with the states like Kuala Lumpur and Selangor (significant dropped in new offerings). The continuous rise of supplies in Johor is rather worrying given the current weak property sentiment in Malaysia. Unless these launches can translate to sales, we may see potential worsening mismatch of supply and demand in Johor.
Wait a minute! We cannot generalise and conclude the oversupply in Johor by just using this data without digging out more information about the actual oversupply issues in Johor.
Source: NAPIC
NAPIC showed Johor is ranked as no 1 state in 2018 Property Overhang table. With this, it is common for investors to say – “Oh, Johor property market is oversupplied! Cannot touch anymore!”.
Well, no doubt the risk is there but decision making for property investment is not so direct and at the same time, it is not so difficult either. Well, you just need to zoom in further to search for the “cancer” of Johor property market!
With no surprise, the oversupplies are mainly coming from a well-known property zone. Where else? Iskandar Malaysia. Although this economic zone probably comes with the best blue print and masterplan in Malaysia, it is unfortunate that the over zoning of Flagship Zone A to E (basically to “everywhere” in Johor state) made it too large for the master developer and Iskandar Regional Authority Development (IRAD) to control.
The opaque execution and bad timing of the offerings from many big developers have caused the gluts of supply over a short period.
Based on the latest KPKT’s data source, by extracting few key developments in Johor Puteri Harbour and Forest City, it showed the unsold units were amounted to 22,847 units (see table below).
It is more than the Napic report of 16k units in the whole Johor state above. Although we could not reconcile the figures with NAPIC, the official KPKT data did reflect the biggest majority of the overhang units are actually coming from these few developments in the Flagship zone, outside the “old” and “matured” Johor Bahru City Center!
Source: KPKT Malaysia
So what have we learn from this? Many argued that the above projects were not built and targeted for local! In fact, it is proven in the foreigner ownership database revealed in KPKT source and it is also proven during our quick survey with many Johorean on the street.
For local folks, inconvenience is their main concern. For example, some of us in Klang Valley still willing to travel from Setia Alam to Kuala Lumpur City Centre on daily basis, but this is not the case for Johorean!
We all know that Iskandar Malaysia is supposed to be seen as “Shanghai equivalent” which aimed to push regional growth by leveraging the spillover from neighbor country – Singapore with its benefits of a much lower cost environment.
Sadly, this ambitious plan needs a very sustainable model over a long period and a proper execution with local participation to fill up the new zone like Iskandar Puteri (formerly called Nusajaya).
With the already large flagship zones and now added in the 5000 acres of reclaimed land of Forest City, without local joining the move, how could these places not oversupplied?
(2) Where are the areas with potential pend-up demand in Johor?
Since we knew the key overhang area, so let’s forget about the new zone for time being! The Johorean, whom we talked to, do not see the new zone like Puteri Iskandar relevant to them. It is mainly due to the location and pricing.
The local in Johor are not as adventurous as Klang Valley folks. They like the old and readied amenities. Our visit to Puteri Iskandar has proven that the population and amenities in Puteri Iskandar are still at the infant stage with limited entertainment areas, eateries, conveniences of daily needs, and transportation.
The current stage of Puteri Iskandar will not fulfill Johorean or possibly Singaporean needs as well. It will take some times. The question is, why wait for it if you have a better opportunity to explore?
The focus should go back to matured area surrounding Johor Bahru City. Johor Bahru folks and many Singaporean like to be near to everywhere for their daily routine and entertainment activities.
Although Johor Bahru city center is considered as Iskandar Flagship Zone A, PROPCAFE re-classifies it back to Johor Bahru city here to isolate it from the mis-conception of the over-supplied in Iskandar Malaysia.
Where is the potential demand in Johor Bahru? The answer is simple. It is on the map!
Based on the map above, you can easily see how matured Johor Bahru is. It means limited lands for future development. In the other hand, what happens to the new Iskandar flagship zones in Nusajaya/Puteri Iskandar? There are plenty of vacant lands there i.e. many developments to come.
