Course Code: SBET 1033

Course Name: PRINSIP DAN KAEDAH HARTA TANAH

Section: SECTION 1 AND SECTION 2

Lecturer’s Name: AP Ts Gs Sr Dr.Noorsidi Aizuddin bin Mat Noor

Session/Semester: 2023/2023

Assignment Title: Article Determinants of Property Values, Johor Bahru

Group 4:
VEKNESWARAN RAJUNAIDU A/L S PALANI RAJA NAIDU(A23BE0453)
DANIA ZULAIKHA BINTI KADENAN(A23BE0091)
NUR AININ SOFIA BINTI ROSLAN (A23BE0295)
AHMAD ANAS HAKIMI BIN SHAHRUN NIZAM (A23BE0015)
PUTERI AMIRA QISTINA BINTI AZMI (A23BE0379)
SALSABILA LIYANA BINTI HANAPI (A23BE0386 )
AHMAD ALIF SYAUQI BIN RAMLI (A23BE0014)

EMAIL PELAJAR :
vekneswaranrajunaidu@graduate.utm.my
daniazulaikha@graduate.utm.my
nuraininsofia@graduate.utm.my
ahmadanashakimi@graduate.utm.my
salsabilaliyana@graduate.utm.my
puteriamiraqistina@graduate.utm.my
ahmadalifsyauqi@graduate.utm.my

1
TABLE OF CONTENT

CONTENTS Pg Number

Abstract 1

I. Introduction 1-3
II. Methods for Calculating Land Value in Johor Bahru 4-8

III. Factors Affecting Value of a Property 9-17

IV. Methodology 18-21

V. Data Collection 22-27

VI. Analysis 28-37

VII. Conclusion 38-39

VIII. Suggestion and Recommendations 40-41

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ABSTRACT

This paper investigates the determinants of house prices. The Johor Bahru, Malaysia is
chosen as the case study in this paper. Hedonic house price modelling is employed to determine
the effects of the structural and location attributes on the prices of the house. Selling prices,
structural and location attributes were collected from the database of the Department of
Valuation and Services of Malaysia, selected maps, and reports. Fifty-five factors that are likely
to influence a house price were identified and used to determine the overall effects of the
structural and location attributes on house prices. However, only significant variables were
included in the final model, and these were identified by using correlation analysis and
modified stepwise procedures. The outcome of this paper shows a positive relationship between
structural and location attributes and house prices.

Keywords: House prices, hedonic price method, the Johor Bahru

I. Introduction

“Location, location, and location” is the mantra of real estate practitioners when it
comes to identifying the most important factor in determining house prices. As a result, over
the past four decades, many studies have been carried out to determine the relationship between
house price and location. The classical urban land economic model (Alonso, 1964; Muth, 1969;
Mills, 1972) makes the monocentric assumption that all economic activities and employment
are located in the Central Business District (CBD). Hence, there is a distance decay relationship
between house prices and distance from the CBD. Following this, distance to the CBD has
frequently been used as a measure of location-house price relationship.

Many structural, neighbourhood, and locational attributes could have brought about
impacts on house prices. Structural characteristics, location-specific factors, and
neighbourhood characteristics may define various sub-markets. Sub-markets may be defined
by structure type (e.g., single-family detached, row house, town home, and condominium), by
structural characteristics (property age housing consumers may have strong preferences for
newly constructed properties or historic properties), or by neighbourhood characteristics (e.g.,
public education and public safety). In this matter, the government plays an important role in
ensuring that the housing price is also proportionate to overall income levels. The increase in
house prices has boosted the property sector and attracted many new developments for
residential buildings. The growth of the Malaysian housing sector has been underpinned by the
interface between three forces: a growing population, high rates of urbanisation, and a growing
economy.

However, it is important to note that location from CBD is not the only variable used
to determine the relationship between house price and location. This is because each unit of a
house has an exclusive package of attributes such as its structural (physical) and location
attributes (Powe et. al., 1995; So et al., 1997; Irwin, 2002; Tse, 2002; Cohen and Coughlin,
2008; Anderson et al., 2009; Dziauddin et al., 2013). By regressing the transaction prices of
houses against structural and location attributes, the effects of these attributes on house prices
can be determined. An important question to ask is upon what factors do premiums depend?

1
Through exploring what factors premiums depend on insights can be gained ‘in helping sellers
set asking prices, in helping buyers set offering prices, and in bringing buyers and sellers
together toward an agreed transaction price’ (Tse and Love, 2000).

