Malaysia: Housing glut worries over Johor's mega projects

Reme Ahmad and Rennie Whang The Straits Times AsiaOne 23 Feb 15;

MALAYSIA'S biggest reclamation project is raising concerns over a potential oversupply of homes in Johor, marine environmental damage in the Strait of Johor and the effect it may have on the livelihood of hundreds of fishermen.

At Kampung Pok, tucked under the Second Link that connects Johor to Singapore, some residents are making known what they think of Chinese developer Country Garden's ambitious plan to raise four islands that total nearly three times the size of Sentosa at their doorstep.

The massive site will house thousands of luxury homes, if artists' impressions provided by the developer are any indication.

"Villagers protest that the route to Forest City passes through our area," reads a banner in Malay hung along the only road in the area.

Millions of tonnes of sand to shape the four islands will be transported by barges from eastern Johor. Lorries preparing for the mega project have already begun plying the narrow two-lane road in the village to the edge of the reclamation project.

"Why are they using our only road to do this? Everything is dusty and busy, and things will get worse," said villager Mohamad Zain.



The project is to resume at full speed after the Chinese New Year, now that the Department of Environment has given its go-ahead. That is likely to mean a clogged village road as trucks and vans deliver workers, bricks and metal bars, food and cement.

Acting village chief Abu Bakar Mohd Ali, who has a restaurant beside a jetty lined with fishing boats, said the project has caused unhappiness and uncertainty among fishermen and villagers, but he also sees it as "inevitable development catching up with the area".

The villages are bordered by mangrove swamps and the Strait of Johor on one side and hectares of mostly empty land in Nusajaya on the other. The edge of the Port of Tanjung Pelepas, Malaysia's biggest container port, is just 1km away.

"Sure, there are concerns about the environment and the future, but things have cooled down as the developer has talked to us," said Mr Abu Bakar.

Mr Abdul Malik Sabtu, head of the fishing community in southern Johor, said about 245 full-time fishermen received between RM3,000 (S$1,120) and RM6,200 last year through a government agency to compensate them for a drop in their earnings after reclamation work began last year.

"We have been affected, so the compensation has helped," Mr Abdul Malik said. "We don't know what the future holds."

The future, as gleaned from the rush of developers into the southern Johor investment zone Iskandar, is one of luxury homes in gated communities. The projects are targeted at the wealthy, including Singaporeans, and some units have been sold to buyers from China.

"With all the new projects, I don't think it will be as easy to get tenants as before," said a Singaporean resident of Causeway View, an estate just 600m from the Causeway. He had previously bought a condominium unit in Johor for RM250,000 and rented it out, but he has since sold it.

Recent changes to the vehicle entry permit, toll charges and the minimum property purchase price of RM1 million for foreigners are also a put-off, he added.

Statistics on the number of housing units coming up are not kept by a Johor or federal government agency, as building approvals are granted by the local authorities, such as the Johor Baru City Council and the Central Johor Baru Municipal Council.

A Malaysian real estate consultant said the JB authorities have approved the construction of 80,900 high-rise units, of which 8,000 are being built.

Mr Samuel Tan, executive director of KGV International Property Consultants, said about 90,000 units are expected to be built by 2017. "Many developers in the area are already pulling their brakes. Some may cancel their plans," he said.

The Forest City developers envision four islands totalling 1,386ha that will be joined by roads to one another and to mainland Johor. Artists' impressions on the website of the master developer, Country Garden Pacificview, show dozens of towers of luxury condominiums and landed houses.

The project is a partnership between China's Country Garden Holdings and a company linked to Johor's Sultan Ibrahim Ismail.

Country Garden's Danga Bay project had set off alarm bells over a potential glut of units when it launched a whopping 9,400 homes for sale in 2013. Since then, more Chinese developers have unveiled plans for mega projects.

On the JB side of the Causeway, China developer R&F Properties is reclaiming both sides of the Strait of Johor for its development.

The 47.1ha project offers what it calls a "hopsca" lifestyle - hotels, offices, parks, shopping malls, clubhouses and apartments. Dozens of tower blocks are being planned.

China's Greenland Group, which has a development in Danga Bay, recently announced another large project.

The Tebrau Bay Waterfront City in eastern JB is expected to be built partly on land already reclaimed at the mouths of two rivers. The first phase promises a snow world theme park, an opera house and a hospital specialising in traditional Chinese medicine.

However, Johor MP Liew Chin Tong from the opposition Democratic Action Party said: "There is already massive oversupply of high-end housing in Iskandar.

"This massive reclamation is going to accelerate the burst of the bubble... it doesn't make economic sense."

Two Malaysian developers with projects in southern Johor declined to comment on whether the large projects are building up to a glut. One said things still remain murky as developers of some coastal projects have not confirmed how many units they plan to launch.