How about the most “IN” areas near to Johor Bahru city? After we surveyed with many Johorean and visited the places there over the weekend, it is surprisingly easy to conclude! You will never go wrong with the upside down of the “Avengers – A”, based on the starting point of Johor Bahru City Centre!
The focus point of Johor Bahru is as simple as below!
JBCC (Point A) – Austin Height (Point B) – Skudai/Taman Ungku-Tun Aminah (Point C) – Taman Molek (Point D) – Bukit Indah (Point E)
PROPCAFE can safely conclude that the highlighted potential areas are the preferred choice of Johorean! By looking at the map, these places are mostly developed, which mean limited supplies. Each area has its characteristic. Johor Bahru City Center (JBCC) that being near to coast way to Singapore are mostly old areas that occupied by Singapore work-bound workers. You may have everything there but the existing properties in JBCC looks “tired” and “run down”.
Mount Austin, a higher end market in Johor, has plenty of up-market hangout commercial activities that providing night life atmosphere equating to Sri Hartamas in Kuala Lumpur. You can find Sunway College and a water themed park there as well.
A quick check on Semi-D in Austin Height showed the property pricing there has been holding around RM1.2-1.4mil over last 5 years after the spike in early 2010s (from the low of around RM700k).
Next is Sekudai (together with Taman Ungku Tun Aminah), a relatively quiet place that has transformed very well with the rise of commercial activities and shopping malls over last 10 years.
Taman Molek, a banking district, is also one of the favourites to Johorean with aplenty of decent and nice properties there. Price is not cheap though (2s Terrace has surged from around RM500k in 2010 to RM800k now). Further up is Tebrau city, we expect more demand will flock in there with the new boost – the opening of Ikea store.
Lastly, Bukit Indah. This township grew significantly after the completion of Malaysia-Singapore Second Link Bridge (included as part of Iskandar Puteri region). The 2 storey terrace price has moved from RM360k in 2010 to RM550k in 2019. The capital appreciation is indeed commendable. Many higher end properties are offered there over last 10 years.
The most notable one would be Horizon Hills. With its economy activities and amenities (clearly better than the newer part of Iskandar Puteri), Bukit Indah township will continue to take full advantage of the spillovers from the grand plan and infrastructure development of Iskandar Malaysia.
In short, it is obvious that these places are holding well due to the scarcity of the lands and location of being near to City Center. It is also not difficult to see the above areas are well supported by key toll-free highways from city center. Check it out more in next section.
You can easily notice the three key highways that branch out from JB city center (see yellow lines).
From JBCC, it splits into EDL (through SouthKey to link up North South Highway), Tebrau Highway (from SouthKey to Taman Molek and Tebrau City direction), Jalan Tun Abdul Razak (to Taman Ungku Aminah and Sekudai and link to Coastal Highway).
From east to west (Pasir Gudang to Bukit Indah), it starts with Pasir Gudang Highway to Singapore-Malaysia Second Link. In Johor, to find a gem, basically you can just search through the routes along these highways. It won’t go too wrong.
Next is to follow back the proven results in the “Avengers” and “Highways” indicator above.
New Super Hero after the Iron Man’s death?
With the dead of Iron Man, you need to find a new super hero! Spider Man?
Super Hero needs Power and what are his “Powers”?
Yup, SouthKey! The New Super Hero!? If you dig into the “Avengers” and Routes of “Highway”, you will find SouthKey is the only available large undeveloped land in the JB city centre! It is not “Far From Home”!
– Location and Accessibility
SouthKey is the only large development land left in Johor Bahru City Center (see below). This 330-acre lifestyle development is residing in the middle of city, literally besides the “Old World” like Taman Sentosa, Holiday Plaza (3km) and KSL Mall (3km), which mean it comes with full amenities. You have everything here within 5km.
SouthKey enjoys the direct access to the new Eastern Dispersal Link (EDL) that would bring you to City Square and CIQ (Singapore Coast Way) within 6km distance.