This study aims to estimate the effects of structural and location attributes on house
prices in Johor Bahru, Malaysia. As structural and location attributes are not directly traded,
several techniques are available to measure their effects on house prices. The literature has
shown that there are two broad categories of non-market techniques: stated preference
techniques on the one hand and revealed preference techniques on the other. In the context of
this study, hedonic pricing is used to measure the effects of structural and location attributes
on house prices.

The hedonic price method (HPM) is a well-established method used to analyse a

market for a single commodity with many attributes, that of housing. In other words, HPM is
based on the idea that properties are not homogeneous and can differ concerning a variety of
attributes. These various attributes will determine the value of the house. For example, since
a recreational lake is an important source of recreational amenities and a pleasant landscape of
the neighbourhood, house buyers may pay a premium to be located near a recreational lake.
As a result, price differentials should develop among the neighbourhoods due to differences in
distance from the recreational lake. These price differentials are signals about the value that
residents place on living in a neighbourhood where recreational lakes exist. HPM will capture
the value of recreational amenities and pleasant landscapes generated by the recreational lake
only if the benefits from the accounts for those residential properties that are located near the
recreational lake.

1.1 Aim of the Study

To study the factors influencing property values in a city and understand the mutual
relationship between these factors.

1.2 Objective of the Study

1. To find what are the factors that influence the property values.
2. To find out what type of relation these factors have concerning property value.
3. How the City of Johor Bahru property values can be modelled using various
statistical techniques?

1.3 Research Questions

1. What are the various factors that influence property value in an urban context?
2. How is the demand and supply influencing the property value?
3. Which way do these factors influence – directly proportional or indirectly proportional?
4. How much (magnitude) is the influence of these factors on property value?
5. How the relationship derived from RQ1-4 is applied to the Johor Bahru case?

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1.4 Scope and Limitation

Scope:
1. The study will only focus on the JMC limit of Johor Bahru city.
2. The study will only focus on registered value and not on the market value.
3. Study various factors affecting the registered property values.

Limitation:

1. Will only consider values within 5 Years of transaction.

2. Various levels of factors will be studied within the time frame.

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II. Methods for Calculating Land Value in Johor Bahru

In the dynamic metropolis of Johor Bahru in Malaysia, where growth is booming, land
is quite valuable. It becomes essential to appropriately determine land worth as developers,
investors, and individuals negotiate this market. To help us make educated decisions,
techniques for determining land value in Johor Bahru are discussed, together with their
advantages and disadvantages.
The comparison method is one of the most common ways to estimate the value of a
property in Johor Bahru. It involves finding similar properties in the same area and comparing
their sales prices to get an idea of how much a property is worth. Using this method valuers
analyse comparable properties based on factors like size, location, zoning, access, and
amenities. By adjusting for these factors, they estimate the market value of the subject land
based on what similar properties have sold for.
The advantages of this method is it is straightforward and involves simple calculations.
Other than that It uses data that is real and public and is not dependent on subjective forecasts.
Moreover, it reflects the market conditions and demand for properties in the area. On the other
hand, the disadvantages of this method is it is difficult to identify transactions or properties that
are comparable. Also, there may be a lack of sufficient number of comparable properties or
transactions. Moreover, there may be differences in size, condition, location, amenities, etc.
between the properties that affect their value and there may be a lack of up-to-date evidence or
information on the sales prices of the properties.
Here are few examples of how to use the comparison method for calculating land value in Johor
Bahru:
If someone want to value a plot of land in Johor Bahru that has a size of 1,000 sqft and
is located near a shopping mall. They can look at the sales prices of other plots of land with
similar features in the same area. According to a website named ‘PropertyGuru’, the average
price per sqft for residential land for sale in Johor Bahru is RM 137.65. Therefore, if someone
find a plot of land that is 1,000 sqft and has a price of RM 1.35 million, they can use this as an
estimate of its value using the comparison method.
Next, if someone want to value an office building in Johor Bahru that has a size of 5,000
sqft and is fully occupied by tenants who pay an average rent of RM 10 per sqft per month.
They can look at the sales prices of other office buildings with similar features in the same
area. According to ‘iProperty’, the average price per sqft for commercial properties for sale in
Johor Bahru is RM 200. Therefore, to find an office building that is 5,000 sqft and has a price
of RM 10 million, we can use this as an estimate of its value using the comparison method.
Third, if someone want to value a house in Johor Bahru that has a size of 3,000 sqft and
is in a prime location with good amenities. They can look at the sales prices of other houses
with similar features in the same area. According to ‘Savills’, the average price per sqft for
residential properties for sale in Johor Bahru is RM 300. Therefore, to find a house that is 3,000
sqft and has a price of RM 9 million, we can use this as an estimate of its value using the
comparison method.
Next, we uncover The Costing Method which estimates the land value by calculating
the cost of replacing it with an identical plot, considering a few factors. Such as Land

