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Iskandar -- Now is the time to invest in or it's overhyped?

sgcount

Alfrescian
Loyal
Hi all, I would like to hear from those who have bought homes in JB.... I know some of you bought a house for your own stay (perhaps seeing how ridiculously expensive small homes in Singapore can be!). But for those who have jumped on the bandwagon to buy a condo or house in Iskandar for investment, what are your thoughts about the prospect?

The reason I asked is that I have gotten very mixed replies from different groups of people property agents, the people in the streets, fellow Malaysian friends, property analysts, etc. Below is a summary of my "findings"

Pros (mainly from agents who are selling their condo projects!):
- Iskandar is an up and coming area where investors and the Malaysian government are pumping money into so it's a good time to invest.
- Prices of Iskandar properties will appreciate given the high demand for cheaper homes than Singapore.


Cons (from neutral parties I spoke to):

- Rental in JB ain't fantastic. No one in JB is going to pay so much for rent to cover your monthly bank loan instalment.
- It's too early to say how Iskandar will develop. This being Malaysia, there will be delays, political changes, etc which will affect the progress of Iskandar. In short, things are still uncertain. Risks are there.
- Property prices in JB now are just too expensive to be worth it for investment. Where it used to cost only RM300+ psf not long ago, now it's going for RM800+ and above.
- There will be so many condos and houses in Iskandar built in the next few years that renting them out is a challenge. Which implies selling them will be problematic too. You may be stuck with the property for a long time.
- Other than low rental yield, don't forget miscellaneous charges such as monthly maintenance fees, utility bills, and annual property tax that you have to pay.
- Laws can change suddenly in Malaysia and foreigners who buy properties there may be at disadvantage by paying more taxes.
- Bank loan interest rates in Malaysia are high and may increase even further.


What are some of your thoughts to the above? Thanks for sharing.
 

Charlie258

Alfrescian
Loyal
All investing activity is risky. But J.B.? Oh Boy!!!!! I say, good luck to you if you want to mess around with J.B. property.

Just ask anybody who invested in J.B. property in the 1970's, 1980's, 1990's. :eek:

You will get an earful!

(Granted, it is cheap. About 2 years ago, a good Condo by a "Top 3" Developer can be had for RM$300 psf. But not now. Now, you pay more than RM$600 psf for the privilege of putting your head on the chopping block.)
 

freekazoid

Alfrescian
Loyal
Like to point out these points gathered are from people whom sentimental and without basis.

"It's too early to say how Iskandar will develop. This being Malaysia, there will be delays, political changes, etc which will affect the progress of Iskandar. In short, things are still uncertain. Risks are there." - Other than Singapore unreal Simcity state, most places in the world will change and evolve...tomorrow is always uncertain certainty of risk or opportunity.

"Laws can change suddenly in Malaysia and foreigners who buy properties there may be at disadvantage by paying more taxes." - Law and tax changes disadvantages to foreigner never happen before and if it does in future...there is no basis to say it leaning towards unfair practice towards foreigner in house ownership. People always mixed up unfortunate event involve foreigner against developer...as Malaysian law unfavorable towards foreign...in fact same law applies to local. And yes protective law/SOP on Buyer (Foreign/Local) still need improvement.
 

kopikong99

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Loyal
It is so much cheaper than next door Sinkieland - Freehold landed from 1.3M to 2.3M after 3 years.

Suburban LH condo in Jurong selling at S$1700 psf.

JB land still provides those who miss Sinkieland something to hedge for next generation.

This is in light of the investment spending by both gov on RTS and HSR infrastructure. In the 70s, 80s and 90s, L and M buay song each other. Like the saying, elephant clash, grass get trampled. If these RTS and HSR do not materialise, then it is a different story.
 

avelc

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Loyal
If the cons are valid to you, then you shouldn't invest now. You make money when you buy, and the time to buy was 2-3 years ago.
 

Photogguy

Alfrescian
Loyal
Just ask anybody who invested in J.B. property in the 1970's, 1980's, 1990's. :eek:

You will get an earful!



We are now in 2000s.......you are lost in time. Just ask those who bought JB gated landed in the past 5 years......are they losing money?
 

nextreal

Alfrescian
Loyal
My views.

1. No one here is an expert. Even if he thinks he is, he will not put all his money where his mouth is.

2. No real expert will come to a forum to share his view. After all, experts are paid to sprout some advice they think is correct, but they will still not put all his money on their very own advice.

