KUALA LUMPUR: The Johor real estate market did fairly well in 2023, and there are some encouraging aspects to consider this year.

Aside from the well-liked landed homes, which are virtually "recession-proof" as usual, there has been a surge in demand for high-rise apartments following years of decline.

KGV International Property Consultants executive director Samuel Tan said that since the borders reopened in April 2022, there has been a growing interest in high-rise apartments and service apartments near the two causeways.

"The positive sentiment is likely to spill over to 2024. These two years could well be the tipping point for Johor Bahru, that is, 12 long years after when we witnessed the last property market boom in 2012," he told NST Property.

Tan said the catalysts in 2024 will be the initiatives to designate Forest City as the special financial zone (SFZ) and the yet-to-be-announced special economic zone (SEZ), rapid transit system (RTS) that is taking shape, the possibility of the revival of the Kuala Lumpur-Singapore high-speed rail, and many mega-scale foreign direct investments (FDI) coming into Johor.

He said industrial properties will remain hot, especially for medium- to large-scale build-to-suit factories.

"Data centres have been queuing for suitable sites. Super warehouses and distribution centres are poised to be the new class of industrial properties in Johor Bahru.

"Offices in selected areas, such as locations designated as SFZ and SEZ, could see increasing demand too," he said.

Tan said that there has also been a noticeable increase in high-rise apartment prices and rentals.

"It appears that prices of apartments in good locations are poised to rise further due to strong demand from Malaysians working in Singapore and investors trying to capitalise on the positive sentiment.

"Another bright spot is industrial properties, in particular data centres, electronic and electrical (E&E) clusters, and logistic warehouses," he said.

Tan said that a lot of MNCs are changing their locational strategy to focus on "China + 1" in order to reduce the possibility of a trade war and the ensuing supply chain restrictions.

According to him, Johor Bahru gains from these waves of relocation and expansion.

"We anticipate a conservative 10 per cent to 15 per cent average increase in transaction volume and price given the positive sentiment," Tan said.

Meanwhile, Tan pointed out that while all is positive for the overall real estate market, there will be challenges like international geopolitical risks, a trade war between the US and China, and domestic political surprises.

"They remain the usual wild cards that will derail or slow down our economy and property market. Another potential risk will be the uncontrolled supply pipeline of high-rise serviced apartments.

"We noticed that the supply of such high-rise properties started to heat up in view of the improved sentiment. It is crucial to pace the supply pipeline to avoid excessive overhang issues that will plague our property market moving forward," he said.

Tan also said that excessive compliance costs are another area that might negatively impact the local property market.

Foremost are the development premium and development charges, which are getting increasingly higher, he said.

He warned that these two are in fact a form of "double charging" on the land.

"To ensure development sustainability for the whole property industry, we implore the authority to relook at the rationale, basis, mechanism, and quantum of imposing such taxes," he said.