THE Johor residential property market witnessed plenty of uncertainty over the past couple of years as a result of the Covid-19 pandemic.
However, amid brighter economic prospects and better control over the Covid-19 crisis in the country, the market is expected to stage a sustainable recovery in 2022.
KGV International Property Consultants (M) Sdn Bhd director Samuel Tan is upbeat that the Johor residential market will perform better this year, both in terms of transaction volume and value.
“This is in light of the high vaccination rate, acceleration of booster jabs and a seemingly less fatal new Covid-19 variant,” he tells StarBizWeek.
However, Samuel says the Johor residential market is only expected to see a marginal improvement rather than a V-shaped recovery.
“The market will be supported by pent-up demand from genuine home buyers. After two years of a soft market, house prices have adjusted to a very attractive level.
“Those who have been monitoring the market will seize the opportunity to own or upgrade to their dream home.”
Samuel says terraced houses will continue to be popular due to their landed property status and smaller absolute value.
“Meanwhile, high-rise apartments in good locations will start to see improved demand.
“Smaller, young families and those who prefer gated stratified development with facilities will buy high-rise apartments. There will also be many opportunities in the auction market as some of these prices have been reduced substantially.”
At the launch of CBRE|WTW’s 2022 Market Outlook Report recently, CBRE|WTW Johor Bahru branch director Jonathan Lo said the overall outlook of the property market is looking up, especially with loosening travel restrictions.
“Landed residential units priced below RM700,000 in good locations are still in demand.
“Market recovery will focus mainly on domestic players of first-time home buyers and medium-income earners, with small scale launches being done by developers,” he says.
In the first nine month of 2021, Lo says the Johor property market suffered due to lengthened lockdown periods that were implemented by the government.
“Nevertheless, economic activities resumed with a positive vaccination rollout.
“Overall, the market stabilised in the fourth quarter of 2021, thanks to various incentives from the government. This momentum is expected to continue into 2022,” he says.
Many property consultants agree that the Home Ownership Campaign (HOC) was a huge factor in driving sales for residential property last year.
Ownership campaign
The campaign, which ran a full year last year, has not been extended into 2022. Views on this have been divided, with many urging the government to continue the HOC this year.
In the absence of the HOC, CBRE|WTW group managing director Foo Gee Jen says developers will need to endeavour to find what works best for them and the common home buyer.
He says developers will have to adapt and find what appeals most to buyers.
Foo adds that the introduction of new units will have to be need-based rather than on speculative buying, a practice that could help contribute to the easing of the country’s overhang situation.
The government kicked off the HOC in January 2019 to address the overhang situation in the country.
The campaign, which saw developers offering various discount packages and incentives, was initially intended for six months but was extended for a year.
The HOC was reintroduced in June 2020 under the Penjana initiative to boost the property market after it was adversely affected by the Covid-19 pandemic.
Meanwhile, KGV International Property Consultants (M) Sdn Bhd research head Tan Wee Tiam says stamp duty will be levied with the discontinuation of the HOC.
“By right, this should add on to the transaction cost.
“Nevertheless, we believe many developers will absorb fully or partially the additional cost to minimise the impact. Price is a function of supply and demand.”
Even without the 10% discount and stamp duty exemption as mandated under the HOC, Wee Tiam says developers will have to try to match the buyer’s expectations.
“All these will be reflected in the final price, eventually. So the overall impact of the HOC withdrawal may not be as serious as many perceive it to be.
“It is, however, a psychological booster to have it as prosperous buyers will be more inclined to explore with the HOC acting as an attraction.
“Other fundamental factors such as the Covid-19 situation, overall economic health and political environment will certainly have an impact on market performance.”
Mixed performance
Separately, Knight Frank Johor director Debbie Choy says there is mixed performance in Johor Bahru’s residential market when comparing high-rise residential developments and landed properties.
“The trend and demand for landed residential homes continue to remain resilient.
“Developers expanding their land bank are also more focused on the search for suitable locations, with larger sites for landed residential developments, and we anticipate more landed home launches in the near future.”
Moving forward, Choy says activity in the rental market is expected to pick up following the gradual reopening of the country’s borders.
According to Knight Frank in its Real Estate Highlights report for the second half of 2021, the cumulative supply of high-rise residential properties in Johor Baru stood at 145,375 units as at the third quarter of 2021.
This, it says, represents an annual increase of 4.2%.
“The volume of transactions for both condominium and serviced apartment categories declined by 19.7% and 12.5% year-on-year, respectively.
“In contrast, the value of transactions for condominiums increased marginally by 0.2%, albeit a decrease in transacted volume. This indicates that higher value units were transacted during the review period.”
During the second half of 2021, Knight Frank says there was a decline in asking prices of selected high-rise residential schemes.
“This is likely due to weakened market sentiment following the third lockdown (National Recovery Plan) in June 2021.”
It says alternative investment strategies for high-rise residential projects, such as those targeted at co-living concepts, have also surfaced.
“Typically, buildings that have low occupancy but are strategically located and surrounded by amenities are preferred by co-living operators,” Knight Frank says.