23 April 2013

Will Election Result Affect Iskandar Malaysia Project?

From news that I read everyday, I notice that some investors would apply Wait-And-See attitude when investing in Malaysia Properties. As now Johor is expected to have a great war in between Barisan National against Pakatan Rayat, I believe the result would give a minor impact to Johor property market. If we look at Selangor and Penang property market after the opposition party took over since Year 2008, the property price there rose at least 50%, which I believe this is due to several reasons:
  1. Quantitative Easing started by US encouraged hot money flow into Asia / Emerging market, and created bubble in asset class, such as Gold / Commodities / Real Estate market. 
  2. Job creation attracts more people from Kampung area to work in City like Penang and Klang Valley, and drives up the property prices. Not only that, with more colleges / private universities setup in City, it also creates demand for students to stay in City and have a good education services there. 
  3. Inflation plays a vital role in driving up the real estate price. The cost of material and labor cost were increasing in faster pace during recent years, and it is very hard for us to see a property market cool down if we cannot find a better alternative investment tools. 
Johor Bahru Market some how rely on Singapore Market. Most talents prefer to stay in Singapore to earn a better income compared to work in JB. If we cannot attract high income jobs in Iskandar Malaysia, then we can only boost up Iskandar GDP by focusing on two main areas:
  1. Tourism - With more Theme Parks are being built up here, we foresee a grow in service industry. 
  2. Education - Some of my friends are considering to let their kids to study in Educity, which I think is quite useful here. 
  3. Logistics/Light Industrial - We can still manage to attract high labor-incentive industry to move to Iskandar from Singapore. Part of the reasons is due to Singapore labor tightening policy as well as Singapore government's effort to transform Singapore Economy to Less Labor Incentive Economy. 
There are more well known developers coming to Iskandar Malaysia to try to help to build a better Iskandar Malaysia. I would foresee the high end real estate market can only be supported by citizens here after more higher income jobs are created. As this point of time, Iskandar Malaysia can only stands as compliment to Singapore, as the Senai Airport actually attracts little passengers compared to Changi Airport. The closer relationship in between Singapore and Malaysia, the better Iskandar Malaysia will be.

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