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 : , Petaling Jaya, Subang Jaya, Kelang, Bahru, Melaka, Ipoh, Seremban, , , 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 (surpassing in recent years). Johor is also one of the most developed states in Malaysia after prominent names such as Selangor, Penang, and . The current state capital and royal city of Johor is (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 and 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 . 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. such as Batu Pahat, , and Kulaijaya are showing early signs of excess supply. While the of Johor Bahru has a similar ratio of 1.17 with sub-districts of and 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, 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 , which is situated at the modern day of district.

Geographically, the state of Johor is flanked by to the north, Melaka and Negeri Sembilan to the northwest, and the Republic of to the south (separated by the narrow ). 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 . Johor was also the birthplace of the United 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 Port (all within the district of Johor Bahru). Johor’s international airport () is located within the 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.

CYF.A9/11.14 7 Components of Johor

Iskandar Malaysia, formerly known as Iskandar Development Region and South Johor Economic Region is the main southern development corridor in Johor. It was established in 2006, with the development region encompasses an area of 2,217 km2 covering city of JB and adjoining towns of Pontian, Senai, Pasir Gudang, and the construction of a new administrative capital in Nusajaya.

Iskandar is modelled after the Pearl River Delta Economic Zone, and is envisaged to capitalize on its current synergies with Singapore as it aims to complement each other as an economic hub. The 5 “Flagship Zones” are identified as development focal points, which will be depicted in the subsequent map of Iskandar.

Figure 2: Johor-Singapore Causeway (left), and Legoland@Iskandar (Right).

There is no current official designation of boundaries for Johor and groupings of selective areas could be highly subjective. For the purpose of studying the housing market, these selective areas are grouped according to the National Property Information Centre (NAPIC, 2014). They include:

1. Johor (10 districts) (Batu Pahat, Johor Bahru, , Kota Tinggi, , Muar, Pontian, Segamat, Kulaijaya, Ledang) 2. Johor Bahru district (4 sub-districts) (Johor Bahru Tengah, Johor Bahru, Pasir Gudang, Kulai)

CYF.A9/11.14 8 Components of Johor

Figure 3: Map of Johor’s districts (2010 Population and Weightage in brackets) (Department of Statistics Malaysia, 2014).

6. 135,575 (6%)

5. 201,148 10. 33,741 (8%) (1%)

7. 131,890 4. 215,416 (5%) (9%)

2. 262,684 (11%) 9. 84,971 (3%)

3. 245,294 (10%)

1. 1,061,950 (43%) 8. 93,651 (4%)

TOTAL JOHOR = 2,466,320: (10% OF MALAYSIA)

CYF.A9/11.14 9 Components of Johor

Figure 4: Map of JB’s districts (2010 Population and Weightage in brackets) (Department of Statistics Malaysia, 2014).

4. 2,850 (<1%)

2. 497,067 (47%) 1. 515,462 (49%)

3. 46,571 (4%)

TOTAL JB = 1,061,950: (43% OF JOHOR)

Figure 5: Five designated areas in Iskandar Johor (JB).

CYF.A9/11.14 10 Basic Information

Table 1: Depiction of Johor and Malaysia (2012) (Department of Statistics Malaysia, 2014). JOHOR MALAYSIA % DEPICTION MEAN 2010 2011 2012 (2012) (2012) 1. AREA (KM2) 19,016 19,016 330,290 5.76 2. POPULATION (MILLION) 3.36 3.41 3.46 3.41 29.52 11.72 3. AVERAGE ANNUAL POPULATION GROWTH RATE (%) 1.60 1.40 1.30 1.43 1.60 -0.30 4. TOTAL FERTILITY RATE 2.10 2.20 2.20 2.17 2.10 0.10 5. LIFE EXPECTANCY (YEARS) 73.97 74.17 74.21 74.12 74.63 -0.56 6. GDP (A) GDP AT CONSTANT 2005 PRICES (RM MILLION) 60,679 64,566 68,791 64,679 751,471 9.15 (B) GDP PER CAPITA AT CURRENT PRICE (RM) 21,329 23,533 24,452 23,105 30,956 -21.01 (C) GDP GROWTH RATE (%) 9.80 6.40 6.50 7.57 5.60 0.90 7. EMPLOYMENT (A) LABOUR FORCE ('000) 1,453.50 1,495.00 1,524.50 1,491.00 13,119.60 11.62 (B) PARTICIPATION RATES (%) 64.00 64.70 64.90 64.53 65.50 -0.60 (C) UNEMPLOYMENT RATE (%) 2.40 2.50 3.20 2.70 3.00 0.20 According to table 1, it is worth noting that the state of Johor has a land area of 19,016 km2, which is only 5.76% of the country’s total land mass. However, the subsequent data of the area is not proportional to its land size. Johor is home to about 11.72% of the country’s total population, produces 9.15% of the country’s GDP, and supplies 11.62% of Malaysia’s total labour force.

