Originally Published Mar 12, 2015

Updated Oct 17, 2015 to include the latest property data and Singapore exchange rate analysis which will show that with the recent weakening of the Malaysia Ringgit there is a massive opportunity today to purchase premium freehold land and build your dream home.  

If you’ve been eyeing Iskandar property, you might have witnessed some incredible changes over the years. Having helped people to invest in Iskandar property for more than 8 years I would like to share my current take on today’s market.   

Iskandar land prices have been fluctuating over the past decade, with savvy investors seeing their investments double, triple (and in a some cases quintuple) in value.  It is not time to purchase all property types, however I believe we are once again seeing a very good time to purchase freehold bungalow land for investment or to design a luxury villa.

Peaks and Valleys of Iskandar Land Prices

CHART UPDATED TO INCLUDE LAND PRICE RELATIVE TO STRENGTHENING SINGAPORE DOLLAR (REPRESENTED BY RED LINE)

Investing on Speculation (2006-2010)

Those who invested in property during this period spent approximately 25 to 65 RM (S$7-25) per square foot for land. The Iskandar Regional Development Authority had just been formed and international marketing of the region was taking off.  This was the riskiest time to invest, but those who did have seen great returns.

 

Investing on Announcements, MOUs, and New Projects (2010-2012) 

Starting 2010, it seemed that every other day another school, hospital, or foreign business had signed up to enter Iskandar.  The investment landscape was becoming more solidified and less risky. 

Marlborough College Malaysia opened its doors in August 2012.  LEGOLAND, Pinewood Studios, Columbia Hospital, Puteri Harbour, the coastal highway along with many other projects were either announced, under construction or completed.  

Bungalow land prices increased steadily from 65RM to 130RM (S$25-50) over those 2 years.  

 

The 2013 Run-Up On Prices  

From late 2012 to 2013, there was a sudden spike in property prices, due to the  recognition of Iskandar’s trajectory in becoming an economic and residential destination. Many also started to realise the fantastic lifestyle opportunity it afforded owners with Singapore right on its doorstep.

The increase in land prices, which peaked as high as RM220 (SG $83) per square foot, shook many potential investors out of the market. In fact land prices were increasing 5 to 10% per month!

 

Government Cooling Measures and Apartment Oversupply (2014) 

In 2014, we have seen a much needed drop in Iskandar property prices, driven by an oversupply of high-density residences (condominiums and mass-market terrace houses) and cooling measures taken by both the Singapore and Malaysia governments.  

This re-introduced stability to the real estate market, with bungalow land prices hovering around the levels seen back in early 2013, or even late 2012.  

 

Infrastructure Completion, Thriving Community, Lower Risk, Lower Prices (2015) 

Today, good quality bungalow land can be sourced at or under RM130-140 per square foot (SGD $43 as of the date this article was published). We are able to purchase land at 2012 prices, without the same risks.  I am personally introduced to opportunities to snatch up land at much lower than that on occasion. I was recently able to source a premium 1 acre plot for a client at under 80RM (27 SGD) per square foot.

The long-term property holders are still holding firm at asking prices upwards of 200RM, but shorter-term and more speculative investors are starting to cash out.   

One of the most attractive elements of Iskandar investment today is that infrastructure, which was still in the works in 2012, has now been built. What this means is that top schools such as Marlborough College, healthcare facilities and hospitals, lifestyle and leisure spots, security, office complexes, and better road systems such as new highways, are now available with more on the way.

 

Value for Investors and Potential Home Owners  

My view is that there is more value and less risk investing in Iskandar right now than ever before for the bungalow land and custom designed villa market.

The general drop in residential property prices caused by cooling measures and the influx of high-density developments is a boon for new bungalow lot investors. 

Iskandar might be a large area, but freehold bungalow land with quick access to Singapore is in short supply (representing less than 0.2% of land in Iskandar), and is not likely to ever be replenished.  It is only available on the resale market in Ledang Heights and Leisure Farm.   

Property developers for the foreseeable future will only be selling off-plan bungalows, and have stopped the sale of land only.  The niche market for high-end custom designed villas still has a healthy demand.

Marlborough College Malaysia has been a massive success and continues to enroll students, and Raffles American School Malaysia will be opening the doors to their larger campus soon that will place an even stronger demand on the high-end bungalow market. 

Add to this the recent announcement of the high-speed rail, due for completion in 2020, which will also add significant value to the area as it connects Iskandar directly to Kuala Lumpur and Singapore. Nusajaya Iskandar will be the first stop on the estimated 90-minute Singapore to KL journey.

These provide a welcoming backdrop to Iskandar residential living and will likely propel property prices further upwards in the near future whilst, more importantly, adding value to the growing community.

For those with a mid- to long-term view on property, I believe more than ever that now is a fantastic time to purchase bungalow land whilst prices have temporarily dropped and seem to have stabilized, and particularly given the recent weakening of the Malaysian Ringgit.  Whether you’re looking at this for the first time, or were previously hoping to invest but got “priced out”, now is the chance to secure some prime land at a good price with far less risk than ever before.

 

How to Find the Best Bungalow Land

A big incentive to buying land in Iskandar is the opportunity to design and build a larger-scale luxury home or villa at a far better value than Singapore’s pricey land and real estate, without losing quick access to the island state.

What might have once seemed outrageously expensive – a Balinese-style villa, or a contemporary minimalist home for example – is now an affordable reality. With the same investment in Singapore, you’d only be able to enjoy a substantially smaller home or apartment.

Finding the right bungalow land and selecting the right lot can be a challenging process. EXHALE can help you, as part of our custom villa design services, and has access to prime bungalow land from 90RM to 140RM (S$30-47) in a market where land is still listed at 200RM (S$67) psf, with sizes from ¼ acre to over an acre.

For more information, feel free to reach me at david@exhalegroup.com, +65 9170 9325 or +60 12 754 9325. Meet our award-winning team to discuss how you can design and build a bespoke luxury home!

 

*The views expressed in this article represent my personal opinion and should not be taken as professional financial advice.  Please seek the advice of your financial advisor before making investments of any kind.  

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