TRAVERSING DOWN SOUTH About us .Incorporated in 1982, Raine & Horne International Zaki + Partners Sdn. Bhd. is a firm of Chartered Surveyors and Registered Valuers. Our practice covers a wide range of services including property valuation, investment and project management, property management, real estate agency and property consultancy. The firm currently operates twelve (12) offices in Malaysia: Kuala Lumpur, Petaling Jaya, Subang Jaya, Kelang, Johor Bahru, Melaka, Ipoh, Seremban, Kuantan, Penang, Kota Kinabalu and Kuching. Since its inception and establishment, Raine & Horne International Zaki + Partners Sdn. Bhd. has enjoyed an outstanding and enviable reputation and success. The firm has received wide recognition from all quarters, nationally and internationally. Founded in 1883, Raine & Horne is one of the world’s largest real estate organisations with offices and affiliates all over the world, including in the major cities of South East Asia, Europe, Canada, USA, Fiji, Australia, New Zealand, Japan and Africa. Raine & Horne International Zaki + Partners Sdn. Bhd. aims to provide our clients with quality professional service. Raine & Horne International Zaki + Partners Sdn. Bhd. is committed to the Quality Management System required by ISO 9001:2008 Standards. Our team comprises of highly qualified partners in various expertise which authorize us to offer broad ranges of services in: Professional Valuation Services Corporate Advisory Services Project Management Property Management & Maintenance Real Estate Agency Auctioning Market Research & Feasibility Studies Property Investment Consultancy Building Auditing Bio Asset Valuation Forensic Valuation CYF.A9/11.14 2 Contents Summary………………..........…...........4 Overview…………....…….....................7 Components of Johor…..…...................8 Basic Information……………….........11 Residents’ Data.....................................15 Property Market in Malaysia………..19 Residential Market in Johor...............26 Residential Market in JB.....................34 Residential Market in Johor ex. JB....36 References………………………….....38 Contact Us…………………………….39 International Affiliations…………….40 CYF.A9/11.14 3 Summary .Basic Information Down south at the Peninsular of Malaysia, the state of Johor is located at the edge of the Asian continental mainland. It is the 5th largest state in Malaysia by land area and the 2nd most populated state after Selangor (surpassing Sabah in recent years). Johor is also one of the most developed states in Malaysia after prominent names such as Selangor, Penang, and Negeri Sembilan. The current state capital and royal city of Johor is Johor Bahru (JB). In terms of economic development, Iskandar is the main driver in Johor. It is intended to draw investment and business to Johor and will be among the biggest development projects in Malaysia. The state administrative capital will be moved to Nusajaya. Residential areas include Bukit Indah and Horizon Hills townships. This southern state accounts for a moderate portion of Malaysia’s land mass and is quickly emerging as one the fastest growing state in Malaysia. However, Johor is still falling behind in various aspects compared to the more advanced states such as Selangor and Penang. They include productivity, healthcare, population size, concentration, urbanization, labour force, job opportunities, income, and property market. Johor’s property value made up 19% of its GDP output for 2013. The amount of activity in this area was higher than the national average with greater percentile of property transactions per 100 population. Moreover, this rate of increment is rising rapidly. Residents in Down South preferred to dwell nearer to the centre of commercial and industrial activities, and major ports within the state. They include capitals and industrial zones such as Johor Bahru and Batu Pahat. On the other hand, Malaysia’s population is aging slowly (but still in its early stages). Median age was 26.2 in 2010. Higher number of the population are leaving childhood and entering the workforce. This is the same for Johor. This region has one of the lowest dependency ratio in the country, which suggests job opportunities are abundant which led to the retaining of young working adults within the state. As for ethnicity, Johor has a higher Chinese composition than that of Malaysia as a whole. The LQ/H ratio which came in at 1.18 for Down South has confirmed that there are no current shortages of houses in this area. Districts such as Batu Pahat, Segamat, and Kulaijaya are showing early signs of excess supply. While the district of Johor Bahru has a similar ratio of 1.17 with sub-districts of Pasir Gudang and Kulai showing signs of excess supply. CYF.A9/11.14 4 Summary Property Market The property market is highly cyclical with a high correlation between volume and value. However, this trend was not observed in 2013. Value increased moderately, while volume dropped