Average annual population growth rate and life expectancy are both -0.30% and -0.56% lower than the national readings, whereas total fertility rate is 0.10% higher. Annual population growth rate was decreasing in the 3 years being examined, which was in line with the national trend. Fertility rate was stable at around 2.20, which is the normal replacement fertility rate. Life expectancy was improving but still lagged behind the national average.

GDP growth rate of Johor was 0.90% higher than average and GDP per capita was -21.01% lower than the country’s mean. It was observed that GDP growth rate was cooling, while GDP per capita was improving. Such data illustrates the potential of Johor to improve on its productivity and standards of living. Job opportunities are comparable for Johor to other parts of the nation with unemployment rate of 0.20% higher than the national average, while participation rate was improving.

CYF.A9/11.14 11 Basic Information

Table 2: Continuation of Economic Data (2013) (Department of Statistics Malaysia, 2014). DEPICTION JOHOR MALAYSIA %

1. GDP (NOMIMAL) (RM BILLION) 86.14 940.97 9.15

2. PROPERTY MARKET VALUE (RM BILLION) 16.77 142.84 11.74

3. PROPERTY MARKET VALUE/GDP (NOMINAL) (%) 19.47 15.18 4.29

4. DENSITY (PER KM2) (2010) 174.00 86.44 101.30

5. URBANISATION RATE (%) (2010) 71.90 71.00 0.90

Besides providing a marginal share of the nation’s GDP, Johor’s property market was slightly ahead compared to its pace of development. In 2013, the area’s combined nominal GDP and property market value accounted for 9.15% and 11.74% of that of the nation; with its property market growth rate and prices increasing at a faster rate than its GDP growth rate.

Property market of this southern state made up a significant share of the local economy; ratio of property market value per GDP was 19.47%, which was 4.29% higher than Malaysia. Population density and urbanization rate were 174 person per km2 and 71.90% respectively. They were 101.30% and 0.90% higher than Malaysia’s average. Such figures depict that Johor is a fairly concentrated and urbanized area in the context of a nation.

Johor’s property market was noticed to be more vibrant compared to the national average. Number of property transactions per 100 population = 2013: (Johor): 1.53; (Malaysia): 1.30 2012: (Johor): 1.45; (Malaysia): 1.50

In addition, it was noticed that Johor recorded the highest improvement for transacted volume of property market in the country. It was one of two states that managed to register a positive YOY change in 2013 (the other being ). YOY change for number of transactions was recorded at 7.07%, which was better than the country’s mean of -10.85%. Whereas value of transactions increased by 79.57% last year, compared to a 6.67% increment for the nation (JPPH, 2014).

CYF.A9/11.14 12 Basic Information

Table 3: Grouping of Household and Living Quarters by District (2010) (Department of Statistics Malaysia, 2014). LIVING DISTRICT HOUSEHOLD % % PERSON / H PERSON / LQ LQ / H QUARTERS BATU PAHAT 60,757 10.18 74,456 10.59 4.32 3.53 1.23 JOHOR BAHRU 265,737 44.53 310,720 44.18 4.01 3.43 1.17 KLUANG 53,226 8.92 60,249 8.57 4.05 3.58 1.13 KOTA TINGGI 20,031 3.36 23,593 3.35 4.24 3.60 1.18 MERSING 8,349 1.40 9,161 1.30 4.04 3.68 1.10 MUAR 48,528 8.13 57,288 8.15 4.14 3.51 1.18 PONTIAN 21,664 3.63 24,796 3.53 4.32 3.78 1.14 SEGAMAT 34,395 5.76 42,290 6.01 3.96 3.22 1.23 KULAIJAYA 53,607 8.98 64,795 9.21 4.58 3.79 1.21 LEDANG 30,455 5.10 36,000 5.12 4.33 3.66 1.18 TOTAL 596,749 100.00 703,348 100.00 4.14 3.51 1.18 - Ratio of existing residential stock per 100 population = (Johor): 20; (Malaysia): 16. - Ratio of total population to number of person per household = (Johor): 835,748 unit of houses (breakeven point); assuming household size is held constant. - Existing residential stock = (Johor): 705,929 unit of houses (an additional of 129,819 units is required to reach breakeven point); assuming household size is held constant.

As expected, the district of Johor Bahru recorded the highest count for both the number of household (265,737: 44.53%) and living quarters (310,720: 44.18%). Coming in second was the district of Batu Pahat with 60,757 households (10.18%) and 74,456 living quarters (10.59%). Kulaijaya was third; with households and living quarters at about 9 percent of Johor.