The EDL also connects to the other three most important highways in Johor i.e. North South Highway (to Kuala Lumpur), Pasir Gudang Highway (to east and west of Johor), and Tebrau Highway (to Tebrau City/Kota Tinggi).
What else? It is sitting along Jalan Bakar Batu (to JB East Coast Highway & Permas Jaya) and easily links up with the JB city inner roads and the main Jalan Tun Abdul Razak. The connectivity in the city is really superb.
– Masterplan that take Johorean Lifestyle to the Next Level
It is the fact that Johor city center is dated and lacking of “energy”. Many projects are scattering around the city without any large scaled integrated developments. SouthKey is now changing this scene and putting a big plan there with –
- 18-Acre Central Park – Probably it is going to be the only big landscaped park under the integrated mixed development in Johor Bahru. The 18-acre recreational park with lush greenery will take the focal point of the whole development to rejuvenate the experience and lifestyle for Johorean, visitors/shoppers, residents and office employees nearby SouthKey.
- High Street – Office suites, Soho, Service Apartment and Condominium to boost the day and night population in SouthKey.
- Business Park with the range of boutique pod, offices, and shop offices to cater different business purpose and usage.
- Park Residences – Approximate 45 acres park-front modern residential enclave.
- Columbia Asia Medical Center. The medical centre has opened its door and now serving the city folks in JB.
- Hotel and Commercial Retail Shophouses. This component will make the township more balance and complete.
- Education zone will host various type of education institutions to further stimulate the vibrancy of SouthKey and meet the educational needs for residents in JBCC and SouthKey.
Lastly, it comes with the Biggest Mall in Johor. This is the “Super Power”!
– Mid Valley, SouthKey Mega Mall
This is the “Super “Power – Spidey Sense” that prompted PROPCAFE to visit Johor properties. All of us missed the boom of properties surrounding Mid Valley – Mega Mall in Kuala Lumpur 20 years ago, this time round we will not simply let this opportunity to slip through us without checking it out. The first phase of SouthKey Mega Mall has been opening its door to public in April 2019. Apparently, Corporate and Hotel Towers are also work in progress.
Based on the component of Mid Valley City in Kuala Lumpur (see below), you can expect the similarity in SouthKey Mid Valley Master plan, for example Hotels (WIP), Grade A Corporate Office Towers (WIP), and Residential Service Apartments (expected in future phase). IGB also already put in plan for the extension of existing SouthKey Mega mall in Phase 2. Garden Mall? Not a surprise.
Don’t It Sound Familiar?
Everyone in Klang Valley know how successful Mid Valley City is. Tan & Tan/IGB Berhad certainly knows how to create value and ensure the survivor-ship of the mall with day time footfall to form its ecosystem, especially from the hotel and corporate offices. In order to make the corporate offices work, they certainly know the location will decide everything.
To recap, Mid Valley City Kuala Lumpur is located few km from City center, besides the old world like Bangsar, Kerinchi, Brickfields and etc. It is right besides the link roads in Kuala Lumpur i.e. Jalan Syed Putra and Federal Highway. Let’s stop here. Aren’t we talking about the same characteristics above when we touched on SouthKey location earlier?
Undeniable, IGB is one of the most successful corporates and developers in Malaysia. They have tones of resources and consultants to serve them. Without a proper homework and research, SouthKey will not be their choice.
The strategic direction is not only to bring more lifestyle and up-market segment to Johorean, they are also targeting the “flow” from Singapore who very familiar and used to the “integrated” modern environment and facilities.
Yes, Singapore folks can come straight from ICQ to the mall directly from the elevated EDL highway within few km without the needs to go through the inner roads in JB.
Due to its location and new facilities/amenities, PROPCAFE sees SouthKey as the new life in Johor Bahru, in term of the choice of higher end residential and commercial activities.
Based on IGB’s proven track record of Mid Valley City, it is easier just to follow the successful big boy like them which will save you hundreds of research hours and millions of consultation fees (yup, they had already paid it for sure Lol).
