Iskandar Malaysia Property Market May 2015

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    savills.com.au

    ISKANDAR MALAYSIAProperty Market Overview

    May 2015

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    GEOGRAPHICAL COVERAGE OF IM

    Source: IRDA 

    •  inancial,

    • Cultural & UrbanTourism (Sultan Ibrahim

    Building)

    •Danga Bay

    •CIQ Complex, The

    Causeway

    •Leisure (KOMTAR

    JBCC)

    JB CITY CENTRE

    •Logistics

    •Manufacturing

    (Aerospace Park, Senai

    Intl Airport, Airport City,

    Senai ree Zone)

    •Tourism (JPO)

    •MSC Cyberport Malaysia

    SENAI-SKUDAI

    • Education & HealthServices (Edu City & Afiat

    Healthpark)

    • Entertainment &Recreation (LEGOLAND,

    Kota Iskandar, Puteri

    Harbour)

    • State Administration•

    Business & inance

    •SiLC and Medini

    Iskandar

    NUSAJAYA/MEDINI

    •Logistics

    •  ree Zone Industrial Area

    •Regional Distribution,

    International Procurement

    •Oil Storage Terminals

    •Port of Tanjung Pelepas

    TANJUNG PELEPAS

    Region Area (km

    2

    ) Population (million)

    Iskandar Malaysia 2,217 1.88

    Greater KL 2,790 7.0

    Dubai 3,885 2.2Hong Kong 1,095 7.2

    Singapore 690 5.5

    •Manufacturing

    (Electronics,

    Petrochemicals,

    Oleochemicals)

    •Oil Storage Terminals

    • Trade & Expo City(APTEC City)

    • Johor and TanjungLangsat Port

    PASIR GUDANG /

    TANJUNG LANGSAT

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    SELECTED PROJECTS IN IMFlagship A

    Iskandar Waterfront

    Development

    : under

    planning 

    Country Garden

    Danga Bay

    :

    completion in 2018 

    Flagship B

    Educity: completed in

    2014 

    Legoland: completed

    in 2013 

    Puteri Harbour: Phase

    2 completed in 2013

    (other phases under

    construction/planning) 

    Pinewood Iskandar

    Malaysia tudios

    :

    completed in 2013 

    Flagship C Flagship D Flagship E

    Port of Tanjung Pelepas:

    completed in 2012 

    Petrochemical & Maritime

    Industrial Hub Tanjung Bin

    :

    completion in 2015 (phase 2) 

    Pasir Gudang pecialist

    Hospital

    : completed in

    2012 

    Universiti Teknologi

    MARA

    : opened in 2013 

    Johor Premium Outlets:

    completed in 2011 

      enai Hi-Tech Park

    :

    launched in 2011 

    Source: IRDA 

    Source: Savills Research

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    PRESENCE OF CHINESE DEVELOPERS IN IM

    Source: Savills Research

    Developer:

    Zhuoda

    Group

    Project:

    Paradiso Nuova

    (high-rise residential

    development on 16

    acres)

    Developer:

    Guangzhou

    R&F PropertiesProject:

    Princess

    Cove (116-acre

    development with

    residences, retail units

    and offices) 

    Developer:

    Hao Yuan

    Project: not announced

    yet (purchased 37 acres

    in Danga Bay) 

    1

    Developer:

    Greenland

    Projects:

    Jade Palace (retail and residential

    units on 13.6 acres)Tebrau Bay Waterfront City

    (128-acre mixed-use

    development) 

    24

    51

    Developer:

    Country Garden

    Projects:

    Country Garden Danga Bay

    (residential and retail units on 57 acres) 

    Forest City

    (integrated developmenton reclaimed land – 

    about 1,386 hectares)

    2

    3

    3

    4

    5

    6   6

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    INVESTMENTS INTO IM   IM continues to receive strong investment interest with 47% realised to date (RM78.53 billion out of RM166.11 billion).

     During the first quarter of 2015, IM secured RM7.98 billion in new investments, recorded a total cumulative committed investments ofRM166.11 billion.

    Manufacturing sector continues to be the top performer, contributing 31% (RM50.82 billion), followed by supporting sectors such asresidential & retail property sector at 41% (RM68.75 billion) and industrial properties, government, utilities, and emerging technologies at 6%, 5%,8%, and 1% respectively.

      The other promoted sectors merely contributing 9% of the total investments into IM, such as logistics (3%), healthcare (2%), tourism (2%),education (1%), and creative & finance (1%).