In terms of ratio for person per household, Segamat was the lowest (3.96), followed by Johor Bahru (4.01), and Mersing (4.04). While districts with the lowest ratio of person per living quarter were Segamat (3.22), Johor Bahru (3.43), and Muar (3.51). These districts were assumed to have the highest purchasing power within Johor. The state’s average for person per household and person per living quarter were 4.14 and 3.51 respectively.

Johor’s LQ/H ratio which came in at 1.18 has confirmed that there was no current shortages of houses in this area. Stock availability was quite sufficient as well. However, districts such as Segamat (1.23), Batu Pahat (1.23), and Kulaijaya (1.21) were showing early signs of excess supply. Reading for Johor Bahru which came in at 1.17 was quite healthy inline with the progress of Iskandar. CYF.A9/11.14 13 Basic Information

Table 4: Grouping of Household and Living Quarters by JB Sub-district (2010) (Department of Statistics Malaysia, 2014). DISTRICT HOUSEHOLD % LIVING % PERSON / PERSON / LQ / H QUARTERS H LQ

JOHOR BAHRU TENGAH 129,854 48.87 150,983 48.59 3.97 3.41 1.16 JOHOR BAHRU 124,612 46.89 145,797 46.92 3.99 3.41 1.17 PASIR GUDANG 10,641 4.00 13,155 4.23 4.38 3.54 1.24 KULAI 630 0.24 785 0.25 4.52 3.63 1.25 TOTAL 265,737 100.00 310,720 100.00 4.00 3.42 1.17

The sub-district of Johor Bahru Tengah; which is home to the Flagship Zone of B and C of Iskandar, recorded the highest count for both the number of household (129,854: 48.87%) and living quarters (150,983: 48.59%). Following closely was the sub-district of Johor Bahru with 124,612 households (46.89%) and 145,797 living quarters (46.92%). Pasir Gudang was third; with households and living quarters at about 4% of Johor Bahru district. Last was sub-district of Kulai with less than 1% of each.

In terms of ratio for person per household and person per living quarter, Johor Bahru Tengah was the lowest (3.97 and 3.41), followed by Johor Bahru (3.99 and 3.41), Pasir Gudang (4.38 and 3.54), and Kulai (4.52 and 3.63). Districts with lower ratios were assumed to have higher purchasing power. The district’s average for person per household and person per living quarter were 4.00 and 3.42 respectively.

LQ/H ratio for district of JB which came in at 1.17 has confirmed that there was no current shortages of houses in this area. Stock availability was quite sufficient as well. However, districts such as Kulai (1.25) and Pasir Gudang (1.24) were showing early signs of excess supply.

It is anticipated that there could be a high possibility of smaller household size in the future. Such a reduction in the number of person per household would directly increase the demand for new living quarters and strain the existing housing stock in the market.

CYF.A9/11.14 14 Residents’ Data

Figure 6: Breakdown of Johor’s population by district (2010) (Department of Statistics Malaysia, 2014). LEDANG PONTIAN 5% 4% SEGAMAT 6% KOTA TINGGI JOHOR BAHRU 3% MUAR 43% 8% MERSING 1% KLUANG 9%

KULAIJAYA 10% BATU PAHAT 11%

It may seem logical that most inhabitants will usually reside around the central hub of commercial and industrial activities, and ports. In the context of Down South, this area of central activities include state capitals and industrial zones. They consist of the district of Johor Bahru and Batu Pahat. While within the district of JB, sub-districts of Johor Bahru Tengah and Johor Bahru account for almost the entire population of that specific district.

Figure 7: Breakdown of JB’s population by district (2010) (Department of Statistics Malaysia, 2014). PASIR GUDANG KULAI 4% 0%

JOHOR BAHRU JOHOR BAHRU TENGAH 47% 49%

CYF.A9/11.14 15 Residents’ Data

Figure 8: by Age (2000 & 2010) (Department of Statistics Malaysia, 2014). 80.00

70.00 67.30 62.80 60.00

50.00

40.00 33.30

30.00 27.60 WEIGHTAGE (%) WEIGHTAGE

20.00

10.00 3.90 5.10

0.00 < AGE 15 AGE 15-64 > AGE 64 AGE GROUP

2000 2010

Age Malaysia’s population is aging slowly (but still in its early stages); with lower portion of children age group (< age 15) in 2010 compared to 2000. Working age adults (age 15 - 64) and retirement segments (> age 64) have increased by 4.5% and 1.2% respectively. Median age has increased from 23.6 (2000) to 26.2 (2010); which is still a relatively young population.

