According to a Bloomberg report on Nov. 22, Johor Bahru is in the midst of being flooded with up to 500,000 brand new apartment homes built by Chinese property developers on reclaimed land facing Singapore up north.
The developers are betting on Johor Bahru's special Iskandar economic zone, which is three times the size of Singapore, to be the next Shenzhen -- the neighbor of Hong Kong that grew from a fishing village to a city of 10 million people in three decades.
When completed, the property Forest City sitting on four artificial islands developed by Country Garden Holdings will reportedly house 700,000 people.
Targeted buyers are the mainland Chinese who have been flown in to view the property and treated like royalty, and who are attracted to the property's proximity to Singapore.
It will have office towers, parks, hotels, shopping malls and an international school, and they will be covered in greenery.
Construction began in earnest in February 2016 and about 8,000 apartments have been sold, the report said citing the developer's response.
Malaysia reclaiming land in front of Singapore
Controversy surrounding the construction of Forest City emerged in June 2014, when it was reported that Malaysia, which is approximately 500 times the size of Singapore, was planning on reclaiming land in front of Singapore.
They wanted to create a 2,000ha island in the Strait of Johor below the Second Link that connects Tuas in Singapore to Johor.
This is approximately three times the size of Ang Mo Kio estate and will take 30 years to complete.
Work at the development near Tuas, as well as for Princess Cove near the Causeway, was subsequently suspended in June 2014, pending studies on the environmental impact and after Singapore raised objections.
But Malaysia gave the green light in January 2015 for work on Forest City to restart.
The prospect of 500,000 new homes has sent property prices crashing. The sheer number of units available is more than the private property homes Singapore has ever built.
The value of residential sales in Johor Bahru fell by 30 percent last year, with some developers offering discounts of 20 percent or more.
A two-bedroom apartment cost as little as 1.25 million yuan (S$258,000), about one-fifth of the price of a similar-sized private apartment in central Singapore.
The Iskandar Malaysia zone around Johor Bahru has got some 60 ongoing development projects. Forest City is one of the biggest.
The development of the Iskandar zone began in 2006, when Malaysia decided to leverage Singapore’s success and unveiled a 20-year plan.
Construction is definitely outpacing demand, as it is projected that current developments can cater to demand for the next 10 years even if they stopped building now.
It is also uncertain who will take up all the available units, especially if prices are volatile and might collapse given that the cost of land in Malaysia is so cheap and with no curtailment of its expansion.
Top photo via Forest City