Iskandar Malaysia beckons

PETALING JAYA: The property market in Iskandar Malaysia, Johor, shows promise underpinned by projects close to the Rapid Transit System (RTS), higher spending power by visitors from Singapore and strong interest from multinational corporations (MNCs).

RHB Research noted the retail, hospitality and real estate players around the city centre are benefiting from the higher consumer spending power of the Singaporeans with a spillover effect likely to be felt further out over time.

The research house found business activity had improved significantly since the lifting of border controls post-pandemic in the region, with property agents receiving an increasing number of queries from potential Singapore buyers.

“We also learned that monthly rental rates for certain condominiums in the city centre started rising to RM5,000 per unit from RM2,500 when borders reopened – to levels on par with rental rates in Kuala Lumpur’s city centre,” RHB Research stated in its report following a fact gathering trip down south.

It added that Airbnb operators had indicated occupancy rates for the units under management have risen 70% to 80% on average year-to-date.

RHB Research said the property market there could get a boost from the WCity@JGCC project, which is slated to be launched in the final quarter of this year.

The first phase of the project, which is just a 10-minute drive or 7km from the RTS station at Bukit Chagar, will have an average selling price (ASP) of RM900 per sq ft and the developer is allowed to sell units priced above RM400,000 to foreigners.

“We think it will be able to garner strong interest from local and international buyers – given its concept, layout and, more importantly, short distance to the RTS,” the research house said.

The improving pricing power will also be visible for the second residential block in Coronation Square, the project closest to the RTS station, that will be launched soon.

The project’s first tower block, which was 80% booked and 60% of the sale and purchase agreements signed, has an ASP of RM1,200 per sq ft but the second tower will likely be priced at RM1,300 to 1,350 per sq ft, according to the research house.

“As for the residential component to be developed by MTR Corp, the ASP is expected to be around RM1,800 per sq ft upon the launch of the project – as it will be integrated with the RTS terminal and the customs, immigration and quarantine or CIQ complex,” RHB Research added.

The property market in the state could also be boosted by catalytic developments focused around the Malaysia-Singapore Second Link area.

The location has also attracted interest from MNCs looking to relocate due to the US-China trade tensions while the fast-lane service has eased the entry of corporations in the digital economy, pharmaceuticals, electrical and electronics, electrical manufacturing services, chemicals and petrochemicals, and aerospace sectors, according to state officials interviewed by RHB Research.

It has kept an “overweight” call on the sector, with UEM Sunrise Bhd and Sunway Bhd as its top picks with a target price of 92 sen and RM2.67 per share respectively.