On February 11 PBS’s Nightly Business Report ran a story that piqued my interest in a big way. The report discussed the Iskandar Development Region in Southern Mayalsia, located in the Malaysian state of Johor, situated next to Singapore and connected to Singapore by a causeway.

The power of “Malaysiapore” with its strong focus on and potential for economic growth has been widely noted. “Malaysiapore” seems to be expanding and the creation of the Iskandar Development Region (IDR) is part of the government’s larger efforts aimed at economic expansion in this Southeast Asian country. Companies investing in the Iskandar Development Region are given corporate tax exemption for 10 years. Investors are permitted to source capital globally, and permitted to employ foreign workers without restriction. The government’s policy has been to provide these incentives only for the activities that the government desires to encourage in the IDR, namely creative industries, educational services, financial advisory and consulting services, healthcare services, logistics services, and tourism related activities.

Here is a nugget from the PBS story: real estate in the Iskandar Development Region is selling for as little 1/30 of the price of the real estate on the other side of a causeway in Singapore. Forbes Magazine recently recommended taking advantage of this development by taking a “grubstake” in real estate in the Johor region, opining that it was hard to imagine that prices would not escalate.

The Indonesian Connection

Both the economy of Malaysian and that of Indonesia its neighbor grew north of 6 percent in 2007 and are expected to repeat that level of performance in 2008. The Iskandar Development Region website talks up the proximity of the IDR to Indonesia, which is describe as an important source of labor for Johor’s manufacturing and service sector, in addition to its location vis-à-vis Singapore. A quick glance at a map and the advantages of Johor’s location are immediately obvious.

Collaborating with Dubai and the Middle East

There seems to be little doubt that a major focus of the Malaysian government, as that focus has been recently articulated by Prime Minister Abdullah Badawi is cooperation with other Islamic nations with respect to economic development. Among the big investors in this region is a consortium of sovereign wealth funds and other investors from Abu Dhabi, Kuwait and Dubai. Sovereign wealth funds are the somewhat controversial funds derived from a country’s reserves, which are set aside for investment purposes that governments consider to be beneficial to the interests of the country and its citizens. One of the partners in a 4.7 billion maritime project being built in the region is Dubai World, a holding company of the government of Dubai.

But it is not just governments and private investors from the Middle East that have found the region attractive. One large investor is General Electric. GE CEO Jeffrey Immelt called the region a “substantial growth opportunity” due to the growing need for “security, water, [and] energy” in a PBS Nightly Business Report last November.

A Diverse Investment Opportunity

The activity in the Johor is not limited to commercial/industrial development. There is a proliferation of resort development too; the Johor region’s attractions are not limited to its proximity to Singapore or Indonesia. Add diving, surfing, golf, sandy beaches and fishing to the mix and it is easy to see why resort developers such as the prestigious Aman Resorts have announced intent to develop in the region. Anticipated growth of the region has given rise to the need a great deal of residential development as well.

A More Ferocious Asian Tiger?

This seems to me to be big story for a number of reasons. When people talk of the premier real estate locations in Asia, the two places that come to mind without much thought process are Singapore and Hong Kong. This expansion has been compared and modeled upon the dynamic Pearl River Delta (PRD) region of Guangdong province in China and its relationship with Hong Kong. The idea of the “Asian Tiger” Singapore expanding so substantially into Malaysia is potentially extremely exciting for real estate investors and can also be viewed as a venue where cooperative ventures between investors from the Islamic and non-Islamic worlds could thrive.

Considering the clear promise of the Iskandar Development Region’s location, the exuberance about the region seems somewhat muted and most of the recent reports of investment in the region do seem to involve firms from the Middle East. As the Nightly Business Report story pointed out, there is a history of less than ideal relations between Singapore and Malaysia, and the success of this region may be dependent on the enthusiasm of Singapore investors. It is dependent also on how attractive this region will become to investors worldwide, and on how well the players in this rather cosmopolitan investment setting are able to get on. For instance, some have expressed concern about the secretive nature of the Middle Eastern sovereign wealth funds which seem to be such an integral part of the development of this region.

