The Johor property market is expect to face another challenging year as foreign buyers, particularly those from China and Hong Kong, had become more cautious with their spending as they wait for the pandemic to subside.
According to VPC Realtors (JB) Sdn Bhd Asia Pacific Property Consultant Bruce Lee, most of the foreign buyers are observing the latest policies of Malaysia on the property market amid the economic uncertainties brought by the COVID-19 pandemic.
“The majority of the overhang property in Johor is located in the Iskandar region, which includes Johor Bahru, and the fundamental issue or root cause of it is that the units were originally built with foreign buyers as the target market,” he told The Malaysian Reserve (TMR).
“The pandemic outbreak is one of the elements that made matters worse. The demand for unsold properties that were originally built for foreigners has become almost non-existence,” he added.
Recent data from Rahim & Co International Sdn Bhd showed that Johor continued to have the highest number of unsold properties at 33,000 units.
Debbie Choy, Knight Frank Malaysia Sdn Bhd’s Johor Branch Head, expects the downbeat demand to continue into 2021, given the continuation of the Movement Control Order (MCO).
“The asking price in the second half of 2020 (H2 2020) went down slightly because it had severely dropped in H1 2020 due to the pandemic,” she said as quoted by TMR.
“With the resurgence of the COVID-19 cases, the five-year trend now is definitely looking downward, especially for the high-rise units, which contributed the most to the unsold properties in Johor.”
She expects the oversupply to continue as demand for serviced apartments and condominiums remains weak.
“With the MCO and closed international borders, developers could not sell their units if people could not house-hunt,” said Choy.
On properties sold to Hong Kongers, she noted that the units were mainly high-rise residences priced between RM500,000 and RM700,000.
“From our understanding, not all developers who promoted their units in Hong Kong were successful,” she said.
“However, there were some developers who claimed to have succeeded in getting booking fees. The success in getting interests from Hong Kong buyers is depending on what sort of units you are selling.”
She described the properties that sold quite well as being “in the Hong Kongers’ affordable range of RM500,000 to RM700,000 per apartment”.
Units in the prime range, on the other hand, did not attract enough attention from prospective buyers from Hong Kong.
She revealed that foreign buyers in Johor tend to acquire apartments, “very rarely” going for landed properties.
Hong Kongers’ interest for Malaysian properties picked up following a violent protest against the Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill in August 2019.
Once enacted, the bill would enable local authorities to detain people targeted in regions and countries that Hong Kong does not have extradition agreement with, such as Taiwan and mainland China.
“After the riot, we saw an uptick in interest from Hong Kongers looking to buy properties outside of Hong Kong,” said Choy.
“Several developers in Johor took the opportunities to do roadshows and present their properties there.”