MAJOR property developers from China are making a beeline for Johor Baru, cashing in on the foreign-led property boom that analysts say could have some impact on diplomacy, environment and domestic politics.
The Chinese builders are tapping into the new “growth corridor” of Iskandar, its proximity to Singapore and the deep-pocketed buyers from China and Singapore.
Even established local developers were ruffled by the presence of the Chinese companies, which seemed to be unleashing a huge number of units at just one go.
China-based Country Garden Holdings Co Ltd, for example, sold 6,000 condominium units at Danga Bay within a few months, with Singaporean and mainland Chinese snapping up the bulk of the units.
Guangzhou-based R&F Properties Co Ltd, which in December last year bought 116 acres of land near the Causeway from the sultan of Johor for RM4.5 billion, is developing what it called R&F Princess Cove.
News reports said it could be selling up to 30,000 units over the next few years on the land and the adjacent land that is to be reclaimed. Set up in 1994, R&F claimed it is China’s No. 1 “comprehensive property developer”.
Chinese developers are pumping billions of dollars into projects across the globe as regulatory restrictions in China and rising concerns that the property market is overheating have forced many to venture abroad.
“Like other developers, R&F made the move to diversify its investment portfolio outside China as domestic property curbs don’t seem to end soon,” Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd, was quoted as saying.
For various reasons, Johor Baru and the greater Iskandar region seem to be their favourite destination. But the rise of China’s developers in Johor has also led to some side issues.
An ambitious plan by China’s Country Garden and a Johor state agency to reclaim 2,000ha of land and turn it into a man-made island off the Second Link, near Tuas, in Singapore has drawn deep concerns from the Singapore government.
Singapore Prime Minister Lee Hsien Loong wrote to Prime Minister Datuk Seri Najib Razak a few weeks ago, asking for more details on the project, which apparently is located too close to the Singapore border.
“We are asking for more information, especially the shape, the profile and the timeline of the project,” said one Singapore source.
The issue was also raised by Singapore during the recent meeting of the Malaysia-Singapore joint committee on environment.
Country Garden has teamed up with state-owned investment arm Kumpulan Prasarana Rakyat Johor to undertake the project. Singapore is concerned that the project could impact its boundary and marine environment.
A bigger concern for the Johor government is that the property boom in Iskandar could spawn discontent among the local population since the skyrocketing house prices seem to be out of their reach.
Without the corresponding rise in the supply of “affordable” homes, Johoreans might find themselves being priced out of the medium- to high-end property market in JB.
This is not to mention the rise in the cost of living, with businesses and services targeting the more upmarket residents from Singapore and China. Malays will not be able to match the purchasing power of the foreigners.
Already, we have seen the growing number of “homeless” in the city centre. These are Malays who commute to Singapore daily to work but cannot afford to rent a house in the city.
Malay voters in Johor Baru may also find themselves becoming a “minority” if more and more non-Malay voters move into the city centre. In short, there will be a massive shift in the demographics.
We could eventually see more Malays selling off their JB properties and moving elsewhere. Will the much-debated housing board be able to quickly address this demographic deficit? Time will tell.