A reader asked me for data on my stand on Iskandar. I've done a lot of extensive research and I pick my markets carefully. You should only buy when there is a shortage of homes, e.g. London, Houston, New York.
I apologize that I don't have the time to put up all the research I've done for copyright reasons. But the gist is this: Iskandar has a population of 1.7m. 4.5 people per household. Divide 1.7m by 4.5 and you need about 377,777 homes. There are 420k houses now with a further 80k to be completed next two years! There is an oversupply of 120k homes!
Even if 50% of the 300k Malaysians bought iskander, you will need about 411k houses and that is an overhang of 90k!
Under such circumstances, even in if prices hold steady, rents will definitely plunge as vacancy rates fall! Remember the perfect storm of 2015/16!!
The price drop will not be fueled by the oversupply of homes, it will be due to the govt open up a 2nd Iskandar nearby, similar to Suzhou.
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Thanks for your comments. I believe there are differences between Iskandar and Suzhou, just as Iskandar to SG is NOT equal Shenzhen to HK! Shenzhen and HK are part of China, while Malaysia and SG are two separate countries! The problem with Iskandar is although the govt has attracted a lot of foreign investments to build schools, LEGOLAND etc., I don't see the govt coming up with equal investments to make the city a thriving place, e.g. reserving spaces for parks, paying the police more to improve security, having a better rule of law (you can actually sue the MCST for absconding with the sinking fund and WIN!). All I see is profiteering by land grabbing developers eager to maximise sales without much thought on city planning. Every square feet has to be developed and sold instead of building amenities. Also, the infrastructure has not arrived although the properties have been sold through promising future infrastructure. My worry is a few of these infrastructure may not happen, and as a result again disappointing investors.
DeleteYou must remember that Iskandar IS NOT Singapore, Melbourne, New York, LA or London. In SG, what the govt promises in infrastructure, they will deliver in 3 - 5 years! In New York, LA and London, the govt will deliver in 4 - 6 years (due to different stakeholders arguing over their interests), in China, 2 - 4 years, in Malaysia, 10 - 20 years and in India, never!
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