The country’s dependency ratio has dropped from 0.59 (2000) to 0.49 (2010), reinforcing the fact that: 1. Population growth is slowing 2. Children age group is diminishing (entering the age of workforce) 3. Working age group is increasing 4. More working adults are supporting the non-working classes (children and elders).

CYF.A9/11.14 16 Residents’ Data

Figure 9: Demographics of Johor by Age (2010) (Department of Statistics Malaysia, 2014). 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 POPULATION 300,000 200,000 100,000 0 0-19 20-29 30-39 40-49 50-59 60-75+ JB JOHOR EX. JB AGE GROUP

Figure 10: Dependency ratio of Johor (2010) (Department of Statistics

Malaysia, 2014). DEPENDENCY RATIO DEPENDENCY

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00

JB JOHOR EX. JB

This south territory accounts for 11.72% of the total population in Malaysia and has a dependency ratio of 0.78; which is quite healthy. This indicates that the proportion of non-working age groups (children and elders) is lower than the working age groups. It was worth noting that the district of JB has the lowest dependency ratio of 0.67 within Johor, while the rest of Johor was higher at 0.88.

The overall population of Johor is very young as well; which is in tandem with the national average. The 3 largest age groups are 0-19 (35.55%), 20-29 (19.85%), and 30-39 (14.93%). They account for 70.34% of the total population in Johor. The demographics of Johor by age is somewhat comparable to Klang Valley in relative terms. This shows that job opportunities were abundant in Johor with majority of the young working adults staying put in the state.

CYF.A9/11.14 17 Residents’ Data

Figure 11: Demographics of Malaysia by Ethnicity (2010) (Department of Statistics Malaysia, 2014).

NON- Malaysia has a total population of OTHERS CITIZEN 28.30 million as at 2010; with 1% 8% INDIANS 61.87% as Bumiputeras, 22.58% 7% as Chinese, 6.70% as Indians, 0.64% classified as others, and 8.20% as non-citizens. CHINESE 22% BUMI 62%

Figure 12: Demographics of Johor by Ethnicity (2010) (Department of Statistics Malaysia, 2014). 1,400,000 1,200,000 1,000,000 800,000 600,000

POPULATION 400,000 200,000 0 BUMIPUTERA CHINESE INDIANS OTHERS NON-CITIZEN

JB JOHOR EX. JB ETHNICITY

Ethnicity Johor has a very high composition of Chinese compared to that of Malaysia; 47.63% Bumiputeras, 36.69% Chinese, 7.26% Indians, 0.43% others, and 7.99% non-citizens. While the district of JB has a quite similar ethnic proportion as the greater Johor.

In the state of Johor, districts with high composition of Chinese (>40%) include; Batu Pahat (41.21%), Segamat (41.12%), and Muar (40.54%). While sub- districts of Johor Bahru Tengah (43.68%), and Johor Bahru (34.73%) displayed the highest Chinese ethnicity in the district of Johor Bahru.

CYF.A9/11.14 18 Property Market in Malaysia

Figure 13: Malaysia’s Overall Property Market (2004 – 2013) (NAPIC, 2014).

50.00

40.00

30.00

20.00

10.00 % CHANGE YOY %CHANGE

0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-10.00

-20.00

VOLUME (% CHANGE) VALUE (% CHANGE) AVERAGE PRICE PER TRANSACTION (% CHANGE)

The property market in Malaysia is highly cyclical. There is a high correlation between volume and value (correlation of efficiency value of 0.75; from 2003 - 2012). 2013 proved to an excepting year, which recorded the worst decline in amount of transaction for the last 10 years; declining by -10.85% YOY.

However, the total value of transaction recorded a decent gain of 6.67% YOY. This led to the biggest yearly gain in the last 10 years for the average price per transaction (rising by a staggering 19.65%). It is yet to be determined that such a rise in average price per transaction is sustainable if volume does not exist to support it.

CYF.A9/11.14 19 Property Market in Malaysia

Figure 14: Volume of Malaysia Property Market by Sectors (2004 – 2013) (NAPIC, 2014). 40.00

30.00

20.00

10.00

0.00 % CHANGE YOY %CHANGE 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -10.00

-20.00

RESIDENTIAL COMMERCIAL INDUSTRIAL AGRICULTURAL DL & OTHERS

Volume 2013 saw a broad decrease over all sectors of the property market; led by the commercial sector (-16.51%), industrial (-15.69%), agricultural (-12.37%), residential (-9.70%), and development land and others (-6.99%).

Value Unlike volume, the commercial sector witnessed the highest incremental in value (27.96%), followed by the residential sector (6.34%), industrial (2.69%), agricultural (-6.97%), and lastly development land and others (-8.89%).

For both of these instances, the residential property sector showed resilience compared to the rest of the market.