Still, Malaysia has a strong economy and it has political leadership that is sounding the right notes and focusing on modernization and economic development. The two governments (Singapore and Malaysia) have promised cooperation. There are some potential stumbling blocks but if real estate investment really is about location above all other things, the IDR is simply too good a prospect not to merit a serious look.

Further reading:
Property investors look to Malaysian real estate as the next big one

Iskandar Development Region and real reform

To many commentators, it seemed an odd statement to make for someone on a reported £60,000-a-week salary.

But when footballer and new Spurs signing Jonathan Woodgate waded into the London property price debate, some of us thought he had a point.

“I think you could buy 10 penthouses up north for the price of something down here.” the defender was quoted as saying in the Telegraph last month. The 28-year-old had just moved from Middlesbrough to Spurs and had found himself house-hunting in London.

“You just want the right place for you and you want to get it at the right price,” he reportedly added. But is he right? His choice of accommodation is interesting - according to the very same newspaper penthouses are on the up after a period in which they were considered a ‘white elephant’ in the property world.

So what’s on offer for the off-plan penthouse investor, is it worth it, and do north and south trends match Woodgate’s comments?

If were assuming we are on a top footballer’s salary, we may as well aim high while browsing the capital in this little experiment.

Top-Level Living

You don’t get much higher than Pan Peninsula, a two-tower luxury apartment development close to Canary Wharf, with off-plan prices starting around the £200,000-plus mark for a one-bed studio apartment.

With the whole project due to be complete by 2009, listings put penthouses in the development at around the £2.5m mark, steep by anyone’s standards, but Pan Peninsula is no ordinary up-market apartment development.

Pan Peninsula’s facilities include a private cinema, health club and spa, a 50^th floor cocktail bar, 24-hour concierge service, restaurant and the ‘sky lobby’ lounge area with refreshments.

The penthouses are described on the development’s website as being personalised and custom-designed to each client’s requirements, so suddenly it’s not too hard to see where that £2.5m goes.

Central Penthouses for around £600,000

Off course, Pan Peninsula is at the top of the scale when it comes to off-plan high-rise opportunity, and a little further into the city you can scoop a penthouse for well below a million without too much difficulty.

For example, £620,000 will net you a top penthouse in Salamanca Tower, Albert Embankment, and if you want to aim between the two prices £1,325,000 will get you a superb off-plan spread in the Lanson Building, Chelsea Bridge Wharf, due for completion by the end of this year.

So, giving ourselves the generous £2.5m asking price of a top London penthouse, let’s head up north and see if we can get 10 similar properties for this total price.

Starting in the north-east, where Woodgate has just moved from, users of housepricecrash.co.uk say Newcastle’s local paper reports the prestigious residential and commercial West One Quayside development, due for completion later this year, has already sold two penthouses off-plan to the tune of £400,000 each. No ten for one there then.

Nearly 20 for that £2.5m

Moving further down the road to Leeds, converted mill houses are big business and in good supply, hence the price of £136,950 for penthouse apartments in Perseverance Mill in Elland, not far from the city. This is naturally not on the same level on the high-living scale to Pan Peninsula, but you get a good spread nonetheless with an open plan kitchen, allocated parking, exposed stonework and far-reaching views. £2.5m will get you 19 of these here!

On across the Pennies to Manchester and the Manyoo Development (PDF link) in Salford Quays will be finished in 2011 and features that all-important concierge service plus luxury kitchens and bathrooms, all a three-minute walk from the planned Media City.

Top-floor two-bed penthouses are selling at a rate of knots, but will set you back £263,750 each. Again, this is no Pan Peninsula, but the development will be as more or less as close as Manchester can offer to it once complete, and 10 penthouses in it will cost you £2,637,500 - just over our £2.5m limit.

