RHB Research's optimism on Iskandar property market grows as market moves past property glut

• Apart from that, rentals for condominiums in Singapore grew 32% annually in the first quarter of 2023, while the government has also imposed a steeper stamp duty starting April.

KUALA LUMPUR (July 24): RHB Research is growing more positive on the prospects of the Iskandar Malaysia property market in Johor, as it believes that the market has moved past the "Forest City scare" or supply glut from the massive mixed-use development, thanks to incoming infrastructure developments.

According to previous reports, more than 20,000 units have been sold as at 2019.

"Since we last visited in 2019, we feel that the momentum has picked up in Johor, especially in areas surrounding the RTS (rapid transit system) station at Bukit Chagar.

"Although none of the listed developers have projects in the Johor Bahru (JB) city centre, the overall Iskandar property market is expected to benefit from the return of property investors and buyers, both local and foreigners. This will further be boosted by increased spending from visitors from Singapore as well as the revival of the KL-Singapore HSR project," said analyst Loong Kok Wen in a note on Monday (July 24).

"There are circa 11 projects surrounding the RTS station at Bukit Chagar going at an average selling price of RM1,000-RM1,300 psf.

"This is on par with the average prices of condominiums in the KLCC area. A visit during the night shows that many residential units located near the station are well lighted up. In years to come when the connectivity is enhanced and more buildings are tenanted, JB city centre will likely expand."

She maintained her overweight call on the Iskandar property market, with buy ratings on UEM Sunrise at a target price (TP) of 70 sen, IOI Properties at a TP of RM1.46 and Matrix Concepts at a TP of RM1.75, as cross-border traffic is expected to increase due to the completion of Johor Bahru-Singapore Rapid Transit System (RTS) in 2026 and the KL-Singapore high speed rail (HSR) in 2033.

Apart from that, rentals for condominiums in Singapore grew 32% annually in the first quarter of 2023, while the government has also imposed a steeper stamp duty starting April.

She reported that Johor’s data centre investments alone contributed RM51.1 billion in 2022 and that the state sees RM17 billion worth of new investments in 2024.

Meanwhile, Johor continues to oversee investments from various international manufacturers and pharmaceutical players such as Bucher Emhart Glass, Colorcon Inc, HQ Pack and Insulet Corp.

According to the Malaysian Investment Development Authority (Mida), Malaysia has attracted RM264.6 billion in approved investments, manufacturing and primary sectors in 2022, which is 14.5% lower than 2021 figures.

Nonetheless, Johor was the top state for foreign direct investment inflow with RM70.6 billion in 2022, representing 27% of the total.

“Should renewable energy become an economic driver for the Johor state in the upcoming years, there is potential for economic collaboration between Johor and Singapore that results in a positive spillover to the Iskandar property market given low property prices and the standstill demand situation that lasted over six to seven years,” she added.