Figure 15: Value of Malaysia Property Market by Sectors (2004 – 2013) (NAPIC, 2014). 80.00

60.00 RESIDENTIAL 40.00 COMMERCIAL 20.00 INDUSTRIAL 0.00 AGRICULTURAL 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % CHANGE %CHANGE YOY -20.00 DL & OTHERS -40.00

-60.00

CYF.A9/11.14 20 Property Market in Malaysia

Figure 16: Malaysia’s Average Price per Transaction by Sectors (RM in Million (2004 – 2013) (NAPIC, 2014).

Average price per transaction In 2013, the commercial sector recorded the biggest change in the last 10 years (53.27%), followed by the industrial sector (21.79%), residential (17.76%), and agricultural (6.16%). Whereas average price per transaction for development land and others marked the steepest unusual decline in the last 10 years (-43.28%).

Abiding by the norm, the industrial sector has the highest average price per transaction of RM 1.46 million, followed by commercial (RM 1.04 million), development land and others (RM 0.89 million), residential (RM 0.29 million), and agricultural (RM 0.14 million).

CYF.A9/11.14 21 Property Market in Malaysia

Figure 17: Weightage of Malaysia Property Market by Sectors (Volume) (2004 – 2013) (NAPIC, 2014).

Weightage of sectors The residential market made up the bulk of the total property market in Malaysia; with a 10 year mean value of 63.87%, followed by the agricultural sector (19.59%), commercial (9.36%), development land and others (4.67%), and industrial (2.47%). A decrease in weightage for all sectors except residential (0.82%), and development land and others (0.25) was observed in 2013.

CYF.A9/11.14 22 Property Market in Malaysia

Figure 18: Number of Transactions by State in Malaysia (2012 – 2013) (JPPH, 2014).

120000 10

7.07 100000 0

80000 -10 %

60000 52,779 -20 UNITS

40000 49,296 -30

20000 -40

0 -50

2012 2013 % (YOY) 2013 COUNTRY MEAN (% YOY)

Number of transactions In 2013, Selangor recorded the highest amount of transactions (81,955: 22%) in Malaysia, followed by Johor (52,779: 14%), and Perak (46,234: 12%). These 3 states made up almost half of the total transactions in Malaysia.

In terms of YOY changes, all states recorded negative growth rates except for Johor (7.07%), and Perlis (5.93%). The country recorded a decline of -10.85% in 2013.

CYF.A9/11.14 23 Property Market in Malaysia

Figure 19: Turnover Rate of Malaysia Residential Market by State (2012 & 2013) (JPPH, 2014). 7 1

0.5 6 0.37 0 5

-0.5 CHANGE (%) CHANGE 4 -1 3.04

3 -1.5 TURNOVER TURNOVER (%) 2.67 -2 2 -2.5 1 -3

0 -3.5

2012 2013 % (YOY) 2013 COUNTRY MEAN (% YOY)

Turnover rate (Residential) For the year ended 2013, the state of Perak recorded the highest turnover rate in Malaysia; clocking in at 4.35%, coming in second was (4.04%), then Melaka (3.92%). The bottom 3 states were (1.60%), (2.28%), and Sabah (2.29%). Johor was at the 11th spot with a turnover rate of 3.04%. The country’s mean turnover rate was 3.34%.

In terms of YOY changes, Perlis was the highest (0.79%), followed by Johor (0.37%), and then Pahang (0.22%). The bottom 3 states were (-2.85%), Kuala Lumpur (-1.71%), and Pulau Pinang (-1.20%). The country’s mean YOY reading was -0.50%.

CYF.A9/11.14 24 Property Market in Malaysia

Figure 20: Percentage of Unsold Residential Units (New Launches) by State in Malaysia (2013) (JPPH, 2014).

90 20

80 10 70 -1.14 0

60 CHANGE (%) CHANGE 50 -10 43.46

40 -20 UNSOLD UNSOLD (%) 42.33 30 -30 20 -40 10

0 -50

TOTAL UNSOLD 2012 TOTAL UNSOLD 2013 % CHANGE (1 YR) COUNTRY MEAN (1 YR)

Unsold units of New launches (Residential) In 2013, based on individual states; Kelantan recorded the highest percentage of unsold residential units (new launches) in Malaysia (66.70%), followed by (63.46%), and Sarawak (51.43%). Johor was ranked number 8th with a collective unsold fraction of 42.33%. The country’s mean reading was 43.90%.

In terms of YOY changes, Sarawak was the highest (11.21%), followed by Kelantan (10.95%), and then Terengganu (5.35%). The bottom 3 states were Perlis (-38.62%), Pahang (-8.67%), and Putrajaya (-7.74%). Johor was at the 7th spot with YOY change of -1.44%. The country’s mean YOY reading was -3.22%.

