By Getty Goh (guest contributor)
Since the Malaysia Budget 2014 was announced in October 2013, many investors have been adopting a wait-and-see approach in response to the numerous property-cooling measures. However, there are also some who are still keen to enter the Johor and Iskandar Malaysia property markets as they view the uncertain times as an opportunity to find bargains.
To help these investors better understand the Johor market, my company recently developed some online real estate research tools. In this article, I will highlight some of our findings, derived from our research tools, that prospective buyers should look out for.
Findings 1: Where are the property hotspots in Johor?
The state of Johor has different towns and cities. Apart from Johor Bahru, some of the other towns that Johor has include Batu Pahat, Kluang, Kota Tinggi, Mersing, Muar, Pontian, Seggamat, etc.
If you are thinking of investing in Johor, have you ever wondered, where are some of the property hotspots within Johor?
To answer that question, we plotted out the transaction data for bungalows (see Figure 1) as well as condominiums (see Figure 2) on the Johor state map to see where the hotspots were.
From the figures, each circle represents transaction volume for the respective town/city. The bigger the circle, the more transactions that took place in that specific town/city.
Figure 1: Johor Landed Detached Houses Heat Map (2012Q1 to 2013Q1)
Figure 2: Johor Condominium Heat Map (2012Q1 to 2013Q1)
Comparing Figure 1 and 2, we can see that property type has an impact on how transactional activity is distributed. Thus, we can see that apart from Johor Bahru, places like Segamat, Kluang, etc. also had many bungalow transactions. On the other hand, for the condominium market, we can see that Johor Bahru had the most transactions, followed by Batu Pahat and Muar.
Hence, unlike bungalow investors, those who wish to invest in condominiums may want to focus on Johor Bahru, as the other towns have shown to have comparatively fewer condominium transactions.
Findings 2: Which property type has the most transaction volume in Johor Barhu?
At present, the Malaysian government does not reveal transaction activities for Iskandar Malaysia. Hence, to get an idea on what types of properties would potentially do well in Iskandar Malaysia, a detailed analysis of transactions in Johor Bahru is done (see Figure 3).
Figure 3: Breakdown of transactions for Johor Bahru (2012Q1 to 2013Q1)
Based on Figure 2, it was found that although Johor Barhu was a hotspot for condominiums, the property type that saw the highest transaction volume was terraced houses (see Figure 3). In comparison, condominiums had the third highest transaction volume (about 12.8%) while detached houses (i.e. bungalows) made up about 3.0% of all transactions that took place in Johor Bahru from 2012Q1 to 2013Q1. Despite the numerous condominium launches that took place in Johor Bahru (including Iskandar Malaysia) in the last few months, this chart tells us that terraced houses is very much in demand (presumably among the locals). Therefore, some investors may conclude that it would be more prudent to invest in terraced houses instead of condominium units.
The simple analyses above are by no means conclusive and there are many other factors investors will have to consider before making a purchase. Nonetheless, the key takeaway I would like you to have is that the overseas property markets are often not what they seem and doing some research can significantly increase your understanding of a new investment destination.
It is my hope that after reading this article, those who are still keen to invest in Iskandar will have a better idea of what to look out for. As the saying goes, ”information is power”. Who knows, these insights could be just what you need to help you find your next big deal!
Getty Goh has a Masters in Real Estate and a Bachelors in Building from the National University of Singapore. He is a director at Ascendant Assets and the Co-founder of CoAssets.com. South East Asia’s first crowd funding and purchase website. For those who wish to know more, please email him at Admin@CoAssets.com.