The property slowdown in Malaysia is more visible in Iskandar Malaysia, according to Maybank IB Research.
The consultancy noted that transactions in Johor fell 33 percent quarter-on-quarter in Q4 2014, underperforming the country (-7.0 percent) and other major cities and states such as Kuala Lumpur (-12.0 percent), Penang (+8.0 percent) and Selangor (+2.0 percent).
Moreover, property prices in Johor weakened by one percent quarter-on-quarter versus the overall country's -0.2 percent, Selangors -0.1 percent, Penangs -0.3 percent and KLs -0.9 percent.
Maybank attributed the downturn in Iskandar to the governments cooling measures, such as the higher floor price for foreign buyers and two percent levy on foreign purchases, the banks tighter lending conditions as well as stiffer competition by newer developers.
It also expressed concern about Chinese developers aggressive land banking activities in the region.
Chinas Greenland Group acquired 128 acres of freehold land in the south of Bandar Baru Permas Jaya while Country Garden secured approval from the Department of Environment (DOE) to continue its massive reclamation of 3,425 acres for Forest City near the Malaysia-Singapore Second Link.
As such, Malaysian developers scaled back their launches, shifting their product mix to avoid direct competition with Chinese developers.
Judging from the number of approved high-rise projects, the Iskandar property market could be hit by too much supply of high-rise mixed development projects if there is still no coordinated planning and control; this will induce price volatility, Maybank stated.
Iskandars oversupply situation may also be exacerbated by the huge incoming supply in 2015 and 2016 where units under construction increased 18 percent year-on-year in 2012 and 2013 respectively.
We remain cautious on property exposure in Iskandar Malaysia and prefer developers with exposure in the Klang Valley and Penang, it added.
Image: Artist's impression of Forest City near the second link at Tuas.