Homebuyers in Hong Kong are looking at Malaysian property as second homes and for retirement, with Kuala Lumpur, Penang and Johor Bahru garnering a lot of interest because of affordable prices amid a supply glut. Terence Law, senior principal project director at Centaline Property Agency, said that more than half of the 21 units released on June 7 at a condominium project in Johor Bahru were snapped up within the weekend by buyers from Hong Kong. The units were priced from HK$787,331 (US$100,000) to HK$2.27 million. Law said about 35 per cent of his clients were buying Malaysian property for retirement or as a second home. According to data from the National Property Information Centre (Napic), the median cost for a house in the state of Johor is 350,000 ringgit (US$84,000). A 300 sq ft apartment in Hong Kong, much smaller than the average flat in Malaysia, would still cost six times more. Malaysia’s southern state of Johor calls for property purchase restrictions by foreigners to be halved to bolster real estate sales Compared to other Southeast Asian cities, property prices in Johor Bahru are “much lower”, Law said. He estimates they are roughly half the price of an average home in Bangkok and “about 20 times cheaper” than prime locations in neighbouring Singapore. Melissa Lee, associate director of valuation and advisory services at Colliers International, said the cost of living in Johor remains among the lowest in the world. “Particularly with the Malaysia My Second Home (MM2H) programme … it remains a target for retirees,” she said. The MM2H is a government initiative that offers 10-year renewable visas to non-Malaysians in a bid to get foreigners to live in Malaysia. It allows visa holders to buy residential property that cost more than 1 million ringgit. But prospects for price appreciation are weak because of an oversupply of residential units. A DBS Bank research report on Malaysian property from January noted that price growth for the third quarter of 2018 had fallen to the lowest level since 2010, partly because of pressure from an “alarming” supply glut. In 2018, about 32,000 residential units worth about 19.9 billion ringgit remained unsold across the country, almost a threefold increase over four years, according to Napic. Johor accounted for 6,066 unsold units, the largest among the states. “Currently, the occupancy rate for high-rise apartments in Johor is about 50 per cent,” said Tan Ka Leong, director of property firm CBRE-WTW in Johor. “For newer high-rise apartment developments, present occupancy rate is estimated to be about 30 per cent or less.” Tan said his estimates do not take into account any unsold units in Johor’s US$100 billion Forest City mega project, which is touted to house 700,000 residents when complete in 2035. Multiple headwinds for Chinese property developers in Malaysia Its Chinese developers Country Garden did not respond to queries on the number of units left unsold. Vacancies in completed high-rise apartments were a result of a large number of developments in 2013 and 2014, leading to high supply in the past three years. Malaysian authorities have frozen approvals for high-rise apartment development since end-2014, and analysts say that vacancy rates and house prices are not expected to fall much lower. However, homebuyers seeking a bargain still have some time to act. “There’s going to be fewer high-rise products being introduced,” said Tan, who expects three to five years for the existing vacant units to be bought. Debbie Choy, branch head of real estate agency Knight Frank’s Johor Bahru office, said that some new supply of high-rise apartments from residential projects approved and under construction can be expected. “It will take some time for the market to absorb the stock,” she said.