CYF.A9/11.14 25 Residential Market in Johor

Figure 21: Weightage of Johor Property Market by Sectors (Volume) (2013) (JPPH, 2014).

60,000 20.00

10.00 50,000

0.00

40,000 CHANGES(%) -10.00 30,000 -20.00

20,000

NUMBER OF TRANSACTIONS OF NUMBER -30.00

10,000 -40.00

0 -50.00

SUB-SECTORS JOHOR YOY (%)

Weightage by sectors Similar to national norm, the residential market made up the bulk of the total property market transactions in Johor; with a share of 63.76%, followed by agricultural (19.04%), commercial (9.63%), development land and others (5.26%), and industrial (2.30%). A shift in weightage from agricultural to residential sector was witnessed in 2013.

It is worth noting that the weightage of all sectors in Johor was equivalent to the national average.

YOY, the residential (16.65%) and commercial (9.78%) sectors recorded positive growth. While agricultural (-13.74%), industrial (-6.76%), and development land (-2.83%) posted negative growth. Johor’s average was 7.07%.

CYF.A9/11.14 26 Residential Market in Johor

Figure 22: Number of Residential Transactions by State for Johor (2013) (JPPH, 2014).

300,000 20.00

15.00 250,000

10.00

200,000 CHANGES (%)CHANGES 5.00

150,000

0.00

100,000 NUMBER OF TRANSACTIONS OF NUMBER -5.00

50,000 -10.00

0 -15.00 JOHOR MALAYSIA AREA 2013 YOY (%)

Weightage by area (Residential) The state of Johor recorded 33,651 residential transactions in 2013. While Malaysia has a total of 246,225 residential transactions for the same timeframe. Thus, the state Down South accounted for 13.67% of Malaysia’s total residential property market transactions.

In terms of YOY, Johor recorded a positive growth of 16.65% which was in contrast with the national’s average of -9.70%. This suggests the vibrancy of the residential property market Down South.

CYF.A9/11.14 27 Residential Market in Johor

Figure 23: Average Price per Transaction of Residential Properties for Johor (RM) (2013) (JPPH, 2014).

295,000 45.00 292,661

40.00 290,000 35.00

285,000 30.00 CHANGES(%) 25.00 280,000 20.00 275,854 275,000 15.00

10.00

AVERAGE PRICE PER TRANSACTION (RM MILLION) TRANSACTION PRICE IN PER AVERAGE 270,000 5.00

265,000 0.00 JOHOR MALAYSIA AREA 2013 YOY (%)

Average price per transaction (Residential) Average price per transaction for the residential sector in this southern territory was slightly lower (-5.74%) than the national average in 2013.

Johor recorded a reading of RM 275,854 (YOY: 39.92%), whereas the country reading was RM 292,661 (YOY: 17.76%).

Given the favorable conditions, there is high potential for such average price in Johor to surpass the nation in the near future.

CYF.A9/11.14 28 Residential Market in Johor

Figure 24: Supply Compilation of Residential Properties for Johor (2013) (JPPH, 2014).

7,000,000 30.00

6,000,000 25.00

5,000,000

20.00 SUPPLY SUPPLY RATIO (%)

4,000,000

15.00

3,000,000

10.00 NUMBER OF UNITS (SUPPLY0 UNITS OF NUMBER 2,000,000

5.00 1,000,000

0 0.00 JOHOR MALAYSIA AREA PLANNED SUPPLY (PS) INCOMING SUPPLY (IS) EXISTING STOCK (ES) IS/ES (%) PS/ES (%)

Supply compilation The total supply of residential properties in Johor was 16.46% of that of the nation in 2013. This was higher than the residential transacted fraction of 13.67%,, resulting in a lower than average turnover ratio of 3.04% for Johor as mentioned earlier. To put it simply, the low turnover ratio for Johor was attributed to a greater increase in supply than demand in 2013.

Incoming and planned supply for Johor were increasing at a faster rate than the national average. In terms of IS/ES and PS/ES ratios, Johor recorded readings of 16.74% and 23.85% respectively. They were higher than the national readings of 14.76% and 13.05% respectively.

In all instances of supply; which include existing stock, incoming supply, and planned supply, the state of Johor was growing faster than Malaysia. This was especially pronounced in the planned supply category. Such figures reinforced the strong potential and confidence that developers have in Down South. CYF.A9/11.14 29 Residential Market in Johor

Figure 25: Supply Compilation of Residential Properties for Johor (2013) (JPPH, 2014).