4
acquisition cost which is the current market price of similar vacant land. Second, there is a
development cost which involves infrastructure, site preparation, and any necessary
construction. Other than there is also depreciation which is age and wear and tear of existing
structures. This method is particularly useful for undeveloped land or land burdened by
outdated structures.
The advantage of this method is it is based on the actual cost of construction, which can
be verified by receipts, invoices, or contracts. Also, it is useful for properties that are new,
unique, or have no comparable sales data. Moreover, it is helpful for insurance purposes, as it
reflects the replacement cost of the property. On the other hand, the disadvantages are it may
not reflect the current market value of the property or its potential appreciation. Second, it may
not account for the depreciation of the property over time or the obsolescence of its features
and may not consider the value of the land or the location of the property.
Here are some examples of how to use the cost method for calculating land value in Johor
Bahru:
If someone want to value a plot of land in Johor Bahru that has a size of 2,000 sqft and
is vacant. They can estimate the cost of constructing a new house on it using online tools or
consult with an architect or engineer. According to ‘Savills’, the average cost per sqft for
residential construction in Malaysia is RM 200. Therefore, to estimate that it would cost RM
400,000 to build a house on your plot of land, we can add a profit margin of 20% to get an
estimated value of RM 480,000 using the cost method.
Next, if someone want to value an office building in Johor Bahru that has a size of 5,000
sqft and is old and deteriorated. They can estimate the cost of replacing all the existing features
of the building with new ones of similar quality and functionality using online tools or consult
with an architect or engineer. According to ‘Savills’, the average cost per sqft for commercial
construction in Malaysia is RM 250. Therefore, to estimate that it would cost RM 1.25 million
to replace the building, we can add a profit margin of 15% to get an estimated value of RM
1.44 million using the cost method.
The investment method, also known as the income approach, is a common method used
to estimate the market value of land in Johor Bahru. It works by assessing the property's
potential for generating rental income and converting that income into a capital value. This
method is particularly useful for valuing land that is intended for development or investment
purposes.
To use the investment method we need to follow a few steps such as Estimating the
Gross Potential Income (GPI). This is the total annual rental income a property can generate if
it is fully occupied and rented at market rates. Second, we need to Calculate the Capitalization
Rate (Cap Rate). This is the rate of return investors expect to receive on their investment in real
estate. Cap rates vary depending on the type of property, the location, and the prevailing market
conditions. Third, it is to convert GPI to Land Value. In order to do this, we have to divide the
GPI by the Cap Rate to arrive at the estimated land value.
Formula: Land Value = GPI / Cap Rate
The advantages of the Investment Method are it reflects the income potential and profitability
of a property, which is important for investors and landlords. Also, it uses data that is real and

5
public, such as rental rates, vacancy rates, and operating expenses. Moreover, It is suitable for
properties that are income-producing or have stable rental income, such as commercial
properties, apartments, or hotels. Meanwhile the disadvantages are it may not account for all
factors that affect property value, such as location quality, demand, supply, market conditions,
etc. Other than that, It may not consider the depreciation of the property over time or the
obsolescence of its features.
For example, Let's consider a hypothetical scenario where one needs to value a 1,500 square
foot shop lot situated in a bustling Johor Bahru commercial district.
The initial step involves estimating the potential rental income generated by leasing the
property. Platforms like iProperty and PropertyGuru can be used to research similar properties
for rent in the area. If the average rental price per square foot for commercial properties in
Johor Bahru is RM 2.50, as indicated by iProperty, the shop lot could potentially earn a monthly
gross income of RM 3,750 (RM 2.50 x 1,500 square feet). This translates to an annual gross
income of RM 45,000.
Second, to arrive at the net income, operating expenses like maintenance, utilities, taxes,
and insurance need to be deducted from the gross income. Online tools like Savills and
Corporate Finance Institute can assist in calculating the operating expense ratio (OER) for
various property types in Malaysia. Assuming the average OER for commercial properties in
Malaysia is 30% (according to Savills), the annual operating expense for the shop lot would be
approximately RM 13,500 (30% of RM 45,000). Subtracting this from the gross income yields
a net income of RM 31,500 annually.
The final step involves estimating the property value using the investment method. This
method involves dividing the net income by the capitalization rate (cap rate), which represents
the expected return on investment for a property. Resources like iProperty and PropertyGuru
can help in determining the appropriate cap rate for similar properties in the area. By dividing
the net income (RM 31,500) by the cap rate, an estimated value for the shop lot can be obtained.