3. Even if someone here is really an expert, he will probably be wrong. Well, advice is free and you can't hold him to what he says today.

For an example of how shared views by fellow forumers can pan out, have a read at the thread "Is this the right time to invest in properties?" in Similar Threads below. :smile:

I am no expert, but many others will agree if I say these:

1. The higher the risk of the investment, the greater the potential investment yield will be. It is true for all assets classes.

2. If you cannot stomach high risk investments, or cannot afford to do that, then don't follow the bandwagon. if you are going to sell your flat for this investment, please turn away.

3. If you cannot continue to service RM4k of monthly loan and maintenance should the market turn south, then don't consider. In a market such as JB where rental potential is closer to 0, and in the probable scenario that property prices will correct, you need holding power. In the long run, you will get capital appreciation, but it may be a marathon wait.

Bottom line, go ahead and listen to others' views, but don't decide solely based on those. Follow both your heart and head. Equally as important, work out a contingency plan, and buy insurance over that.
 

sgcount

Alfrescian
Loyal
Thanks all. Especially nextreal, your advice is very practical and to the point. For point 3 on JB rental, it really can be that bad huh? Cos factoring in the high bank loan interest rate and possibility of not having tenants for a long period of time I think I need to work out if it's worth the risks for myself.

Read reports there will be a lot more condos being churned out in the next few years. Just wondering if supply will outdo demand if Iskandar doesnt develop fast enough. Then rental is almost as good as zero.

Indeed holding power is very important in this......
 

Investor

Alfrescian (Inf)
Asset
Really agree with Nextreal. As for the 'expert' part, it really depends on how you wanna define 'expert'. To many who have no idea at all in the investment world, your advices are already very 'expert' to them. Not everyone knows what you know, even simple logic. So yes, once in a while, there'll be expert like yourself who actually care to share some thoughts with strangers in forums, for Free.
 
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Frodo

Alfrescian
Loyal
Hi all, I would like to hear from those who have bought homes in JB.... I know some of you bought a house for your own stay (perhaps seeing how ridiculously expensive small homes in Singapore can be!). But for those who have jumped on the bandwagon to buy a condo or house in Iskandar for investment, what are your thoughts about the prospect?

The reason I asked is that I have gotten very mixed replies from different groups of people property agents, the people in the streets, fellow Malaysian friends, property analysts, etc. Below is a summary of my "findings"

Pros (mainly from agents who are selling their condo projects!):
- Iskandar is an up and coming area where investors and the Malaysian government are pumping money into so it's a good time to invest.
- Prices of Iskandar properties will appreciate given the high demand for cheaper homes than Singapore.


Cons (from neutral parties I spoke to):

- Rental in JB ain't fantastic. No one in JB is going to pay so much for rent to cover your monthly bank loan instalment.
- It's too early to say how Iskandar will develop. This being Malaysia, there will be delays, political changes, etc which will affect the progress of Iskandar. In short, things are still uncertain. Risks are there.
- Property prices in JB now are just too expensive to be worth it for investment. Where it used to cost only RM300+ psf not long ago, now it's going for RM800+ and above.
- There will be so many condos and houses in Iskandar built in the next few years that renting them out is a challenge. Which implies selling them will be problematic too. You may be stuck with the property for a long time.
- Other than low rental yield, don't forget miscellaneous charges such as monthly maintenance fees, utility bills, and annual property tax that you have to pay.
- Laws can change suddenly in Malaysia and foreigners who buy properties there may be at disadvantage by paying more taxes.
- Bank loan interest rates in Malaysia are high and may increase even further.


What are some of your thoughts to the above? Thanks for sharing.

I've got no money to invest but have you seen these sites?

http://www.iskandarproject.com/

http://www.getitright-iskandar.com/
 

sgcount

Alfrescian
Loyal
Hey thanks Frodo... very informative. Hmmm... the outlook doesnt look positive... may be herd mentality many are plunging money into iskandar or for own home stay.

I guess the key point to take away is to have lots of holding power. I was over optimistic before this.
 

Frodo

Alfrescian
Loyal
Hey thanks Frodo... very informative. Hmmm... the outlook doesnt look positive... may be herd mentality many are plunging money into iskandar or for own home stay.

I guess the key point to take away is to have lots of holding power. I was over optimistic before this.

