I am glad that there are more and more people that is raising the alarm for the oversupply of Iskandar. Now from a recent article from the Straits Times has clearly pointed that out and supported by numbers. Let me interpret in simple terms what it means.
1. Severe oversupply.
In forth quarter last year, there were 118,191 homes under construction in Iskandar and another 168,371 planned. Johor has a population of 3.5 million as compared to Singapore of 5.3 million. However, Singapore only has about 67,000 homes under construction and another 6,000 planned as of first quarter this year.
More development are coming up. Country garden launched 9,000 and developing a 2,000ha island called Forest City off Tuas. This is 3 times the size of Ang Mo Kio. Guangzhou R&F princess Cove will build another 3,000 apartments by 2017. It may even launch as many as 30,000 in the end. Another 80ha of Iskandar land has been bought by Shanghai-based Greenland Group, Zhouda Real Estate Group and Hao Yuan Investment.
2. Is there an economic boom to sustain such frenzy in real estate development?
As far as i can see now, the answer is clearly a 'no'. Of all the RM131.6 billion (S$51.5 billion) committed investments in Iskandar from 2006 to december last year, a quarter (RM33 billion) went into residential property development. This is very strange as usually for such a frenzy to start first, there should at least be a boom in the economy. Not the other way around. Take china for example, the economy is booming as it has become a global factory over the past decades and thus the sky rocketing prices of the properties in some of the major cities. But what about Iskandar? It appears to be the other way around where they are pre-empting a boom in the local economy and building houses. Is there a gold rush such that companies around the world are rushing to setup factories or business there? Answer again is no. The gold rush is nothing but appears to be hype created by property developers to capitalize on our greed.
There was an interview that they did with a real estate agent. She said that she plans to rent out her condo and the rental demand could come not just from expatriates working in Johor but also those working in singapore who would like more space and the lifestyle in Iskandar. Well, i would say that's only wishful thinking. Firstly very few expatriates would want to live in Johor and work in Singapore. It is just too inconvenient having to cross the causeway twice daily. If they are indeed expatriates, the company will pay for the rental and why should they care? If they pay for it themselves, they are not viewed as 'expatriates' generally but just foreigners on local terms. Secondly, if they want more space and lifestyle, they wouldn't have rented a condo too but a house. Soundly as absurd as it is, people tend to believe what they want to believe so it is up to you to decide with all the supporting argument and data (more would be preferred but I think that little is already scary enough for me).
1. Severe oversupply.
In forth quarter last year, there were 118,191 homes under construction in Iskandar and another 168,371 planned. Johor has a population of 3.5 million as compared to Singapore of 5.3 million. However, Singapore only has about 67,000 homes under construction and another 6,000 planned as of first quarter this year.
More development are coming up. Country garden launched 9,000 and developing a 2,000ha island called Forest City off Tuas. This is 3 times the size of Ang Mo Kio. Guangzhou R&F princess Cove will build another 3,000 apartments by 2017. It may even launch as many as 30,000 in the end. Another 80ha of Iskandar land has been bought by Shanghai-based Greenland Group, Zhouda Real Estate Group and Hao Yuan Investment.
2. Is there an economic boom to sustain such frenzy in real estate development?
As far as i can see now, the answer is clearly a 'no'. Of all the RM131.6 billion (S$51.5 billion) committed investments in Iskandar from 2006 to december last year, a quarter (RM33 billion) went into residential property development. This is very strange as usually for such a frenzy to start first, there should at least be a boom in the economy. Not the other way around. Take china for example, the economy is booming as it has become a global factory over the past decades and thus the sky rocketing prices of the properties in some of the major cities. But what about Iskandar? It appears to be the other way around where they are pre-empting a boom in the local economy and building houses. Is there a gold rush such that companies around the world are rushing to setup factories or business there? Answer again is no. The gold rush is nothing but appears to be hype created by property developers to capitalize on our greed.
There was an interview that they did with a real estate agent. She said that she plans to rent out her condo and the rental demand could come not just from expatriates working in Johor but also those working in singapore who would like more space and the lifestyle in Iskandar. Well, i would say that's only wishful thinking. Firstly very few expatriates would want to live in Johor and work in Singapore. It is just too inconvenient having to cross the causeway twice daily. If they are indeed expatriates, the company will pay for the rental and why should they care? If they pay for it themselves, they are not viewed as 'expatriates' generally but just foreigners on local terms. Secondly, if they want more space and lifestyle, they wouldn't have rented a condo too but a house. Soundly as absurd as it is, people tend to believe what they want to believe so it is up to you to decide with all the supporting argument and data (more would be preferred but I think that little is already scary enough for me).
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