    Source: IRDA 

    5.50  11.90

    21.70   23.65   26.92  31.22   33.90

    46.82   50.09   50.825.05  9.11

    14.4519.98

    28.79

    43.26

    61.15  66.92

    7.10

    8.17

    16.52

    21.83

    27.30

    35.14

    33.25

    38.58

    40.06

    5.80

    5.80

    6.83

    6.28

    6.28

    6.28

    7.31

    8.31

    8.31

    8.31

    RM11.30

    RM25.80

    RM41.75

    RM55.56

    RM69.48

    RM93.89

    RM105.14

    RM131.64

    RM158.13

    RM166.11

    RM0

    RM20

    RM40

    RM60

    RM80

    RM100

    RM120

    RM140

    RM160

    2006 2007 2008 2009 2010 2011 2012 2013 2014 Mar-15

    Total Cumulative Investments into Iskandar Malaysia [2006 – Q1 2015]

    Government

    Properties

    Utilities, Tourism & Others

    Manufacturing

    Total Committed Investment

    Committed

    RM87.58billion

    (53%)

    Realised

    RM78.53billion

    (47%)

    Total Investments into Iskandar Malaysia

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    FOREIGN INVESTMENTS INTO IM   Investments from Singapore mainly consist of education,

    healthcare, manufacturing and property development sectors.

      Investments from China are mainly from the property

    development sector.

    Source: IRDA 

    Singapore

    RM12.06 bil

    USA 

    RM6.30 bil

    SpainRM4.18 bil

    JapanRM4.06 bil

    ChinaRM3.74 bil

    Top 5 Foreign Investors

    Foreign investments stand at 38%

    of the total committed

    investment as of Q1 2015. Top 5 foreign investors are:

    Singapore

    USA 

    Spain

    Japan

    China

    50.64 67.69  83.40

    101.14   102.34

    34.14

    37.45

    44.81

    56.99   63.77

    0

    20

    40

    60

    80

    100

    120

    140

    160

    180

    2011 2012 2013 2014 Q1 2015

       T  o   t  a   l   I  n  v  e  s   t  m  e  n   t  s   (   R   M    B

       i   l   l   i  o  n  s   )

    Domestic vs Foreign Investments

    ForeignInvestments

    DomesticInvestments

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    APPROVED DEVELOPER

    Income tax exemption

    on income derived from disposal of land in the approved nodes (up to 2025); and

    Income tax exemption on income derived from sale or rental of a building in the approved nodes (up to 2030)

    IM INCENTIVES SUPPORT PACKAGE (ISP)

    Note:

    1) The ISP to be extended for another 10 years after the initial expiration on 31 Dec 2015.

    2) The approved nodes are Medini, Vantage Bay, Danga Bay and Pinewood Iskandar Malaysia Studio.Source: IRDA 

    APPROVED DEVELOPMENT MANAGER

    Income tax exemption

    on income derived from the provision of management, supervisory & marketing services to an

     Approved Developer company, specific to an approved project in the approved nodes (up to 2030)

    IDR TATU COMPANY

    10 year corporate tax exemption for qualifying activities or an Investment Tax Allowance of 100% for five (5) years

    Other incentives:-

    I. Exemption from EPU property acquisition guidelines

    II. Each foreign knowledge worker employed by an ISP approved company will be eligible to import or purchase a

    duty free car for his or her own personal use

    III. Flexibility to recruit foreign knowledge workers subject to the guidelines of the Iskandar Malaysia Expatriate

    Committee (IMEC)

    IV. Flexibility from foreign exchange administrative rules set forth by BNM

    FLAG HIP INCENTIVE – FI CAL & NON-FI CAL

    5 year corporate tax exemption / Import duty & sales tax exemption / flexibility to recruit foreign workers / flexibility from

    foreign exchange administrative

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    RECENT MARKET UPDATES

      Traders Hotel Puteri Harbour has

    rebranded itself asHotel Jen Puteri

    Harbour, Johor. It’s the 10th hotel to adopt

    this new brand name

    UEM unrise Bhd unveiled its

    comprehensive development plans for the

    2nd phase of Gerbang Nusajaya, which

    consists of a 210ha integrated eco-friendly

    tech park (“Nusajaya Tech Park”) and a

    212.4ha motorsport city (“FASTrack

    Iskandar”)

    United Malayan Land Bhd is collaboratingwith Thailand’s

    Onyx Hospitality Group

    to

    open the first Amari Hotel in Malaysia. It will

    be part of a mixed-use development in

    Johor Bahru named “Suasana Iskandar”.

