Vouch 15 Cover Story – Interview with Mr Wong Kuen Kong

Johor Bahru Property & Ecominic Outlook in 2016

Be prepared and Adapt to Change

What is your view on the property market in Johor Bahru for the coming year? Will the property market remain buoyant?

In 2014, the market overshot and became unexpectedly hot. In 2015, the market was a bit down because of the lower prices of international currency and fuel. 2016 poses a challenging outlook for property developers but the landed property market is still moving. When the market is slow, it is the buyer’s opportunity. Smart investors will buy and keep because the market will pull through and recover in 1 to 2 years’ time.

What challenges does the property market face in the coming year and how do you see ways to address these challenges?

In the face of global economic challenges, we seek to be prepared and adapt to change.  Developers could offer favourable package deals for customers while investors could buy at a good location and keep till the time is right before making the next move. However, it is advisable not to speculate, but invest.

Some people expressed the concern that the prices of residential properties in Johor Bahru are relatively high compared with other states and in many cases are beyond the affordability of young working adults. What is your view on this?

Bear in mind that property prices will not drop as the costs of materials and land increase over time. It is the marginal rate of increase that is the concern. For example, a residential property of 20 x 70 sq ft in the Seri Austin township of Johor Bahru cost RM200,000 in 2005 has more than doubled in price in 2015.

Property prices in Johor Bahru are higher than ever before in Johor history but not as high as those in Kuala Lumpur. As first-time home buyers often face challenges in getting their bank loans, we urge and hope that Bank Negara will come up with appropriate initiatives or policies and guidelines to help first-time home buyers to get onto the property ladder.

As the sale of commercial properties and the rent derived from them are subject to Goods & Services Tax (GST), how does this impact on an investor’s decision in purchasing commercial properties?

With GST, property developers face an overall cost increase in terms of construction materials and other input services. For residential properties, developers cannot charge house buyers GST as residential properties are exempt-rated, but for commercial and industrial properties, the GST component will be charged to buyers. Thus there should not be any impact on investor’s decision as this apply across the board.

What are your property goals or prospects for the year ahead?

 At trying times, developers should be cautious in launching new projects and be conscious of taking calculated risks. For me, there will be fewer launches and careful planning in anticipation of the good times ahead. Works will be undertaken to refine and enhance existing projects turning them into quality lifestyle spaces with enhanced amenities and wellness values.