"Iskandar Malaysia is Only Going One Way – Down"

Quite good article from a Singaporean website, I thought might be relevant for Malaysians also.

Although I am not exactly a property expert, I did echo similar concerns in the past, for instance here:


"Two Iskandar developers (to IPO in 2014), I am scared all the clever money has been made already, and the property market is way too hot and might already be cooling"


Some snippets from the article at DrWealth's website:


When you drive around Iskandar Malaysia, it’s not uncommon to see swathes of empty apartments with no one living inside. Therein lies perhaps the main issue with the region – the lack of a critical mass of people, especially locals, staying in the area.

In the beginning, the majority of property purchases were made by foreigners, particularly Singaporeans, who were seduced by the attractive price tags.

Unfortunately, the property cooling measures announced in Malaysia’s 2014 Budget have thrown a spanner in the plans of many of these potential investors. Since the beginning of the year, foreigners can only purchase property worth at least RM1 million, have to pay more in Real Property Gains Tax, and must contend with a 2 percent property levy. These moves have whittled the number of potential property investors in Iskandar.

Couple this with the glut of housing development projects being launched by big Chinese developers such as Country Garden and Guangzhou R&F and you’re looking at the classic problem of unchecked growth – supply outrunning demand.

Bonia venturing into property: deja vu?

I still remember one event in 1997 very well: property prices had risen, many players went fresh into the game, lots of hot money was poured into it, and then Bonia decided to also take a punt at it. Many commentators were amazed why a (reasonably successful) consumer brand like Bonia would want to venture into an unrelated industry.

The rest is history, soon afterwards all came crashing down, the stock market, the currency, the bond market, the property market and the ego of certain people who thought they were on top of the world.

It was with this in my mind when I received an email from a friend with the text:

"Bubble peaking? Fashion and shoes maker buying into property ... totally unrelated business"

pointing at this article on the website of The Edge:

"Bonia adds prime KL property to its real estate investment arm".

A clear "deja vu" moment for me.

Another related article:

"MOL’s Ganesh Kumar Bangah morphs into … property tycoon?"

Ganesh has been a very successful internet founder (MOL, invested by Vincent Tan), what is he doing developing property?

It is not 1997/98, after the crisis many steps have been taken to improve the strength of the banks, the corporate governance of companies, etc., that kind of crisis happens only once every 30-40 years or so. But Malaysia could be hit by a more moderate crisis, the one that hits countries on average every 7 years or so (both 30-40 years and 7 years are just indications). And the above two events (and many more, for instance the punting in penny stocks) do indeed point to a market top. But market tops are hard to predict, and bubbles can grow pretty large, so it does not mean that things will come down any time soon, it could easily happen in 2014 or even in 2015.

Happy Deepavali to all Hindu readers.