considerably. Average price per transaction had the best run in the 10 years being reviewed. Nonetheless, the residential sector was more resilient compared to the rest of the market. Residential sector made up the bulk of the total property market in Malaysia as well as Johor. The number of transactions for Johor accounted for 14% of the total transactions of Malaysia. Turnover rate was weak at 3.04%, but has improved slightly in terms of YOY. While percentage of unsold new launches was at the middle range of the country’s list. Within the vicinity of Johor, there was shift in weightage from the agricultural to residential sector in 2013. The district of JB held the majority of residential transactions (55%) for Johor, due to its considerable population size, state of development, and progress of Iskandar. In terms of YOY, Johor was one of the exceptional state which recorded high growth in contrast to the nation’s reading. Johor provides 16% of the total residential supply in Malaysia, which is higher than the number of transactions (14%) as mentioned earlier. IS/ES and PS/ES ratios for Johor were higher than national average, with the latter exceeding by a substantial amount. Distribution for the value of transactions in Down South was quite balanced; with highest being RM 300,001 – 400,000 (14.72%), followed by RM 500,001 – 1,000,000 (13.45%), and RM 150,001 – 200,000 (13.28%). 2 – 3 and single storey terrace houses were the most transacted residential types. All house types recorded double-digit positive YOY changes for average price per transaction and the rate of increment seemed to be consolidating in the near term when compared to QOQ. The immense preference for terrace houses was fairly symmetrical between JB district and Johor ex. JB with 2 - 3 storey terrace houses being the main choice in the former and single storey terrace houses for the latter. Considerable weightage of strata properties was only present in JB district while such properties had a minimal presence in Johor ex. JB. CYF.A9/11.14 5 Summary A growing number of transactions was witnessed within the price range of RM 300,001 – 1,000,000 in Q1 2014. In addition, average gross rental yields for Johor Bahru, Muar Town, and Bukit Indah@Iskandar were quite satisfactory according to their respective house types. Figure 1: Q1 2014 QOQ changes of Johor for Residential Volume and Average Price per Transaction (NAPIC, 2014). 18.55 14.49 11.98 QOQ (%) QOQ CHANGES JB -0.39 JOHOR EX. JB TOTAL JOHOR -6.80 -11.44 VOLUME AVERAGE PRICE PER TRANSACTION A summary of the current residential market in Johor can be illustrated in the volume and price chart of Figure 1. In the most recent quarter of Q1 2014, JB district recorded a higher growth in average price per transaction and a higher decline in volume transacted than the rest of Johor. The performance of Johor as a whole was in a better condition than the country’s average. CYF.A9/11.14 6 Overview Down south at the Peninsular of Malaysia, the state of Johor is located at the edge of the Asian continental mainland. It is the 5th largest state in Malaysia by land area and the 2nd most populated state after Selangor (surpassing Sabah in recent years). Johor is also one of the most developed states in Malaysia after prominent names such as Selangor, Penang, and Negeri Sembilan. The current state capital and royal city of Johor is Johor Bahru (JB), which was formerly known as Tanjung Puteri and Muar respectively. The old state capital is Johor Lama, which is situated at the modern day of Kota Tinggi district. Geographically, the state of Johor is flanked by Pahang to the north, Melaka and Negeri Sembilan to the northwest, and the Republic of Singapore to the south (separated by the narrow Straits of Johor). Historically, the sultanate of Johor was founded in the early 16th century. It was one of two successor states of the Melaka empire, with the other being the sultanate of Perak. Johor was also the birthplace of the United Malays National Organization (UMNO) by Dato’ Onn Jaafar in 1946. Johor is linked to Singapore via two road connections; the Johor-Singapore Causeway and the Malaysia-Singapore Second Link. The Causeway also carries a railway line, which is now part of the main rail route linking Singapore with Thailand via Kuala Lumpur, Ipoh, and Butterworth. While the state has 3 major ports; mainly the Pasir Gudang Port, the Tanjung Pelepas Port, and the Tanjung Langsat Port (all within the district of Johor Bahru). Johor’s international airport (Senai) is located within the Johor Bahru district as well, which formed part of the “Flagship Zones” of Iskandar. In terms of economic development, Iskandar is the main driver in Johor. It is intended to draw investment and business to Johor and will be among the biggest development projects in Malaysia. The state administrative capital will be moved to Nusajaya. Residential areas include Bukit Indah and Horizon Hills townships.