JOHOR BAHRU: When Singapore enterprise proprietor Jonathan Gan bought a 4-room condominium at Lovell Country Garden in 2018, he thought he had clinched his dream retirement residence.
The freehold residence situated close to Johor Bahru’s metropolis centre was twice the dimensions of his 3-room HDB flat in Singapore, however the fee was solely half of the latter when he purchased it straight from the builders.
“The best thing about the unit is the amazing view. You never get anything close to it at such value in Singapore,” added the 42-year-old, who lives along with his spouse and two daughters.
The residence, like most items within the Lovell growth, overlooks the Straits of Johor. The balcony opens as much as a picturesque sea view and there’s a sandy seaside under.
“It was the ideal weekend home,” mentioned Gan. “But now it’s becoming a bugbear.”
Just three years after he bought it, Gan who purchased the unit at round RM1 million (US$242,000) is having a hard time making an attempt to promote it, despite the fact that the asking worth is a fraction of what he paid for it.
Since the COVID-19 pandemic hit final yr, border closures between Singapore and Malaysia meant that he and his household couldn’t go to his weekend residence.
Furthermore, Gan’s enterprise in Singapore has been affected by the pandemic, and he now must promote the residence to achieve some liquidity.
“All this was never part of the plan. But the house is just left there, collecting dust and its value is going down by the day. We felt it is better to cut our losses and try to get rid of it,” he instructed CNA.
Despite being on the market for over a yr, there have been no takers. He has engaged brokers and even marketed the unit on numerous property portals however to no avail.
“There is not much hope. Barely anyone has viewed or signalled interest,” he mentioned.
Gan is amongst property homeowners in Johor Bahru who’re having points making an attempt to promote their properties, because the market is within the doldrums as a result of extended results of COVID-19.
Condominium developments round Johor Bahru have been constructed with overseas patrons in thoughts, however the pandemic has closed borders, leaving a lot of them empty. Units owned by these from China, Singapore, Hong Kong have been left unoccupied whereas properties that have been left unsold have stayed empty. Landed property is additionally dealing with potential depreciation.
JOHOR’S OVERSUPPLY PROBLEM
According to statistics compiled by property consultancy agency Henry Butcher, the worth and quantity of residential property transactions in Johor had been climbing “rather steadily” from 2017 till 2019.
In its report on the outlook of the Malaysian property market in 2021, the agency famous that the amount of transactions rose 8 per cent in 2018 and seven.5 per cent in 2019, whereas the worth of the transactions elevated by 1.5 per cent in 2018 and 15.9 per cent in 2019.
The report highlighted that the Movement Control Order (MCO) imposed by the Malaysian authorities from Mar 18, 2020 was a key purpose that reversed the upward development.
It mentioned that within the first 9 months of 2020, the amount and worth of transactions declined by nearly 1 / 4 in comparison with the identical interval in 2019.
Property analyst Debbie Choy, who’s director of Knight Frank Malaysia’s Johor department, mentioned the scenario is especially unhealthy for condominiums and serviced residences, of which there’s an oversupply within the Iskandar area.
“Many developments were targeting a large proportion of overseas buyers. With the prolonged effects of COVID-19 restricting movements, it has been challenging for developers or investors to offload either for sale or rent,” mentioned Choy.
The scenario is exacerbated by the truth that foreigners are presently not allowed to buy properties in Malaysia beneath the Malaysia My Second Home Program (MM2H) scheme, which has been briefly suspended since July 2020.
MM2H was suspended by the Ministry of Tourism, Arts and Culture (MOTAC) according to the federal government’s resolution to bar foreigners from getting into enter Malaysia following the outbreak of COVID-19.
MOTAC added that the federal government is at the moment reviewing the MM2H programme, and that foreigners nonetheless to take part should abide by the most recent necessities when it’s reinstated.
MM2H president Anthony Liew was quoted by native media final Sunday (Jun 6) saying that the suspension has curtailed curiosity from Singapore and China patrons in Johor property.
“The three big Chinese developers, Country Garden Pacificview, R&F Development and Greenland Group, have seen the demand for their developments in Johor from Chinese buyers drop,” Loke reportedly mentioned.
Even homeowners of the extra premium, newer developments in Johor Bahru are having issues making an attempt to draw tenants.
A Taiwanese girl, who needed to be recognized solely as Okay, instructed CNA that she has put up her 3-room condominium unit at The Astaka for hire, after she headed again residence when the pandemic hit.