2.50 12.00

10.00 2.00 8.00

6.00

1.50 CHANGES YOY (%) 4.00

1.00 2.00

0.00 YOY CHANGES (%) YOYCHANGES 0.50 -2.00

-4.00 0.00 JOHOR MALAYSIA -6.00

-0.50 -8.00 STATE

IS/ES (%) PS/ES (%) NEWLY LAUNCHED/TOTAL TRANSACTIONS COMPLETED/TOTAL TRANSACTIONS TOTAL LAUNCHES/TOTAL TRANSACTIONS

Supply compilation (Cont’d) Referring to Figure 25, Johor’s near-term and mid-term supply growth rates were positive and better than the national average.

When segregating new supply into physical availability, it was observed that majority of the launches was under construction (50.26%). The weightage for under construction residential properties has increased, while those newly launched and completed have decreased. Weightage for not constructed was stable.

The YOY change for newly launched units per total transactions was negative (-0.86%). YOY for completed houses per total transactions was negative as well (-5.69%). While YOY for total launches per total transactions was positive (5.86%).

CYF.A9/11.14 30 Residential Market in Johor

Figure 26: Number of Residential Transactions by Price Range for Johor (Q1 2014) (NAPIC, 2014). 1,600 18.00

1,400 16.00

14.00 1,200 12.00 1,000

10.00 (%) WEIGHTAGE 800 8.00 600 6.00 400 4.00

200 2.00 NUMBER OF TRANSACTIONS OF NUMBER 0 0.00 (A) 0 - (B) 50,001 (C) (D) (E) (F) (G) (H) (I) 500,001 (J) 50,000 - 100,000 100,001 - 150,001 - 200,001 - 250,001 - 300,001 - 400,001 - - 1,000,001 150,000 200,000 250,000 300,000 400,000 500,000 1,000,000 - ABOVE PRICE RANGE (RM) Q1 2013 Q4 2013 Q1 2014 W (Q1 2013) W (Q4 2013) W (Q1 2014)

Figure 27: Number of Residential Transactions by House Type for Johor (Q1 2014) (NAPIC, 2014).

3,500 40.00

3,000 35.00 30.00 2,500 25.00

2,000 (%) WEIGHTAGE

20.00 TRANSACTIONS 1,500 15.00 1,000 10.00

NUMBER OF OF NUMBER 500 5.00

0 0.00

HOUSE TYPE

Q1 2013 Q4 2013 Q1 2014 W (Q1 2013) W (Q4 2013) W (Q1 2014)

CYF.A9/11.14 31 Residential Market in Johor

Figure 28: Residential Average Price per Transaction by House Type for Johor (RM in million) (Q1 2014) (NAPIC, 2014).

0.90 70.00 0.78 0.80 0.72 60.00 0.70 0.60 50.00 0.60

0.48 (%)CHANGES 0.50 40.00 0.38 0.36 0.40 30.00 0.29 0.27 0.30 0.20 20.00 0.20 0.09 10.00 0.10 0.07 0.06 0.00

0.00 0.00 AVERAGE PRICE PER TRANSACTION (RM MILLION) TRANSACTION PRICE IN PER AVERAGE

HOUSE TYPE

Q1 2013 Q4 2013 Q1 2014 YOY (%) QOQ (%)

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%). Together, they made up more than 40% of the total residential transactions in Johor. However, there was an apparent shift in weightage from the lower price range of RM 50,001 – 200,000, to the higher price range of RM 300,001 – 1,000,000 in Q1 2014. However, transactions above RM 1,000,001 were minimal.

Almost 60% of the total transactions in Johor was in terrace houses (with 2 – 3 storey being the dominant type). All of the other house types were less than 10% each. Number of transactions for all strata properties was less than 9%.

Generally, all house types recorded double-digit positive YOY changes for average price per transaction with 2 - 3 storey semi-detach and townhouses leading the charge. When compared with QOQ changes, the rate of increment seemed to be slowing down in the near term.

CYF.A9/11.14 32 Residential Market in Johor

Figure 29: Average Gross Rental Yield of Residential Properties in Johor (2013) (JPPH, 2014).

16.00

14.40 14.00

12.00

10.00

8.00 7.65

6.00 GROSS YIELD (%) GROSS RENTAL 4.00 4.00

2.00

0.00 JOHOR BAHRU (SINGLE STOREY MUAR TOWN (LOW-COST FLATS) BUKIT INDAH@ISKANDAR (SKY TERRACE) EXECUTIVE SUITES) AREA

UPPER CASE (%) LOWER CASE (%) AVERAGE (%)

Gross Rental Yield The average gross rental yields for Johor Bahru, Muar Town, and Bukit Indah were quite satisfactory according to their respective house types.

Single storey terrace houses in Johor Bahru recorded an average gross rental yield of 4.00%, while low-cost flats in Muar Town posted 7.65%. Luxury condominiums at Bukit Indah@Iskandar has an expected average gross rental yield of 14.40%.

