Enough demand to take up plentiful Johor property projects

PETALING JAYA: Concerns about oversupply of property projects in the areas surrounding the Johor Baru-Singapore Rapid Transit System (RTS) Link are starting to emerge, analysts say.

UOB Kay Hian Research (UOBKH Research), following a recent trip to Johor, said that it was a recurring concern that has been raised as developers are racing to clear inventories before the commencement of the RTS by end-2026.

There is a potential supply glut in the RTS-core areas, where 25,000 to 30,000 units launched recently are scheduled for completion in 2029 to 2030, the research house said.

But at the same time, it also noted that while concerns on oversupply are understandable, past cycles suggest that large infrastructure catalysts often trigger an initial burst of launches before demand catches up, as connectivity benefits materialise.

“To illustrate the strength of potential underlying demand, we take the evolution of property prices in Shenzhen, China, as a case study.

“In summary, prices rose following the initial inclusion of the high-speed rail in the National Plan and continued to climb during the construction phase, as connectivity premium and mixed-use appeal become more apparent when nearing completion and favourable policies were introduced in selected years,” it said.

UOBKH Research also said it believes oversupply concerns are somewhat overstated and that demand could hold up.

“We believe mixed-use transit-oriented developments with direct RTS access should continue to see healthy take-up and room for price appreciation as connectivity premium and mixed-use appeal becomes more tangible nearing completion.

“Current launch pricing of RM1,300 to RM1,400 per sq ft near the RTS may seem elevated, yet transactions continue to close at these levels. This reflects sustained interest from Malaysians working in Singapore and regional investors.”

The research house said Johor’s property values could mirror Shenzhen’s price gains seen during infrastructure build-out and policy easing phases.

UOBKH Research added that strong demand could be sustained for mass-market launches priced from RM400,000 to RM500,000 or more than 3km from the RTS, driven primarily by affordability and local demand.

The research house maintained its “overweight” call on the sector and an “accumulate” calls on Lagenda Properties Bhd and S P Setia Bhd.