With this end note of “Super Powers”, we would like you tell us if there is any other project in Johor Bahru City Center that matches SouthKey’s offering above. If not, the answer is writing on the wall. SouthKey will be one of the rare gems in Johor Bahru City Center.
What have been completed in SouthKey?
PROPCAFE visited SouthKey Mosaic, which consists of 5 units of 4-storey boutique pods (occupied by Great Eastern, Hong Leong Bank, CIMB and Allianz), 41 units of 4 storey shop offices and two towers of serviced apartments.
Without a doubt, commercial areas in SouthKey are much better designed in term of infrastructure (proper road planning) and better looking facades compares to its neighbour townships and “old world” in Johor City Center.
Actual Site of Mosaic, SouthKey
Mosaic Service Residences is the only completed residential property in SouthKey so far. Well, we need to highlight that we failed to get a two bedrooms Airbnb unit at Mosaic during our visit in JB as all units were fully booked.
The two towers of 584 units over 34-storey comes with 1 to 3+1 bedroom layouts (676sf to 1509sf). For those who like facilities, Mosaic has allocated 105k sqft at the 7th floor for the facilities (see below) for residents, which is rather huge in today’s standard.
Mosaic comes with decent ambience and it is the One to catch if you want and need a place now in SouthKey.
Actual Site of Mosaic Service Residences
Show Unit and Actual Bare Unit
Fantastic View from Mosaic Service Residences
What is NEXT?
There are so many things to write about Johor Bahru and of course the development of SouthKey as well. Without coming down Johor to witness it, we probably would still holding some mis-conception of property market in Johor.
Johor property market is big and we cannot make judgment by consuming high level information. Hopefully, the “Avengers” and “Super Powers” would help you to gain more insight and use the methods to evaluate the properties in Johor Bahru.
PROPCAFE will stop here for the first part of Johor Bahru and SouthKey series. It is definitely not the end of our Johor Bahru series. What’s in the line? During our trip, we managed to peek on the next offering of SouthKey – “The Herald”, a very interesting new generation Shop-Offices and business suites tower with co-working and common facilities. If you are looking for commercial opportunities, don’t miss it.
PROPCAFE also found out SouthKey’s another plot of land that developer coded it as “Entertainment City”. Hearsay, some big fast food chains have comfirmed its presence there! Well, not hard to see the drive-through feature in the photo below 🙂
The most interesting part of this latest plan is the inclusion of the container market place. Check out the photo below – before we are summoned to take it down by developer!
For those who do not know about this concept and cannot wait for our next series, you may check out the Common Ground in Korea (youtube below). Yup, one of the most trendiest hipster hangout market places and instagrammable spots in Korea! Cool stuff! It will be in SouthKey in near future.
So stay tuned, we will publish SouthKey series two soon!
Good sharing! With this article, JB property no longer as scary as i thought last time. Agreed that matured area in the city is the way to go. Still, it depends on the amenities and conveniences surrounding the property. SouthKey is still new and no much publication as well. At least now i know there is something big mixed dev worth for a look in JB city.
Hi do you think history will repeat itself at mid valley southkey
Ken, thanks for your comment.
We will cover the masterplan of southkey in next article which will surely touch on your question. Just to give u a bit of teaser.
Southkey, the project as awhole is bigger than existing midvally city in kl. midvalley is just a part of the southkey project. IGB already executed the mall, means it has repeated the mall dev. Next is their corporate office and hotel, same o same planing like Midvalley city in kl already more than half way through (wip). Again, repeated. Next will be the mall extension to link with existing mall (IGB already announced it and recorded in one of the news), so garden mall likely ll be there as well. The last bit will be the residence component of midvalley city. This one, we guess it could be together with its garden mall dev there. Lets see whether we are right. the land which yet to develop is quite sizeable.
One thing u need to know is, in term of the loc and connectivity wise, southkey is equally good as midvalley city in kl. we saw many similarity of it. The only difference is southkey has bigger land and its masterplan have more components (from SouthKey developer)than existing midvalley city in kl. We will show you more about SouthKey as awhole in series two, stay tuned!