Photos by my daughter
For the uninitiated, “Bandar and Taman” are common naming nomenclature that Malaysian property developers use for their new towns. More recently, we do see more sophisticated and creative naming efforts, I guess more “atas” names also equate to higher property prices.
Today, for most of us investing in Johor, you’re likely to be buying a residential, commercial, industrial unit situated in a new town. These towns are most likely carved out from former oil palm plantations, forests, swamp land and more recently reclaimed land(e.g. Danga Bay)! Good town planning and more importantly good execution of the plan will ensure vibrancy and sustainable growth of the town. More important to us as investors, a vibrant growing town will see good appreciation in property prices.
So when we invest in Johor, it is not enough to evaluate a development as a standalone project (e.g. gated guarded 300-unit development with full resort style facilities), but we have to look at the town in which it is located, the maturity and growth potential of the town. There is also a danger of comparing it to what you get in Singapore, some people say S$1000 per square feet (psf) is expensive in suburban Singapore, but RM500 psf in Johor to me can be equally expensive if the location is not right.
Unlike in Singapore, we know that when HDB announces, “Let there be a mega HDB town in Tengah. And it was so”, town-planning in Johor is a little more complicated and not always sure-wins. Typically, towns situated at intersections of major highways have inherent advantages. Even so, it is not always sufficient to be located next to the highway .Visible road signs (Look out for my subsequent article on “The mysteries of missing Johor Road signs”) and good landmarks such as large billboards and high rise buildings do help. In a big country, size does matter!
“Demand for any type of real estate within a larger national built-environment is one derived from the consequent growth in human needs and economic activity” – (Collier’s report Come 2030 will there be suitable spaces for small and medium businesses? Feb 2013). So there are 2 ways of doing that, either you entice enough people to live in the area or you create enough economic activity for people to work and play (transactions) in the area. Do note the consequent growth can be a long process that can take up to 5-15 years (any longer you should reassess if it is worth investing in the first place). Hence, buying into new townships can reward you handsomely but it can also be a long wait before you see the fruits of your investment.
Anchor operators such as Hypermarts (JUSCO, TESCO, GIANT), Hospitals and Schools are usually brought in to kick start economic activity. This explains the influx of major investments in medical and education businesses in Johor. But a word of caution here, hospitals (I know that) and schools don’t build their reputation and get crowded overnight.
For me, I want to see hypermarts because they are the biggest crowd-puller. I would also like to see banks, both local ones (CIMB, Public Bank, MayBank) and even better if there are foreign ones. Taman Molek has a large concentration of local and foreign banks located in close proximity to each other, people do their transactions there instead of having to travel all the way to the city centre, Johor Bahru. I would also pay close attention to the presence of clinics (GPs, O&Gs, Dental) and nurseries/kindergartens, both absolute numbers and trending . On the other hand, eating houses and car workshops in my opinion are not very good indicators, many do come and go.
I will be going through the different flagship zones in Iskandar Malaysia in my subsequent postings. I have to clarify that each zone offers unique property investment opportunities, but as with all investments, it will also involve different levels of risks. But what I hope to do is to help you make informed decisions about your investments. I would also be providing more photos in my postings, so thank you for the feedback that more pictures would be good.
