JB property prices, rental rates up on RTS project

PETALING JAYA: The strong Singapore dollar, coupled with the development of the Johor Baru–Singapore Rapid Transit System (RTS), has begun to increase property prices and rental rates in areas surrounding the station.

Citing Knight Frank, RHB Research said in a report that transactions on a few high-rise projects have reached RM900 to RM1,100 per sq ft, which is almost on par with property prices in the Klang Valley.

“Given the scarcity of available land for development surrounding the RTS station, some parties have also offered to acquire certain old neighbourhoods for redevelopment.

“There is a spate of developments on the ground and various parties are planning different projects. It was also mentioned that there is a new light rail transit proposal on the table,” RHB Research said.

It added that demand for high-rise units in the Johor Baru city centre is very much “Singapore dollar-driven”.

“Meanwhile, the expensive rental rates in Singapore have also started driving rental demand in the Johor Baru city centre,” it said.

Among the main drivers of property demand in the area, moving forward, is the improved connectivity upon completion of the RTS and the strong Singapore dollar.

Meanwhile, it was also highlighted that there are planned and incoming supply of serviced apartments totalling 71,000 units, which is about 57% of the current stock.

“Although the numbers appear somewhat worrying, the supply entering the market should be spread over three to five years.

“In our opinion, today’s demand is also backed by infrastructure development – the RTS – that is ongoing, providing visibility for future cross-border connectivity,” it said.

Separately, RHB Research noted that Singaporeans’ strong spending power is a big boost for retail spending and retail traffic footfall in Johor Baru, especially with the relatively weaker ringgit.

“Malls such as Aeon Mall Tebrau City and Mid Valley Southkey are extremely popular among Singaporeans and are often packed during school holidays.”

RHB Research said there is currently 20 million sq ft of space in the Johor Baru retail market, with 1.8 million sq ft of incoming supply over the next two years.

“This number includes The Gem@Coronation Square (1.2 million sq ft) but we understand that there are no concrete plans in place yet for the mall and as the situation is still fluid, so the actual incoming supply may be lesser.”

RHB Research said the number of hotel rooms in the city has not changed significantly over the past six years, adding however that room rates have picked up considerably, especially for five-star hotels.

“This was attributed not just to the recovery in tourist arrivals from Singapore but also to strong domestic demand,” it said.