In case you have not heard of, there have been recently plenty of hype (see one of them in the link below) regarding the Malaysian government intention to build a great Iskandar JB, Malaysia. The news is so hot that I can almost compare it with the hype of REITS now (wherever you’ll go to, you’ll see people asking “when is a good time to enter REITS”).
I’ve recently went out with my ex-colleagues on property hunting in the Iskandar JB, Malaysia area. I must say that with such aggressive promotions backed from the government, developer took this opportunity to launch apartments after apartments, condos after condos and houses after houses to the public in large – which is why it makes an extremely difficult decision for investors. For some of the newly launched condos/houses, please see picture below.
Aren’t they impressive? Yes of course they do. Can you afford it? Yes, I think you can.
These condos and houses are launching currently at about RM900-RM1100 psf and if you convert them into SGD, then you’ll be looking at around SGD 300K for a 2 bedroom and SGD400K for a three bedroom. Sounds attractive? Wait, there’s more… For Singaporeans and non-Malaysian, the downpayment will usually be at 20% and with plenty of rebates that comes with the package, it looks like you only need 10% to make the downpayment and the house is yours. As for Malaysians, the perks are even better. They can literally get the house for “free” without any downpayment made since they would qualify for a 90% loan and along with the 10% rebate, they do not need to essentially come up with any money upfront to purchase a house. Sounds to me like a recipe for housing bubble in the making.
My Thoughts on this:
I do believe that Iskandar will be a great project for years to come with plenty of upcoming potential winners with branded schools (Marlborough College – this is where our Duchess Kate Middleton attended her college), great amenities (Gleneagles Hospital) and plenty of playgrounds and activities (Legoland, Hellokitty land) to play with. However, I suspect that the recent hike in prices in the properties in JB is not so much fuelled by real demand of homebuyers (of course it is a part of it but not a major one). Instead, I feel that the developer is promoting aggresively to increase the housing prices purposely so that the foreigners can buy in (note that foreigners including Singaporeans can only buy properties in Malaysia that is above RM500K) and then subsequently given the rebates of up to 10%. My point is given that the cost to the developer is nearly the same regardless of who they build a house for, it makes sense to just price everything higher so that they can capture more of the market; afterall, they can’t sell anything that costs less than RM500k to a foreigner anyway!
With the increasing stringent in rules regarding buying Singapore properties, it is easy to see why Singaporeans love Malaysian properties so much. It is much more affordable, bigger, nicer and anything and everything that you cannot find in Singapore. However, if you are thinking to purchase with the intention to invest, it is important that you should be comparing apples to apples and not apples to oranges. If you must compare, you should compare it to similar houses in the same promixity area.
Having said that, I feel that if you are investing for your own stay or looking to purchase a 2nd home outside of Singapore, then there are no better buy than the close proximity of our close neighbour – Boleh Iskandar, Boleh Malaysia 🙂