The Residual Method is a way of estimating the value of a piece of land based on the
potential development that can be built on it. It is often used when there are no comparable
land sales in the area or when the land has a specific use that makes it different from other
lands. The basic formula for the residual method is starts with the estimated value of the
completed development project (Gross Development Value) and then subtracts the
development costs and the developer's profit margin. The remaining amount is the estimated
land value. This method assumes that the developer will pay the highest price for the land that
still allows them to make a reasonable profit. Therefore, the residual land value depends on the
assumptions and estimates of the GDV, the Total Development Costs, and the Developer’s
Profit.
The Advantages of this method is it considers the development potential of the land
which Useful for comparing different development options and identifying the most profitable
one. Meanwhile the disadvantages are it requires significant market research and expertise to
apply correctly. It also relies on accurate estimates of GDV, development costs, and profit
margin.

6
For example, using the residual method, a developer interested in a Johor Bahru condo project
can estimate their maximum land purchase price. With a projected GDV of RM50 million and
a 20% profit margin (RM10 million), the developer can pay up to RM10 million for the land
after factoring in development costs (RM30 million). This price, however, is subject to other
market and negotiation factors. It's crucial to use additional valuation methods like comparison
or income for a more comprehensive picture.

The discounted cash flow (DCF) method is an approach used to estimate the value of
an asset based on its expected future cash flows. In the context of land valuation in Johor Bahru,
it considers the potential income the land can generate over time, discounted back to its present
value. The DCF is used to estimate future cash flows which includes rental income, sale
proceeds, appreciation. Secondly, to determine discount rate to make sure it is in risk-free rate,
real estate risk premium, and project-specific risks. Moreover, it is also used to calculate
present value of each cash flow and to sum present values.
The advantages of DCF are it considers time value of money and future income
potential. Also, it is Flexible for various development scenarios and provides a comprehensive
valuation. On the other hand, the disadvantages are it relies on accurate estimates of future cash
flows and discount rates. Because of this it is sensitive to market changes and development
risks and requires complex calculations and expertise.
The profit method, also known as the income approach, is an established method for
valuing land in Johor Bahru. This method focuses on the potential income the land can
generate, particularly through rental income, and converts that income into a capital value. This
method is particularly useful for valuing land intended for development or investment
purposes.
The Profit Method begins with estimating the Gross Potential Income (GPI), which
represents the annual rental income the land can generate when fully occupied and rented at
market rates. This is done by researching similar properties in the area and analysing their
current rental rates, considering factors like location, size, zoning, and amenities. Next, the
Capitalization Rate (Cap Rate) is calculated, representing the expected rate of return investors
seek from their real estate investments. This varies based on the property type, location, and
market conditions. Analysing recent land transactions in the area helps determine the typical
cap rate for similar properties. Finally, to arrive at the estimated land value, the GPI is simply
divided by the Cap Rate.
The advantages of Profit Method, including its ability to assess land value based on its
income-generating potential, offering a valuable indicator of its worth. It's also relatively
straightforward to calculate, making it a readily accessible method. Furthermore, its
widespread use by real estate professionals ensures reliable comparisons within the market.
However, the method also presents limitations. Its accuracy heavily depends on precise
estimates of both Gross Potential Income (GPI) and the Capitalization Rate (Cap Rate), making
it sensitive to fluctuations in market conditions. Additionally, it may not be suitable for valuing
land with no clear income potential, rendering it less reliable in those specific situations.
While each method offers valuable insights, the ideal method for calculating land value
in Johor Bahru depends on the specific land and its intended use. For land with income-

7
generating potential, the comparison and profit methods provide reliable estimations based on
market data and potential rental income. When development is planned, the residual method
helps assess the land's value in relation to the project's feasibility. The DCF method considers
future cash flows and time value of money, offering a more nuanced evaluation for long-term
investments. Ultimately, using a combination of these methods and consulting with
experienced professionals ensures a comprehensive and accurate assessment of land value in
the dynamic Johor Bahru market.

