Now that 2015 has started and the first quarter of the year is nearing its end, what is the state of affairs down here in Nusajaya? I will divide my answer to this question into two: bricks and play - i.e. from a property market (bricks) perspective and from a quality of life (play) viewpoint.
The property market enjoys currently a good supply situation which puts pressure on rents - if you are a tenant those are good news, since rents have gone down a bit and you actually have a choice between several properties. Gone are the days when landlords had a waiting list of people wanting to rent their houses for increasing sums of money. Having said this, from our experience in the last 6 months the rental demand has increased and good quality houses can find tenants easily at rents which are still above the 2009-2011 level, but below the 2012/2013 level. To give an example from our own portfolio, our semiD in East Ledang was let in 2010 for RM7,000 and the rent increased slowly to a maximum of RM10,000 in 2013 and is now down to RM8,000 (end 2014). These figures correlate with other houses we have and anecdotal evidence from other landlords.
What we are seeing is in my opinion a balancing of two factors, the increase in population and the increase of housing supply in the prime property sector. The master planners of Iskandar have planned this quite well so far. At least when it comes to landed properties. There are and have been times when the increase of supply is not quite balanced with the increase of population, and vice versa - but so far it always balanced out at one point, just like a pendulum - going too far into one direction and then the other until it finally finds its balance in the middle.
Whether this is also true for the condominium / serviced apartments sector remains to be seen. I saw a presentation from a valuer, Mr Wee Soon Chit (of Land Serve Johor) at a recent event (the Iskandar Malaysia Business & Investment Forum) and he showed a slide which suggested that even the condominium construction may be in tune with estimated population growth with only a slight future oversupply situation. The question remains however whether the anticipated population growth will be the kind of population who can afford what is in Malaysian terms very expensive housing.
So is the outlook positive then? Driving around the area you see lots of factories being built, e.g. on the way to Gelang Patah the industrial area of Nusa Cemerlang is being extended, an area which has lots of local and international manufacturers such as FMC Technologies, Fastenal etc. Not far from there is the new Nusajaya TechPark, a development joint venture between Ascendas of Singapore and UEM. And the SILC industrial park which focusses on logistics companies is also being extended. At the same time the port tanjung pelepas (PTP) is expanding. There are new factories being set up in the Senai area where the airport is. And there is a huge oil and gas area in the making a bit further a way on the East coast. All these developments mean there will be more people moving into the area. And this in turn will mean that there will be new demand for housing. The market will definitely be more competitive - there are more houses now and there are also apartments, so the smaller houses (terraces and semiDs) might have to compete with those. If you are a landlord you have to deliver better quality to stay ahead of the game. And as a tenant you will have a better choice at better rents for the foreseeable future.
Nusajaya has experienced a lightening storm of development in the last 6 years (and still is) and has come a long way from AEON Jusco Bukit Indah just opening its doors in 2008/2009. Now there are many more shops and shopping centres, some of them well run such as the Johor Premium Outlets and some less well such as Medini Mall next to Legoland. Especially Bukit Indah, a SP Setia development, has given the area a boost at the very beginning. UEM’s retail projects such as Anjung Neighbourhood Mall, Medini Mall, Puteri Harbour were slow to come off the ground. Empty shops and shop closings show a dim light on UEM’s capability of managing its assets. But even these shopping and dining centres will improve over time, just at a so so much slower pace than a completely privately owned company would have been able to achieve. Puteri Harbour especially is shaping up quite nicely, with beautiful dining establishments such as Spice & Grill. Another milestone for Puteri Harbour will be the new and very modern convention centre which is currently under construction:
For kids there are now several theme parks in the area (Legoland Malaysia, Red Cube aka Hello Kitty, Angry Birds and the Lat’s Kitchen dining experience). There is a Marks & Spencer in JB’s new JBCC mall with other more upmarket shops. And there is a new and nice Tesco’s Extra in Skudai/Mutiara Rini around 20min from Nusajaya. More new businesses are opening this year. Nusajaya is slowing reaching critical mass in a way that businesses become interested to cater to the local population. Gone are the days you could drive into the Nusajaya roundabout without looking, there is traffic now and it is growing. The local (but international) Senai Airport is also expanding and from October a new airline (Flymojo) will use the airport as its main headquarters suggesting that there will be new destinations added to the current ones of Air Asia, Malaysia Airlines, Firefly and Malindo Air who are already using the airport. The ferry to Harbourfront Singapore has still not happened but is being announced in monthly intervals, only to be rescheduled to a later date. It seems the ferry operator has still no agreement from Singapore’s authority for the requested 90 minute route. Why not have a ferry go from Puteri Harbour to Raffles Marina (only circa 15 minutes) remains a mystery.
In a nutshell, loads is happening in Nusajaya, and it is still growing like mad.