SINGAPORE: On the weekend of Sept 20 and 21, directors and business associates of companies related to billionaire Robert Kuok will gather in Kuala Lumpur for a closed-door private preview of Southern Marina, a new development in Iskandar Malaysia’s Puteri Harbour.
According to sources, apartment units in one of two high-rise condominium blocks will be offered to them at prices equivalent to about RM1,000 psf.
That is a substantial discount to recent launches in the area, and could have an adverse impact on developers with significant unsold units.
“At RM1,000 psf, the pricing of Southern Marina will affect other projects in Puteri Harbour that were launched at higher prices of RM1,200 psf and above,” reckons Ivan Hoh, managing director of PropNex International.
Yet, the indicative pricing of Southern Marina could well be an appropriate level at which to move the units, amid growing signs that the once redhot Iskandar Malaysia market is now cooling.
Donald Han, managing director of Chesterton Singapore, figures that prices in Puteri Harbour could now be heading back to the RM800 to RM1,000 psf range, where they were hovering in 2012.
The companies behind Southern Marina are Kuok Brothers Group’s Huge Quest Realty and Malaysian sovereign wealth fund Khazanah Nasional’s Tanjung Bidari Ventures, which hold stakes of 70% and 30% respectively.
Kuok Brothers holds a 60% stake in Huge Quest while the listed plantation group, PPB Group, holds the remaining 40%.
Made up of about 400 apartments in total, the high-rise condo towers are part of a mixed-development with four blocks including office, serviced apartments, retail and F&B outlets with a total gross development value of RM1.5 billion ($589 million).
The mixed-use scheme sits on a 5ha (about 12.5 acres) site adjacent to the upcoming convention centre and near the Custom & Immigration Quarantine Complex as well as the ferry terminal.
The site was purchased last April from UEM Land Holdings for RM182 million, which translated into about RM334 psf.
That was considered to be aggressive at the time, but property agents were expecting prices to continue heading north.
Indeed, developers of properties in Puteri Harbour had been reporting strong take-up rates during the preceding months.
In late-2012, the launch of UEM Sunrise’s Teega saw queues snaking outside the showflat hours before it opened.
Teega contains 736 condo units and 556 apartments, and all the units were sold out within three months, recounts Anne Tong, CEO of HSR Global.
At the time, the development was priced at an average of RM700 psf.
Encorp Marina, with 514 serviced apartments, was also launched in late-2012, with units reportedly sold at an average price of RM900 psf.
Prices in the area then climbed quickly.
Tiong Nam Properties’ Pinetree, which contains a 26-storey condo tower with 264 units and a 26-storey hotel tower was officially launched in the middle of last year at prices ranging from RM977 to RM1,500 psf, according to property agents.
A lot of the units were said to have been snapped up by Japanese groups.
Adjacent to Pinetree is Puteri Cove Residences by a joint venture between two Singapore-based groups, Pacific Star Group and niche property developer DB2 Group.
The project contains a total of 1,054 units in three 33-storey high-rise condominium towers.
Another four low-rise blocks fronting the private marina contain a mix of 56 SOHOs and loft apartments.
The first high-rise tower of Puteri Cove Residences previewed last October at prices of RM1,100 to RM1,200 psf.
The second tower was launched in April this year at prices from RM1,180 to RM1,580 psf.
Now, surging supply of new properties in Iskandar Malaysia as well as growing signs that interest rates will soon rise are affecting sentiment.
According to Chesterton’s Han, savvier developers have resorted to “packaging” to boost the appeal of their projects.
Some are exploring interest payment schemes with banks to help lower mortgage payments for buyers, while others are looking at offering sale-and-leaseback arrangements with rental guarantees of up to two years upon completion.
“A lot of people are concerned about oversupply, so this is a way to help alleviate that,” he says.
PropNex’s Hoh agrees.
“People are also wondering if there will be enough businesses coming into Iskandar to generate employment to encourage people to live there, and fill the residential units,” he says.
Last year, Country Garden Holdings’ Danga Bay project offered 9,600 units at one go.
Priced at an average of RM900 psf, 30% to 40% of the units are said to be still unsold.
Even R&F’s Princess Cove project launched recently saw the first phase of 3,000 units released at prices in the range of RM900 to RM1,100 psf, notes Hoh.
“So, it’s hard for other developers to price their waterfront developments above those levels,” he explains.
Kuok Group and Khazanah appear to recognise that the market has shifted, and are now pricing units at Southern Marina to match the new environment.
The closed-door weekend preview in Kuala Lumpur will be followed by another closed-door private preview for directors and business associates in Singapore the following weekend (Sept 27 and 28).
No date for the public launch has been set yet.
This article appeared in the City & Country section of Issue 644 (Sept 22) of The Edge Singapore.