The property overhang in Johor is well known in the industry. The state leads the country in unsold units.
According to property market transaction data from the National Property Information Centre (Napic), Johor recorded the most unsold completed properties in the country with 5,468 units, making up 18.4% of the total overhang from last year to the first quarter of 2020 (1Q2020).
Despite the negative headlines, market experts have long maintained that the local market remains buoyant and the glut is largely limited to luxury residences targeted at overseas and interstate investors.
This two-speed market is the outcome of clear mismatches in developments offered by developers and those sought by the market.
In the case of Johor, it means affordable, landed homes.
Temokin Development Sdn Bhd (TDSB) chief executive officer Tan Chien Chyi described how the developer is navigating the market and finding success in the state in these challenging times.
“Looking at the different property data sets accumulated by Napic, I think it would be correct to say … the pent-up, demand is not so much in the high-rise segment, but more in the landed segment of the market.
“The landed market has been quite ‘safe’ in the Johor market because it is something they are used to,” Tan told Property Advisor.
He said there is also an overhang in the market due to the abundance of high-rises in the country.
“I don’t think … Johor will be able to compete in terms of the level of development offerings. Hence, landed properties seem to be the segment we are quite confident in as a developer.”
According to property research and consultancy firm CBRE|WTW, the overhang is mostly due to the oversupply of high-rise units, mainly serviced apartments and small offices, and home offices, which could take more than five years to be absorbed into the market.
As for unsold landed residential units, it said if the market is trading upwards and the economy is still growing, this unsold stock will take two years to clear.
TDSB, a member of Temokin Holdings Sdn Bhd (THSB) launched the first phase of its maiden property project, the Mahligai at Nusa Damai, Pasir Gudang, in 2018.
Mahligai is a three-phase landed project with a total gross development value (GDV) of RM105 million. It consists of 163 units of landed properties with the prices of the two-storey and three-storey terraced units starting from RM480,000.
“To date, we have seen a take-up rate of 95% for Phase 1, 60% for Phase 2, and Phase 3 will be launched in the fourth quarter this year.
Creating value for the customer is key for TDSB
Property development is about creating and adding value to a property above its current worth.
According to Tan, there are two types of property buyers – one has multiple properties (serial investor) and the other buys for their own stay.
“What we see in the market is that most Johoreans are purchasing for their own stay and they look at the locality – a mature neighbourhood close to other family members.
“We aim to offer the most practical and liveable space to our customers, an offering that adds value to the project. But we believe there is a dollar-and-cents and a non-dollar-and-cents approach to these things.”
Tan says both work hand in hand in creating a value proposition. The first is to price the property in a range that is palatable to the target market and then capitalise further with added value.
He revealed that the company had tied up with Telekom Malaysia Bhd to provide one year’s free internet for buyers.
“It is one of the things that I think is critical since these days everyone has a device. It is an added value because TM owns most of the networks in Malaysia in terms of the cabling and telecommunications,” he said.
Being part of the community
“Other than that, we have realised how customer service in the development industry needs to improve. For example, we launched our Kita Bersama programme together with the local council, the police and firefighters. That has created some traction in the sense of placemaking, which is not commonly used in Malaysia.
“When we started, it was more the developer giving ideas, seeing what could be done. But what we have learnt in how to get to the top is the process of doing it. As a developer, we give ideas and now we are receiving them from the community as well,” he said.
The programme is part of the developer’s philosophy of connecting communities, seeking to promote closer engagement between the developer, the local community and stakeholders to foster neighbourliness.
House plan design plays an important role
Tan believes that a proper house plan plays a significant role in setting up an interior that is both functional and aesthetically pleasing.
“The design is very important to us. Our real focus is on the next generation of buyers, so we take into account both traditional and modern lifestyles to create an updated product to suit an updated lifestyle.”
Grounded in this ethos, the company is expecting to launch two more projects by the end of this year – Diami @ Melati in Gombak, which comprises 24 superlink houses on Malay Reserve land with a total GDV RM46 million, and a joint venture with Tropicana Corp Bhd and Tropicana Temokin called Tropicana Miyu in Petaling Jaya with a total GDV of RM283 million.