The Astaka, a premium condominium situated at Bukit Senyum within the coronary heart of Johor Bahru, noticed 70 per cent of its items snapped up by patrons when it was first launched in 2019.
The two towers, standing at 65 and 70 storeys, have 3 or 4 room items of between 2,207 and a pair of,659 sq ft.
However, after the pandemic hit, demand has dried up and homeowners who are usually not in Johor are usually not capable of finding tenants.
Okay instructed CNA that she had bought the unit in 2019, with the thought of renting it out for funding returns. However, after nearly two years, no tenant has made a “suitable offer”.
She first listed her 3-room unit at RM5,700 a month. Fifteen months later, she has lowered the rental worth to RM3,800 and there has not been a single supply from potential tenants. She bought the unit for round RM2 million.
“I think considering the circumstances, I have no choice but to lower the rental price. I notice that there have been no offers. I am patient. Hopefully, when the pandemic is over, there will be people who are interested,” mentioned Okay.
The demand from Johoreans has additionally weakened, as they reel from the consequences of the pandemic.
Khor Yu Leng, a political economist with consultancy agency Segi Enam Advisors, mentioned that apart from border closures limiting overseas patrons or tenants, locals are additionally grappling with the financial affect of COVID-19 and their disposable earnings has been restricted.
She famous that locals with extra spending energy have been sometimes Johoreans who commuted each day to Singapore for work. However, with borders closed from each day commuting, this group is both out of labor or is now primarily based in Singapore.
“The spending power of the former Johor daily commuters and Singapore residents who visited Johor weekly or otherwise has diminished or disappeared from the Johor economy,” mentioned Khor.
She famous that the affect on the Johor economic system meant that some Johoreans have turned to the state authorities for monetary help,and shopping for luxurious condominium property will not be reasonable.
“A yr later, with Johor’s financial umbilical nonetheless reduce off from Singapore, and Malaysia struggling a giant wave of COVID-19, casual social assist actions (to assist the lower-income households) have been ongoing,” added Khor.
Even with the overall value and volume of transactions increasing prior to COVID-19, Khor noted there were signs that some condominium developments were struggling to sell their excess units.
In its report, Henry Butcher Malaysia highlighted that Johor was the state with the highest proportion of unsold residential properties in the country, even before COVID-19.
The report said that Johor contributes 19.5 per cent of “overhang” residential properties and a whopping 73.7 per cent of all overhang condominium apartments in the country in 2019.
“Of these, approximately 34 per cent of the overhang service apartments/sohos are priced over RM1 million which were believed to have been designed specifically for foreign investors from Singapore and China,” the report said.
LANDED HOMES ALSO AFFECTED
Besides condominiums and serviced apartments, those with landed properties in the southern state are also concerned about depreciating values.
A Singaporean who needed to be recognized solely as Mustaqim, who owns a 2-storey 4,000 sq ft terrace residence at gated neighborhood Horizon Hills, has expressed concern that the worth of his home is depreciating since he bought it in July 2017.
Horizon Hills is in style amongst overseas patrons, particularly Singaporeans, as it’s a mere 15-minute drive to Tuas Second Link. The growth can also be near facilities such because the Sunway Iskandar township, which has hospitals, malls in addition to prestigious worldwide faculties.
Mustaqim purchased the home as a retirement residence somewhat than an funding, however admitted he was apprehensive that primarily based on latest worth tendencies within the space, his residence has misplaced a few of its worth.
He purchased his residence a decade after the event was launched in 2017, for round RM1.8 million.
“With COVID-19, some of my neighbours who are Singaporeans have decided to sell their homes for RM1.1 million to RM1.2 million. It is spoiling the market a bit but I can understand why with the borders closed,” mentioned Mustaqim.
“I am concerned that this downward trend will continue and my home’s value will be going lower and lower. I would be owning a depreciating asset,” he added.
However, Mustaqim, who’s at the moment in Singapore as a result of borders being closed, is set to attend out the pandemic.
“The value will rise again post-pandemic,” mentioned Mustaqim.
Property brokers in Johor have additionally seen their livelihoods hit with the decrease quantity and worth of transactions throughout COVID-19.
An agent who needed to be quoted solely as Brian, instructed CNA that he has been compelled to take a second mortgage on his own residence because the variety of transactions has dried up for the reason that pandemic.
“Some months I barely make any transactions, so I’ve been looking around for another job to tide through over the next few months,” he mentioned.
