Development frenzy sparks bubble fears in Johor
May 27, 2015 - Johor
Iskandar Malaysia in the state of Johor continues to be the focus for a multitude of new residential developments, particularly by Chinese companies targeting Singaporean buyers, who are being lured to invest in the economic zone due to its close proximity to Singapore.
This boom in construction looks to be leading to a glut, however, as prices and supply continue to outpace demand in the state.
Lawrence Wong, a board member of the Monetary Authority of Singapore, recently warned that the 336,000 private residential units in the pipeline in Iskandar totals more than the entire supply of private homes in Singapore, and the oversupply could inevitably lead to a price depression.
As The Malaysian Insider points out, this 336,000 estimate does not even include the reclaimed land near the Tuas Second Link, due to be developed from 2020.
Despite the significant price growth seen in the region a few years ago, Iskandar is losing some of its edge for investors.
According to Malay Mail Online, property value growth in the region reached its peak in 2012 at 25 percent annual appreciation but has exponentially decreased since then, plunging to only 10 percent in 2014.
Sales and development in Iskandar Malaysia are already wilting, The Financial Times also recently reported.
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Trends, property prices, real estate bubble, home prices, real estate prices