Changing strategies in an oversupply residential market?

A Maybank analyst said in a local daily report that Malaysian developers are now switching their strategies from all residential into landed and industrial properties. The reason is because the incoming supply of these new residential units would cause an oversupply situation by end of 2015/2016. For many years, the launches of residential high-rise in Iskandar was always ‘FULLY SOLD’ quickly but these days, the mention of Iskandar would get the response of, ‘sure or not? I thought bubble already?’ The analyst, Wong Wei Sum further pointed out that with this oversupply, the prices may decline for the next 2 – 5 years (medium term).  Oh yeah, the parts that is having oversupply include Danga Bay and Nusajaya-Medini. There are of course still areas where Johoreans are still looking to buy and for which the prices are still reasonable! Johoreans continue to prefer landed and these days, gated and guarded, just like locals from other cities.
Over a period of 2 years, many high profile developers from China has descended on Iskandar and with their huge capital have been buying up tracts of lands and building huge integrated projects, especially in number of units. They include the earliest, Country Garden Holdings Ltd and currently extremely aggressive Guangzhou R&F Properties Co. The latest one is Greenland Group. Every time I switched on TV when I was in Singapore for 6 times within the past 3 months, I could see Guangzhou R&F’s advertisements. When I go a few of my favourite malls, I have also seen their marketing team pushing their Princess Cove project. The reason is because just the launch of Phase 1 already consists of 3,224 residential units. I have never seen this kind of numbers by any Malaysian developers thus far.
I think its important for anyone who’s thinking to buy in Iskandar to also understand what’s really happening there. The truth is, there has never been such an attempt on such a large scale before Iskandar was launched. One thing that you should note is that negative reports have never stopped from the time Iskandar began till today. From ‘white elephant claim’ to ‘sure fail’ to ‘there is nothing there’ to ‘VEP will cause it to stop’ and more. There are some truths to these negative reports but as they say, risk vs return is a decision that only you yourself can make. I have not bought anything in Iskandar yet. However, I do look forward to buying one which meets my usual expectations, rental first, appreciation second. If there are none by the time I have my funds ready, will just switch to other markets. Investment is always a CALCULATED risk. If you don’t invest, it’s also a risk. Remember that.
written on 8 Oct 2014
Next suggested article: 21% discount for properties in Iskandar? Or higher?