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III. FACTORS AFFECTING VALUE OF A PROPERTY

land use
regulations

structura enviromental
l factors factors

legeslative locational
control factors factors

infrastructur Al
supply factors
Factors

demography
demand factors and sosio
cultural factors

Figure 1: Determinants of Property Prices

The Demand Factors

Important role in influencing changes in real estate value. Demand factors are caused
by economic and social factors in real estate valuation. Economic growth in Johor is
booming, resulting in an increase in job opportunities and business growth, which drives
demand for real estate. Rapid Infrastructure Development Infrastructure development projects
such as roads, public transport, and other facilities can increase the attractiveness of Johor as
a real estate investment destination. An increase in population or migration to Johor can also
cause demand for real estate to increase, especially if there is a need for quality housing. JB’s
strategic position as a gateway to Singapore and as a growing city could be a factor boosting
property demand there.

Physical infrastructure advantages

Good infrastructure can provide various advantages that affect real estate valuation
among them are accessibility facilities. Excellent infrastructure such as a good road network
and efficient public transport can improve accessibility to real estate. This can increase the
value of the property because good access makes it easier for users and potential buyers. In
addition to Community facilities. Infrastructure such as public parks, shopping malls, hospitals,
schools, and other public facilities also affect property values. The presence of these facilities
can attract buyers and contribute to the increase in property values. Availability of Basic
Utilities affects property valuation. Infrastructure for the supply of clean water, electricity, gas,
and other utility facilities is essential. Good and effective availability of these utilities can add
value to real estate. Development Area. Infrastructure affects the development area. This is
because areas
9
with good infrastructure tend to experience growth and development that can increase property
values. Market Stability. A solid infrastructure also gives property buyers confidence in the
stability and reliability of the area, which in turn can increase property values. When real estate
appraisers take into account the advantages of infrastructure in the evaluation, these factors are
usually considered as important aspects that affect the real estate value of a property.
Social Infrastructure Advantages
The advantages of social infrastructure affect the attractiveness of an area for property
buyers who want to enjoy a better quality of life. This makes these elements important in real
estate valuation. If the land is close to basic facilities such as hospitals, schools, offices and
other basic facilities, the increase in land prices is increasing. This is because the area is a
focus area.
Location Advantages
Properties that have a strategic location with proximity to major roads, public transport
hubs, schools, shopping malls, and other amenities have a higher value. Similarly, property
located close to a railroad may have a lower value if the noise from the train is loud and could
disturb residents.

Transport Linkages
If location is a function of market linkages, then any adjustment in the cost or length of
the linkages for a given parcel will alter its value. Improved transportation routes in cities
have changed the value of properties located near these routes. Such as accessibility to main
road, nearness to bus, transit system, distance to rail transit system and distance to Airport.

Demography and socio-cultural factors

Population Trends. This is because the age structure, the trend of small families, and
the tendency of the population to live in a certain area affect the demand for certain types of
real estate. Lifestyle and Culture. Living habits, lifestyle trends, as well as the cultural
preferences of the local community influence the type of housing they are interested in and
the location they choose. Community and Neighbourhood Presence. The existence of an active
community and a cultured neighbourhood with various social amenities such as parks,
recreation centers, and social activities can increase the attractiveness of real estate in the area.
Income and Salary. The income and salary levels of residents affect the type of property they
can afford, as well as the price level they are willing to pay. Social Needs. Demand for
commercial or residential real estate is closely related to social needs, such as an increase in
the number of shopping centers, health services, and educational institutions. These factors
outline the demand, purchasing trends, and location preferences of demographic and
sociocultural groups. Therefore, they are important in the assessment of real estate values.