Off course, this has been a very rough experiment, with the £2.5m penthouses in Pan Peninsula somewhat without comparison elsewhere in the UK. But maybe Jonathan Woodgate was not so far off the mark after all, and the Perseverance Mill example shows just how far that sort of money can potentially go outside of the capital!

Demand is increasing for homes with a reduced carbon footprint, utilising the latest in solar and wind technology as Australian households become more environmentally aware.

And after a decade of government imposed water restrictions, water tanks and recycling systems are becoming standard in homes as people look for ways to conserve fresh water in the drought-gripped continent, yet still enjoy a green garden.

Celebrities take the lead in the green property revolution

Entertainer Kylie Minogue has just listed her property for sale on French Island, south of Melbourne, for an estimated $2 million, through agent Hocking Stuart. The retreat, where she recovered from cancer, was significantly renovated to include water retrieval systems, solar and wind power.

Minogue is the latest in a long line of celebs who have transformed their living spaces to support the sustainability message.

Actress Cate Blanchett, who is an ambassador for Earth Hour, has reportedly spent $1.5 million on renovating her Sydney home, including grey water recycling, a water tank and solar panels.

And further afield, actor Brad Pitt has been campaigning for eco-friendly homes to be built in New Orleans in the areas ravaged by Hurricane Katrina.

Once optional, green to become standard

In last year’s federal election campaign, Labour leader and now Prime Minister Kevin Rudd announced a policy that all homes with an income up to AUS $250,000 a year would be eligible for a loan to help fund a “greenovation” on their home, to encourage energy and water conservation.

While the details of the policy’s implementation have not yet been rolled out, it is expected that this will pressure property developers to include these features as standard on new build homes.

Property developer Lend Lease is a member of the Dow Jones sustainability index, and the company says that creating sustainable buildings (PDF link) is the fastest way to cutting greenhouse gas emissions.

Mirvac announced in its latest sustainability report (PDF link) a world first for residential mass housing, with its Vision Estate in Glenfield powered on a three-way natural gas system, reaching 80 per cent energy efficiency compared to 35 per cent on coal-fired power. The company estimates that the power savings each year on the estate will be equivalent to removing 60 cars from the road.

The Westwyck sustainable housing development in the Brunswick West area of Melbourne features on-site waste disposal, recycled materials, solar planets and drought tolerant plans in the communal areas. A study conducted by the federal government science agency, the CSIRO, found Westwyck residences use 64 per cent less water than other houses in the surrounding area.

The Eco-Village at Currumbin, in Queensland, was last year named the Urban Development Institute of Australia’s best environmental development, and the Housing Industry Association’s Greensmart Development of the Year. On the verge of releasing a new lot of land under the Highlands release, some homes are having energy usage screens installed, to show how much energy is being used, and produced through solar cells, to keep homes carbon neutral.

In Western Australia, Landcorp’s Harvest Lakes development has a mandatory five-star energy rating for each of the homes and blocks oriented towards the best sunlight to reduce heating and cooling costs.

Green property = more green in your pocket

Spending a bit extra on a home that has been designed with the environment in mind can seem like a challenge, particularly as interest rates continue to rise and affordability and access to greenfield space becomes more difficult.

However, estimates suggest that buying an environmentally sustainable home is far cheaper than renovating an existing home, so it is worth looking at the new breed of green homes to bring your life in balance with the environment.

And the benefits continue for the ongoing household budget. Less power means a lower bill, and there are growing opportunities to put power back into the grid and receive a cash payment from the power company.

But perhaps the most significant benefit is the advantages on resale value. Eco-friendly elements tend to increase the value of a home, and according to eco-consultancy Better Living Energy Solutions, investment in green technologies for the home also protect against likely future rises in the price of electricity, fuel and water.

Further reading:

Developing for Green: Investing in Better Buildings for the Future