IMHO if you want to invest then find those that are very central to amenities. Rental outlook not so good so maybe likelihood would be to resell to fellow Singaporeans or foreigners (some would say "the next sucker") after holding for a few years and value has gone up by a few hundred thousands.

For me, my story is that buying a bigger HDB is too prohibitive; started looking for HDBs in March but found resale too expensive, BTO must pay levy and wait long long, ballot for BFS also rejected. So we just decided in June this year buy freehold landed for own-stay at price of a 3 room HDB flat and rent out HDB after property agents persuaded me not to sell off my HDB entitlement. Now hoping to get my keys in a couple of weeks' time.
 
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potter

Alfrescian
Loyal
mly banks will be very happy to lelong yr hse if u can't service the loan, within few mths. Dun play play.
 

FHBH12

Alfrescian
Loyal
Hey thanks Frodo... very informative. Hmmm... the outlook doesnt look positive... may be herd mentality many are plunging money into iskandar or for own home stay.

I guess the key point to take away is to have lots of holding power. I was over optimistic before this.

Iskandar is a cheaper alternative to Singapore properties. Good for those who want to have a house for weekend stay or retirement. The value proposition is there. The HDB rental around net S$2.5k is mostly sufficient for a couple to retire if the Johor house and car are already fully paid. Very tempting for a couple in their 50s who want early retirement.
 
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nextreal

Alfrescian
Loyal
For point 3 on JB rental, it really can be that bad huh?

Read reports there will be a lot more condos being churned out in the next few years. Just wondering if supply will outdo demand if Iskandar doesnt develop fast enough. Then rental is almost as good as zero.

Indeed holding power is very important in this......

Thanks for reading my post. :smile: I'm not a statistician, but allow me to explain my rationale on this.

According to the Dept of Stats and Valuation and Property Services Dept, in 2012, the state of Johor has 695,565 residential properties (residences). At a population of 3.3M, that works out to a ratio of 4.7 pax to each residence.

Now, the annual population growth rate in Johor stems from 1.8% to 1.1% since 2009 (it has stagnate for the past 2 to 3 years). Assuming we take an optimistic 1.5% constant annual growth rate, that means every year, Johor's population grows by around 50,000.

We now factor in the number of residences coming online, both committed and planned as of Q2 2013. Believe it or not, that's a colossal number of 153,582 (CG@DB by itself is already 5% of this figure :P)

Assuming all these properties get TOP by 2018 (in 5 years time), and feed to the 50,000-a-year of "new" population, we get a ratio of only 0.6! In very simplistic terms, for every 10 residences that will be completed in 2018, there is only 6 potential buyers or renters! That's compared to 47 pax for every 10 residences today!

Of course, you have correctly pointed out there's a huge mismatch in my comparison. True, families and individuals from the original 3.3M will want to buy the new 153,382 residences. But don't forget those original 695,565 residences will be resold. Again, I'm not a statistician, so I won't go beyond what I presented here. But I think you get the message.

So is the resale or rental market looking all gloomy? Yes, if I just use my head. But remember I wrote that we should use our heart as well? My personal view, which should be taken with a handful of salt, is that with (1) the right sized residence at (2) a great location and (3) a lower relative price, we stand a better chance in selling or renting out our unit.

So, what's (1), (2) and (3)? I think these are all subjective, and what's right or great to me will be wrong or lousy to you. That's where our hearts come in. So let's not debate here.

But for (3), lower relative price, I like to say if you want a bigger piece of the buyer's pie by targeting local Malaysians, forget about properties with value higher than RM1M. In fact, according to GIRI only 16% of locals have a budget from RM600k to RM1M. The majority 77% only has a budget of below RM600k. If you bought that RM2M bungalow, be prepared to target foreigners only.

I hope you are entertained by my post here. Please don't quote me, as these are purely my views, which is worth nothing regardless if they turn out true or not in 3 -5 years time. :biggrin:
 

nextreal

Alfrescian
Loyal
Really agree with Nextreal. As for the 'expert' part, it really depends on how you wanna define 'expert'. To many who have no idea at all in the investment world, your advices are already very 'expert' to them. Not everyone knows what you know, even simple logic. So yes, once in a while, there'll be expert like yourself who actually care to share some thoughts with strangers in forums, for Free.

Thanks for your compliment, but I'm really no expert. :smile:

I'm just like many forumers here who earns an honest salary, and have saved enough to buy a property or two across the causeway.
 
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