10
Structural factors
Structural factors in real estate evaluation refer to the elements that have the design and
physical condition of the property that affect the value of the property. Some important
structural factors include:
Property Type: Property types such as terraced houses, condominiums, bungalows,
commercial, or industrial have different effects on property values.
Size and Space: The size of the property and its interior spaces such as bedrooms,
bathrooms, kitchens, and overall, also affect the value of the property.
Physical Condition: The physical condition of the property including age, structural
condition, renovations, furniture, and other amenities also play a role in assessing value.
Quality of Construction: The quality of construction and materials used in the
construction of real estate also affect the value of real estate.
Land Conditions: If the property has fertile soil, good topography, or attractive views,
this can increase the value of the property.
Public: Proximity to public facilities such as transport stations, schools, hospitals, and
shopping centres is also a factor in property valuation.
These factors, when combined, help the real estate appraiser to determine the correct
value of the property based on the physical structure and characteristics that affect the market
value of the property.

Environmental factors
Neighbourhood and Surroundings: Clean, safe, and pleasant neighbourhoods and well-
maintained surroundings tend to increase property values. Natural Beauty and Landscape: The
presence of beautiful nature such as parks, lakes, or attractive scenery affects the value of real
estate. Security and Comfort: Good security factors and the comfort felt by residents such as
the presence of security controls, the presence of play areas or recreational areas, can increase
the value of real estate. Pollution Control and Air Quality: An environment that is free from
pollution and has good air quality affects real estate values. Access and Neighbourhood
Infrastructure: The availability of public facilities, transport facilities and access to basic
services such as shops, restaurants and medical centres also affect property valuation. These
environmental factors can have a positive effect on property value by making the area more
attractive, comfortable, and liveable, making it important in property value assessment.

Land use regulations

Land use regulations will have a positive or negative impact. Value Confusion: If land
has certain use restrictions that limit development potential, the real estate value may be less
than land with wider development opportunities. Limited Development: Strict regulations on
building types and sizes can limit the potential for real estate development. This may reduce
the value of the property if the buyer’s wishes are not met. Stability and Reliability: While
strict regulations can limit development, they also provide assurances about the stability of the

11
surrounding environment, making real estate more attractive to those who prioritize control
and reliability. Environmental Conformity: Rules that lead to a uniform and matching design
in an area can improve visual impact and comfort, increasing real estate value. Environmental
Control: Control of conservation areas or areas that need to be maintained for environmental
reasons can preserve the beauty of an area and, in some cases, increase property values.
Therefore, land use regulations not only affect real estate development, but also play an
important role in determining the environment and reliability of the area, which in turn affects
real estate value.

Legislative / Statutory Control Factors

The legal control factor in real estate valuation refers to the laws, regulations, and
policies that govern real estate. These factors have a major impact on property value:
Real Estate Leases: Laws related to real estate leases such as local property tax rates
can directly affect real estate values. High tax rates can reduce property values.
Rent and Use Controls: Regulations related to the control of rent or use of real estate can
affect the value of real estate. These controls can limit the potential income or use of the
property.
Foreign Title and Ownership: Legislation involving foreign title or property purchase
laws by foreign nationals also affects the real estate market and property values.
Development Regulations: Policies and regulations related to property development,
building permits, and land use changes also affect property values. Development limits or
zoning regulations can limit the potential value of a property.
Environmental Law: Regulations related to environmental preservation, environmental
impact, and conservation areas can affect real estate values, especially if they have implications
for real estate.

12
 3.1 City Level

enviromental
factors

Determinants
transportaional
factor of property locational
factors

values

land use

Figure 2: Determinants of Property values at city level

The Demand Factors

Environmental factors
Location is generally accepted as the single largest factor affecting market valuation. Different
types of properties in different areas have different prices. This is very important for buyers to
adapt to the environment and location in an area. For example, good environmental quality
such as no air pollution will increase the property value compared to a polluted area. Buyers
will pay more for properties in desirable areas.

Land use regulations

The effects of land use regulations such as value confusion, limited development and stability
and reliability cause property values to be positive or negative. while removing land use
regulations from one property can be expected to have a positive effect. land use regulations
increase property values due to "amenity effects" and "disadvantages effect."

Location Advantages

Location advantages affect the value of a property. This is due to the house unit located in a
certain location is different in terms of environment, social problems and distance to
workplaces and economic activities. That's why it's property higher values in areas of
administrative centres, education and good transport facilities compared to areas that are

13
around unfavourable uses such as drains, airports, railway lines, slums and others because they
can disturb and lack comfort. Higher accessibility to work centres is a big factor influencing
the country value for being able to avoid traffic jams.

Transport Linkages
Good public transport links also influence commercial property values. For rapidly developing
areas such as Johor Bahru, the value of nearby residential properties or business premises will
be multiple times the value compared to areas that are not equipped with public transport
infrastructure. This is because the main area and connects one destination to another.