    Upon completion in 2017, Amari will have

    242 rooms with indicative average price per

    room between RM1,158 and 1,552 per

    night

      Iskandar Malaysia

    declared as a

    Regional Centre of

    Expertise for

      ustainable

    Development

    (RCE)

    to promote

    sustainable future

    developments and to

    provide a platform for

    individuals and

    organizations to

    generate ideas.

    Employees Provident

    Fund

    (EPF) entered

    into a joint venture

    with Australia’s

    Goodman Group

    to

    develop logistics

    assets in Klang Valleyand Iskandar Malaysia

    with a total

    development value of

    RM1.4 billion.

    CapitaLand’s Ascott Limited

    (Ascott) raised

    its presence in Iskandar with its 3rd property

    (the 214-unit Citadines Medini Nusajaya)

      Australian developer Walker Corporation

    together with an investment firm namedWang & Wong Pte Ltd

    will develop

    “Senibong Hills”. This development consists

    of landed homes and high-rise apartments

    together with a club house.

    3 new firms to invest approximately RM600

    million

    in Medini:

    Goldbury is establishing a globalinformation technology (IT) automotive

    hub in Medini

    Brandt International will set up a BPO

    and knowledge process outsourcing

    (KPO)

    Vision Technology Consulting will

    develop a development centre that willprovide Oracle technology

    implementation and related outsourcing

    services as well as enterprise mobility

    solutions.

    February

    2015

    March

    2015

     April

    2015

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    RESIDENTIAL PROPERTY MARKET   As of end of 2014, the total supply of residential properties in IM stands at

    429,018 units

    , an increase of 2.3% y-o-y.

    Landed properties

    = 274,010 units (64% of supply)

    Non-landed properties

    = 56,087 units (13%)

    Low cost housing = 98,921 units (23%)

      The total existing stock of condominiums/serviced apartmentsincreased by 65%

    between 2006 (20,512 units) and 2014 (33,840 units)

      Residential units under construction =106,487 residential units

    (37% are landed properties, 58% non-landed properties and 5% low

    cost housing)

      Residential units under planning =141,960 units

      Therefore,248,447 new units

    in the pipeline = 58% increase over the existing supply.

    Source: JPPH

       2   1   7 ,   8

       7   7

       2   3   0 ,   7

       5   5

       2   3   9 ,   4

       5   6

       2   4   6 ,   4

       2   1

       2   5   1 ,   2

       4   9

       2   5   4 ,   9

       0   4

       2   6   0 ,   7

       1   6

       2   6   8 ,   7

       5   5

       2   7   4 ,   0

       1   0

    35,79739,509

    44,044 46,306 48,412 49,164 50,110

    51,658 56,08796,76497,734

    97,914 98,06898,669 98,753

    98,767 98,92198,921

    5.7%

    5.0%

    3.6%

    2.5%

    1.9%

    1.1%

    1.7%

    2.4% 2.3%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

     -

     50,000

     100,000

     150,000

     200,000

     250,000

     300,000

     350,000

     400,000

     450,000

     500,000

    2006 2007 2008 2009 2010 2011 2012 2013 2014

    Total Residential upply in IM (2006 – 2014)

    Total Low-Cost Stock Total Non-Landed Residential Stock

    Total Landed Residential Stock Growth Rate (%)

       1   9 ,   6

       0   3

       2   1 ,   3

       7   2

       2   2 ,   7

       3   1

       2   4 ,   6

       6   5

       2   5 ,   2

       0   5

       2   5 ,   2

       0   5

       2   6 ,   1

       2   9

       2   7 ,   3

       1   3

       2   7 ,   4

       8   4

    909

    2,471

    2,9152,985 2,985 2,985

    2,9853,349

    6,356

    -

     5,000

     10,000

     15,000

     20,000

     25,000

     30,000

     35,000

    2006 2007 2008 2009 2010 2011 2012 2013 2014

    Cumulative High Rise Residential Properties in IM

    Serviced Apartment Condominium / Apartment

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    NEW LAUNCHED CONDOMINIUMS IN IM   The incoming supply of condominiums reached its peak in 2013, as a total of

    34,949 units

    were launched

    during the year with the majority(80%) located in Johor Bahru City Centre and surrounding suburbs.

      As a comparison, Kuala Lumpur launched about 22,000 units of condominium units in 2013 and the number of

    private residential units launched in Singapore was 15,885 units only (inclusive of landed and non-landedproperties) that year.

      2014 was a slow year as the number of newly launched condominium unitsshrank by 63%

    from a year ago.