The agent, who specialises in promoting condominiums within the central Johor Bahru space, mentioned that almost all developments have the identical downside – too many items on sale with “almost zero” demand.
“Some months, we have to live with zero completed transactions. So, the situation is really bad for us,” added Brian.
The tightening of restrictions during the ongoing nationwide MCO 3.0 meant that agents are not able to legally arrange physical viewings of homes for any interested buyers or tenants. With virtual viewings being the only permissible option, it becomes even harder to make a sale.
CNA has approached the Johor chief minister’s office, as well as the state housing and local government committee for comments on the state of the property market and whether measures will be taken to assist industry players.
EMPTY HOMES SUSCEPTIBLE TO CRIME
Another headache for owners whose properties have been left empty is their susceptibility to break-ins.
Economist Khor said that properties that are not located within gated communities may be more vulnerable.
Investors with properties in Johor but cannot be physically there are now confronting the practical problems of how to guard, maintain and have a house-sitter, she said.
“The actuality of the extended border closure will certainly crimp some future demand,” she added.
In September last year, it was reported that police had arrested two men for breaking into houses at Taman Bukit Indah, a suburb where foreigners have been known to invest in property.
Johor police added that the pair had specifically targeted vacant homes whose owners were in Singapore due to the border restrictions.
Rahmah Zainolabidin, a Singaporean who chose to remain in Johor Bahru during this pandemic, told CNA that she has been taking care of homes belonging to her family members who have chosen to return to the city-state.
She told CNA how her sister’s home, a terrace house located in a non-gated community in Taman Bukit Indah, had been robbed in August 2020.
“When I was walking towards the home from afar, I could see that something was wrong. The windows were pried open wide and the gate was ajar,” said the 65-year-old.
“They broke the gate grilles and drilled into the safe, taking thousands of dollars in cash as well as jewellery,” she added.
Rahmah mentioned that her sister was contemplating promoting the home, however she needed to first put aside cash to restore the harm inflicted.
“It is sad because she already got robbed, but now she has to fork out more money to try to sell it off. And in this market, I’m convinced there will be little interest, especially with the number of robberies reported in the area,” Rahmah added.
“Crime is a serious issue … I don’t think people would consider buying homes in areas with high incidences of break-ins.”
Charmaine Tay, a freelance agent who focuses on property offers in Johor Bahru and the Medini Iskandar Malaysia space, instructed CNA that homes situated in areas with a excessive incidence of break-ins have seen a drop in worth and demand.
“Many buyers are aware that landed homes are susceptible to break-ins in Johor, so they tend to look for those located within gated areas where there are security checks,” mentioned Tay.
“But for those houses outside gated communities, especially in areas like Taman Bukit Indah where robbery is common, they are harder to sell, and the value has depreciated faster recently,” she added
BUYERS FROM OTHER STATES, OVERSEAS BARGAIN HUNTERS COULD SPARK RECOVERY
Those interviewed by CNA mentioned that there are two teams of patrons who may assist pave the way in which in direction of restoration within the residential property sector.
The first group is potential patrons from different states.
Choy of Knight Frank predicted that home tourism will possible get well first. She famous how within the second half of 2020, the property market noticed a slight rebound when motion restrictions have been lifted domestically earlier than one other wave of infections hit in September.
Choy mentioned that many Malaysians who’ve been caught in Kuala Lumpur would then take some “leisure time off” and possibly buy or rent properties in the smaller cities.
However, she warned that the high-rise residential sector in Johor would only see gradual and slow progress as the units, which are in abundant oversupply, are not priced right for locals.
“Developers have since then restructured and re-looked at planning to target more local purchasers i.e. by reducing unit sizing and thus, the end pricing – this makes the prices more palatable for the local community,” said Choy.
READ: ‘The ball is in our court’: Johor chief minister on reducing COVID-19 cases and border reopening with Singapore
The return of foreign buyers may also provide some relief.
Choy highlighted the reopening of borders will provide “a extra optimistic outlook with extra certainty and adaptability on journey preparations”, especially with the currently low prices.
She noted that even as there will be bargain hunters from overseas, foreign buyers should note the Johor land administration has stated that there is a minimum threshold of RM1 million on residential homes for non-Malaysian citizens.
With borders remaining shut in the short term, the situation seems especially bleak for those desperate to sell their homes like Gan, who cannot find a buyer despite lowering his asking price for his 4-room apartment at Lovell Country Garden.
“It’s a sticky situation. Although we had good times using it as a weekend home, ultimately buying it was a wrong decision we now regret,” he said.