CYF.A9/11.14 33 Residential Market in JB

Figure 30: Number of Residential Transactions by House Type in JB (Q1 2014) (NAPIC, 2014).

2,500 50.00 45.00 2,000 40.00 35.00

1,500 30.00 WEIGHTAGE (%) WEIGHTAGE

25.00 TRANSACTIONS 1,000 20.00 15.00

500 10.00 NUMBER OF OF NUMBER 5.00 0 0.00

HOUSE TYPE

Q1 2013 Q4 2013 Q1 2014 W (Q1 2013) W (Q4 2013) W (Q1 2014)

Figure 31: Residential Average Price per Transaction by House Type in JB (RM in million) (Q1 2014) (NAPIC, 2014).

1.20 1.09 1.11 120.00 0.99 1.00 100.00 0.75 80.00 0.80 0.65 60.00 0.60 (%)CHANGES 0.41 0.40 40.00 0.40 0.24 0.28 20.00 0.20 0.08 0.09 0.06 0.00 0.00 0.00 -20.00

AVERAGE PRICE PER TRANSACTION (RM MILLION) TRANSACTION PRICE IN PER AVERAGE HOUSE TYPE

Q1 2013 Q4 2013 Q1 2014 YOY (%) QOQ (%)

CYF.A9/11.14 34 Residential Market in JB

In this finale, the number of transactions for Down South will be further broken down into two components; namely JB district and Johor ex. JB.

JB In the district of JB alone, the total residential transactions in Q1 2014 accounted for 55% of the overall Johor state.

The most preferred house type in JB was 2 - 3 storey terrace houses which made up close to 45% of the total transactions in Q1 2014. This was followed by single storey terrace houses which represents 18% of the total transactions. Condominiums and apartments were third with 10%. Number of transactions for all strata properties was capped at 14%. This was significantly lower than those in Klang Valley and Penang.

Generally, almost all house types recorded double-digit positive YOY changes for average price per transactions (except for flats and low-cost houses). Some of the biggest advancers were townhouses and low-cost flats. The rate of increment in QOQ seemed to be slowing down compared to YOY.

CYF.A9/11.14 35 Residential Market in Johor ex. JB

Figure 32: Number of Residential Transactions by House Type in Johor ex. JB (Q1 2014) (NAPIC, 2014).

1,400 40.00

1,200 35.00 30.00 1,000 25.00

800 (%) WEIGHTAGE

20.00 TRANSACTIONS 600 15.00 400 10.00 200 NUMBER OF OF NUMBER 5.00 0 0.00

HOUSE TYPE

Q1 2013 Q4 2013 Q1 2014 W (Q1 2013) W (Q4 2013) W (Q1 2014)

Figure 33: Residential Average Price per Transaction by House Type in Johor ex. JB (RM in million) (Q1 2014) (NAPIC, 2014).

0.60 80.00

0.48 60.00 0.50 0.45 40.00 0.40

0.29 20.00 (%)CHANGES 0.30 0.26 0.27 0.00 0.18 0.20 0.16 0.14 0.12 -20.00 0.11 0.10 0.06 0.03 -40.00 0.00

0.00 -60.00 AVERAGE PRICE PER TRANSACTION (RM MILLION) TRANSACTION PRICE IN PER AVERAGE

HOUSE TYPE

Q1 2013 Q4 2013 Q1 2014 YOY (%) QOQ (%)

CYF.A9/11.14 36 Residential Market in Johor ex. JB

Johor ex. JB Whereas the rest of Johor excluding the district of JB only account for 45% of the overall Johor state in Q1 2014.

In Johor ex. JB, single storey terrace houses accounted for almost 32% of the total transactions in Q1 2014. This was followed by 2 – 3 storey terrace houses (23%) and vacant plots (16%). Demand for strata properties was muted at 2%.

YOY changes for average price per transactions were positive for all properties (except for condominiums and apartments, townhouses, and low-cost flats). Some of the biggest advancers were cluster houses, and flats.

QOQ, all properties recorded positive growth as well (except for townhouses and low-cost flats). Leading advancers include flats and detach houses. The rate of increment for QOQ seemed to be consolidating compared to YOY.

CYF.A9/11.14 37 References

Department of Statistics Malaysia. (2014) Statistical Releases, [Online], Available: http://www.statistics.gov.my/portal/index.php?option= com_content&view=article&id=472&Itemid=111&lang=en&negeri=Malaysia [11 Dec 2014].

JPPH. (2014) Property Market Report 2013, Putrajaya: Valuation and Property Services Department.

NAPIC. (2014) Key Statistics, [Online], Available: http://napic.jpph.gov.my/portal [11 Dec 2014].

CYF.A9/11.14 38 Contact Us

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