Source from: New Straits Times, Original Article
The termination of the Kuala Lumpur-Singapore high-speed rail (HSR) project is expected to negatively impact properties in some parts of Iskandar Malaysia in Johor, especially the Iskandar Puteri region (formerly Nusajaya).
In contrast, the no-go for the bullet train project will have a positive impact on properties in Johor Bahru (JB) city centre, including the Danga Bay area, Datamine Malaysia head of research Jerren Lai said.
Malaysia and Singapore have decided to terminate the multi-billion ringgit HSR project as both countries could not reach an agreement on several changes that the Malaysian government proposed.
The HSR project was due to have seven stops in Malaysia – Iskandar Puteri, Batu Pahat, Muar, Ayer Keroh, Seremban, Putrajaya, Kuala Lumpur – and one in Singapore. It was expected to be completed and start operation in 2026.
Lai said the lack of a major catalyst like the HSR project will slow the growth in property prices in Iskandar Puteri, including Puteri Harbour.
“Many people were looking forward to the HSR and developers had planned their future projects in Iskandar Puteri in anticipation of demand coming from Singapore. The situation is likely to change now with the cancellation of the project,” he said.
Lai told NST Property that JB CIQ (Customs, Immigration, and Quarantine Complex) and the surrounding areas will now become more popular among homebuyers and developers.
He expects the value of properties in the JB CIQ area will move in tandem with the on-going Rapid Transit System (RTS) project, connecting Johor Bahru to Woodlands in Singapore.
“A lot of people are confused between the HSR and the RTS. Many people assume that when the HSR is cancelled, it will create havoc in the industry. The truth is, only certain areas in Iskandar Malaysia will be affected by the cancellation of the HSR and those are areas where developments were being planned by developers to ride on the potential of the rail network,” Lai said.
“We have the RTS-Gemas double-track railway line (RTS-Gemas line) that is under development in Johor, which will be constructed all the way to KL Sentral (Brickfields, Kuala Lumpur) in the future. In a way, the RTS-Gemas line is a duplicate of the HSR as both lines aim to link Kuala Lumpur with Singapore. If you look at it, the termination of the HSR project will not have much impact in terms of connectivity between JB and Singapore as people can still travel via the RTS-Gemas line.
“Travel via the HSR was expected to take 90 minutes from Kuala Lumpur to Singapore. The RTS-Gemas line, upon its full completion, will take three and a half hours and this is a major improvement from the existing train service which takes up to 11 hours from Kuala Lumpur to Singapore,” he said.
Why JB CIQ will become more popular
Lai explained that the HSR line was set to come from the Tuas link area, also referred to as the second causeway link, and many had anticipated property prices to increase in Iskandar Puteri because of that.
“With the cancellation of the HSR project, it will impact properties in Iskandar Puteri, but not in the JB CIQ area as we have the RTS-Gemas line under development. We expect demand will shift to JB CIQ and this will make both land and property there more valuable.
“The RTS and Gemas are two separate projects but it is a connecting line. Each will have a terminal at JB CIQ. JB CIQ will become a major interchange for the two lines and a popular hub just like KL Sentral.
“By 2022, the Gemas double-track (Gemas-JB line) will be ready, while the RTS, linking JB CIQ to the Singapore Thompson MRT, will take about five years to complete. So basically in five years from now, there will be proper rail connection within JB city centre with a direct link to Singapore via the RTS. The rail service will be extended to Kuala Lumpur in the future via the double-track line,” he said.
Lai expects JB CIQ properties will be significantly influenced by Singapore Woodlands’ valuation once the RTS construction starts full scale.
“It is projected that JB CIQ property prices will be 30 per cent lower than Singapore Woodlands once the RTS is up and running. The current six-year delay on the RTS has not only stagnated prices at RM921 per square foot (psf) but resulted in some distressed sales,” he said.
Datamine’s projection is based on the most common type of real estate valuation method in Malaysia, that is a comparison on location proximity, condition and property size.
JB CIQ valuation path will not likely be a ‘straight-line’ progression from its current 240 per cent gap vs Woodlands to the forecast point of 30 per cent differential.
Lai said during the construction phase, the valuation will likely fluctuate in tandem with perceived efficiency on factors such as timeline, immigration clearance system, crowd control system that will interplay to form the market price.
He said once the RTS is completed, it will be faster to get to Singapore Woodlands from JB CIQ than to the nearby Larkin area.
The journey will take five minutes and another 35 minutes via the upcoming Thompson-East Coast MRT line to downtown Singapore Orchard Boulevard station, he said.
The latest Urban Redevelopment Authority 2020 Q4 (URA Singapore) reports that Woodlands (District 25) private property median price stands at SGD737 psf (RM2,211 psf) while Orchard (District 10) at SGD1,968 psf (RM5,904 psf)
In contrast, the latest Iskandar Property Census research that systematically tracks Johor properties since 2012 recorded JB CIQ median price at RM921 (SGD307). This represents a 2.4 times price gap compared to Woodlands and 6.4 times gap to Orchard area.
JB CIQ median price is computed from Datamine Malaysia census data comprising eight properties – Skysuites (RM635 psf), Sky Habitat (RM800 psf), V Summerplace (RM748 psf), TriTower (RM1,253 psf), Suasana (RM1,350 psf), R&F Princess Cove (RM910 psf), Twin Tower (RM791 psf), Paragon Suites (RM880 psf).
In the Iskandar Property Census 2020 Q3 Report, the findings showed that there was no shortage of demand for Johor properties. Connectivity barrier is the major factor hindering Singapore demand from reaching Iskandar supply and efficient RTS implementation is all the more critical given HSR cancellation.