    Only 12,934 units were launched in 2014. This could be a consequence of the recent cooling measures such

    as the raise in Real Property Gains Tax (RPGT), minimumforeign threshold raised to RM1 mill ion

    as of 1

    May 2014 and the tight lending market.

      However, any development that was approved before 1 May 2014 does not have to comply with the RM1million threshold rule. For instance, units in “Causeway Regency”, launched in January 2015, can still be sold

    below RM1 million to foreigners.

      Besides, the lack of new launches could be attributed to the low take-up rates of launched projects, as

    developers with new stock to the market could have taken their cue from the performance of their

    competitors.

      In April 2015, we witnessed the launch of “Causeway Regency” (228 units) and “Jade Palace” (2,456 units).

    Jade Palace is a 13.6-acre waterfront development jointly developed by Greenland Group and IWH that

    consists of 13 towers of residential building (4 towers are open for booking now). Anecdotal evidence shows

    that Phase 1 was 80% booked. During the same period, MB Group launched their wellness development

    located in the Sungai Pulai Ramsar Wetland Reserve and named “Sungai Pulai Wellness Resort”, and offered a

    preview of its high-rise residential development at Tampoi named “Aliff Avenue” (282 units).

      In December 2014 was announced that all new serviced apartment applications will be frozen, but thosewho have received their approval prior to this announcement can continue their projects.

    Causeway Regency 

     Aliff Avenue 

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    RECENT LAUNCHES IN IM

      cheme Name Location Built-up (sq ft) Price Range (psf) No of Units Take Up Rates

    Aliff Avenue

    Tampoi 538 - 1,098 RM400-640 282 Preview only

    Princess Cove - Phase 1

    Tanjung Puteri 469 - 1,343 RM750 - RM1,300 868 50%

    G Residence

    Plentong 653 - 1,552 RM450 - RM500 480 70%

    Citywoods

    JBCC 764 - 1,240 RM540 417 40%

    Acquaint Danga

    Danga Bay 549 - 4,730 RM900 - RM1,200 818 80%

    Centara Residences

    Nasa City 785 - 1,690 RM660 - RM732 232 20%

    Causeway Regency

    JBCC 776-1,408 RM800-980 228 n/a

    Jade Palace

    Danga Bay 488 - 1,047 RM850 2,456 Booking stage

      eventh Cove

    Masai 907 – 4,861 RM978 – RM1,149 392

    Grand Medini

    Medini 474 - 1,149 RM770 - RM1,100 672 50%

    Citrine @ The Lakeview

    Medini 933 - 1,348 RM850 328 75%

    Meridin - Phase 2

    Medini 318-885 RM1,000-1,100

    Tower A: 583

    Tower B: 322

    Tower C: 322

    Tower B: 100%

    Source: Savills Research

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    OFFICE PROPERTY MARKET   As at end of 2014, the total private purpose-built office supply stands at 5.89 million sq ft. Refurbishment works at Menara Komtar were recently

    completed (total NLA is 409,000 sq ft) and is now fully occupied by Jcorp and its subsidiaries.

      There is no major office cluster located in IM per se, but approximately 95% of the existing offices are located within the JB City Centre with most

    of the buildings being old.

      Overall occupancy rate averages 73% across Iskandar Malaysia, with only a few well-located office building that manage to achieve higher than85%, such as Menara MSC Cyberport, JB City Square Office Tower, Menara TJB, Menara Ansar and Menara Landmark. Menara Landmark is

    located within an integrated development that consists of 4 levels of medical suites as well as the Doubletree by Hilton.

      Rental rates for prime office space in Johor Bahru City Centre are ranging between RM2.50psf and RM3.50psf per month.

      Future office supply is mostly sited within master-planned developments such as Medini Business District, Medini Central, Iskandar Waterfront

    District, Iskandar Financial District & Sunway Iskandar

      Apart from the manufacturing sector, sectors that require office space such as Financial Advisory & Consulting, Education, Creative Industries,Tourism and Healthcare are encouraged to move to Iskandar Malaysia.

    Source: JPPH

    Name Developer Expected

    Completi

    on Date

      ize

    (sq ft)

      tatus

    Medini Lakeside UMLand 2018 683-2,120 Open for

    registration

    Markers Iskandar -

    Tower A 

    Ra Ta Land Sdn

    Bhd

    2017 1,500-

    4,300

    Tower A

    100% leased

    Markers Iskandar –

    Tower B

    Ra Ta Land Sdn

    Bhd

    2017 1,500-

    4,300

    140 units

    available

    Lakefront Southkey –

    Tower A & B

    Southkey

    Properties Sdn Bhd

    2015 A: 80,000

    B: 50,000

    n.a.

