KUALA LUMPUR: Johor is undergoing a significant transformation, shifting from its previous status as having the highest overhang property to a more favorable position, according to Sheldon Fernandez, the country manager of PropertyGuru Malaysia.
Fernandez attributed this change to a series of initiatives undertaken by the state, including the development of the Rapid Transit System (RTS) Link, the establishment of Forest City as a special financial zone (SFZ), the proposed Johor-Singapore Special Economic Zone (SEZ), and the potential revival of the Kuala Lumpur-Singapore high-speed rail (HSR).
He said that these efforts have not only boosted property demand but have also led to an improvement in property values throughout the region.
"As we reflect on the past year, it is evident that Johor's property landscape has undergone a period of growth, resulting in a surge in demand for properties in the state, especially in Johor Bahru. Investors and homebuyers seeking to capitalise on this momentum should carefully consider Johor Bahru and its surrounding suburbs.
"With the development of major projects, such as the RTS and other initiatives that position Johor as an emerging hub of economic activities, the outlook for the state appears promising. The ongoing developments and anticipated economic growth could lead to attractive investment prospects in the real estate sector." Fernandez said.
The RTS Link, slated for completion by the end of 2026, is proving to be a catalyst for the southern state's economy by enhancing connectivity with Singapore and revitalising the local property market, especially in Johor Bahru, Fernanded said.
In the past few years, Johor's residential property market has grappled with a significant overhang issue, exacerbated by the Covid-19 pandemic. However, with the onset of post-pandemic recovery and recent advancements in transportation infrastructure, Johor is poised for a turnaround.
Following the announcement of the endemic phase in April 2022, iProperty Malaysia saw a 29 per cent surge in Johor Bahru's property demand index.
Similarly, as the RTS Link reached 50 per cent completion in April 2023, the demand index for Johor Bahru properties climbed by 17 per cent.
These demand trends are in line with NAPIC's Property Market Report 2023, which noted a 20 per cent decrease in Johor's unsold property units from 5,258 in 2022 to 4,228 units by 2023.
According to NAPIC, Johor emerged as the leading state in the 2023 Malaysian House Price Index (MHPI), showcasing an encouraging annual home price growth of 6.2 per cent.
In comparison, the runner-up, Penang, achieved a growth rate of 3.8 per cent.
Considering Johor's MHPI improvement and the RTS Link development in Johor Bahru, iProperty Malaysia took a closer look into the capital city's residential property transactions in 2023.
Based on actual transactions captured by brickz.my from December 2022 to November 2023, it was found that 70 per cent of the non-landed properties transacted belong to the service residence category.
"We are seeing a significant year-on-year (YoY) median asking price growth of 20 per cent for service residences in Johor Bahru. This could indicate that the advantage of seamless connectivity outweighs the preference for larger living spaces due to lower entry costs and closeness to a main mode of transportation," Fernandez said.
According to the Global Property Guide, the average gross rental yield in Malaysia stands at 5.16 per cent as of Q1 2024, with Johor surpassing the national average at 6.25 per cent.
When examining the gross rental yields for the 10 most popular projects, more than half exhibit yields exceeding 5.00 per cent.
"Though not exceptional, these figures offer some promise when compared to the nation's average rental yield. We believe this presents an opportunity for investors seeking properties with promising rental returns," Fernandez said.
He said one of the main reasons why the projects above appeared to be the most popular was their proximity to the RTS LInk.
Secondly, most properties on the list are freehold, indicating a preference for the type of tenure that allows owners to have greater control over their properties. While freehold tenure is a key factor for many buyers, other considerations such as location, amenities, infrastructure, and future plans also affect homebuyers' purchase decisions, he said.