    Citrine Office Suites Sunway Iskandar

    Sdn Bhd

    2017 746-1,671 100% sold

      elected New Launches of Office uite in IM

    40%

    45%

    50%

    55%

    60%

    65%

    70%

    75%

    80%

    2006 2007 2008 2009 2010 2011 2012 2013 2014

    A

    a

    O

    c

    R

    e

    Occupancy Rate of Purpose Built Office -Private

    Source: Savills Research

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    RETAIL PROPERTY MARKET   New completions in 2014 include:

      KOMTAR JBCC (405,000 sq ft)

      Sutera Mall – Entertainment City (approximately 300,000 sq ft)

      Mydin Pelangi Indah (21,528 sq ft)

      As of 2014, there is a total of 12.49 million sq ft of NLA of retail space in IM, with retail space per capita slightly over 6.33 sq ft per

    person (lower than Greater KL’s 7.6 sq ft per person).

      Average prime rents in IM are ranging between RM5psf and RM20psf; however, JB City Square, located opposite the CIQ, managed

    to achieve as high as RM40psf.

      Retail growth in IM is evident asproven by the opening of Johor Premium Outlet Phase 2 (2013) and KOMTAR JBCC (2014). Moreover,

     AEON Tebrau City is undergoing expansion to house a multi-storey car park, a department store and a supermarket.

      With the population expected to grow and plans set in place in IM to boost its economy, this will support the growing retail market in

    the years to come.

      Major malls in the pipeline are listed below:-

    Note: (*) Tropicana Danga Bay Mall was initially announced at 1 million sq ft and it has now reduced to 250,000 sq ft.

    Source: Savills Research

    Name Developer Expected Completion

    Year

    Net Lettable Area

    (sq ft)

    Paradigm Mall WCT - 750,000

    Midvalley Southkey Megamall Southkey Properties Sdn Bhd 2018 1,500,000

    Tropicana Danga Bay Mall Tropicana Danga Bay - *250,000

    Capital 21 Hatten Group 2017 1,000,000

    Country Garden Lifestyle Mall Country Garden Danga Bay 2017 430,000

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    INDUSTRIAL PROPERTY MARKET

    Source: JPPH

      As at end of 2014, the total number of existing supply of industrial properties in Iskandar Malaysia stood at 14,159 units. Terraced

    factories accounted for 54%, followed by detached (21%) and semi detached factories (21%).

      2014 observed a growth rate of +2.65% Y-o-Y, which is the highest since 2006.

      This strong growth can be attributed to the new quality industrial parks (Frontier Industrial Park, i-Park@SiLC, Setia Business Park,

    SiLC, Skudai 8 Biz Hub and Indahpura Industrial Park) which were launched in 2013 and 2014.

      With other industrial developments coming on stream in a couple of years such as the Nusajaya Tech Park, Sime Darby’s Harvest

    Green Industrial park and UMLand’s Dover Business Park, the supply is expected to improve significantly. In addition, we expect more

    MNCs shifting their operations to IM, as foreign investments currently account for 38% of the total committed investments.

     -

     2,000

     4,000

     6,000

     8,000

     10,000

     12,000

     14,000

    2006 2007 2008 2009 2010 2011 2012 2013 2014

    Current Existing Supply of Industrial Properties by Type

    Terraced factory Semi-detached DetachedFlatted factory Ind!trial com"le# $l!ter

    409

    909

    33%

    - 10

    272

    804

    1,029

    1,681

    - 23

    2%1

    -

     200

     400

     600

     800

     1,000

     1,200

     1,400

     1,600

     1,800

       T   e   r   r   a   c   e    d    f   a

       c   t   o   r   y

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       "    l   e   #

       $    l      !   t   e   r

       T   o   t   a    l   n   u   m    b   e   r   o    f   U   n   i   t   s

    Future Supply of Industrial Properties by Type

    Incomin& Ind!trial S""ly

    'lanned Ind!trial S""ly

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    THANK YOU

    For further enquiries, kindly contact:

      avills (Malaysia) dn Bhd

    Research & Consultancy

    [email protected]

    Disclaimer: This document is prepared by Savills (Malaysia) for general informative purposes only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these

    particulars do not constitute, nor constitute part of, an offer or contract; interested parties should not rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to

    the accuracy. No person in the employment of the agent or the agent's principal has any authority to make any representations or warranties whatsoever in relation to these particulars and Savills (Malaysia)

    cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.