3.2 Neighbourhood Level

Enviromental
values

Determinants
trasportaion of Property locational
Al factor
values values

social
infrastructure

Figure 2: Determinants of Property values at neighbourhood level

Environmental Factors:
Property value is affected by environmental factors. The environment can increase or decrease
the value of real estate based on the uniqueness and quality of the environment. Sustainable
environmental areas, landscape beauty such as attractive views, lakes and green areas can
increase the value of real estate. A safe, clean, and orderly neighbourhood has a higher property
value because it provides comfort to the residents.
Social Infrastructure:
Social infrastructure is a network of public facilities and services provided for community use.
The availability of these facilities forms the quality of life and attractiveness of the area which

14
can affect the value of real estate. Elements such as health, education, public facilities,
recreation and social. This will give better quality life.
Location Factors:
Urban and rural areas have different property values. Urban areas with good accessibility have
higher real estate values because they are easily accessible to business centres, educational
institutions, hospitals, and recreation centres. Distance to work is also important. A close
distance to the workplace has a higher value than a far distance from the workplace. This is
because the close travel time can attract people to buy the area.

Transportation Factors:
Locations that have good transportation facilities such as train stations, and bus services have
high real estate values because it makes it easier for residents to move. This is because users
are willing to pay a higher rent compared to the same premises but far away from their
residence. This can make it easier for people to use it, especially at night. Better transport routes
in the city have change property values. Changes in transportation routes have changed cost
effective to get a certain market, so a distant land of the CBD now command higher rents due
to improvements access to the market.

15
3.3 Property Level

physical
infrastructure

determinants
of property
values
legislative
structural
control
factors
legulations

Figure 3: Determinants of Property Values at property level

Physical Infrastructure
Physical Infrastructure among the determinants of property value due to areas with high
infrastructure provision have a higher land value. Among the physical infrastructure is the
availability of facilities such as power supply and backup, water supply, sewerage network,
drainage network, solid waste disposal and traffic and transport elements.

Structural Factors
Structural Factors relate to the physicality of the property. The other factors are property type,
size and design, build quality and land conditions. Property types such as terraced houses,
bungalows, commercial or industrial properties have different impacts on property values. Size
and Design, such as the size of the property, interior and exterior design, as well as furnishings
such as bedrooms, bathrooms, kitchens, and living rooms also affect the value of the property.
While the quality of the construction, the materials used, and the physical condition of the
property such as the age of the property, the condition of the structure, and the level of
maintenance also affect the value of the property. Land Conditions such as Properties with
fertile soil, good topography, or attractive views can increase the property's value.

Legislative Control Regulations

various taxes related to the sale, ownership, and use of property, especially, Property Profit
Tax Law, municipal tax and different tax rates which are tax rates on service rates, electricity,
water, and telecommunications.

16
IV. METHODOLOGY
The research method is a method used to obtain a solution or answer to the problem to
be studied. The research method is divided into two, namely the primary method and the
secondary method. In addition, research methods are also divided into quantitative and
qualitative methods. Quantitative methods involve numbers and statistics. Qualitative methods
involve words or interviews. Secondary research, sometimes referred to as desk research, is the
use of pre-existing data or information that has been gathered for a different reason by another
party. Researchers use pre-existing sources rather than personally interviewing individuals or
conducting experiments to get primary data. Secondary research may be an effective and
worthwhile approach for a few reasons, including obtaining historical viewpoints, conserving
time and money, and investigating vast databases. Secondary research included data from
several agencies, valuers, and real estate brokers, as well as articles from various magazines,
books, and online searches. To study the trend of housing and transaction taking place in Johor
Bahru housing market, data collected from newspaper, mass media, and property consultants.

Firstly, a study a large recession in the housing market in Johor Bahru since January
2018 to November 2021. The transaction volume and total transacted price for residential
properties decreased over time. However, there are indications that the market is improving.
Residential property values and transaction volume grew by 57% and 43% year over year in the
first quarter of 2023, respectively. Nonetheless, while the transaction value rose by 5.1%, the
transaction volume decreased by 4.9% on a quarter-over-quarter basis. There has been a surge
in land deals in Johor Bahru since 2022. Both local and international direct investments have
grown, as has the number and value of property transactions. The Johor Bahru property market
has stabilized and moving forward.

Secondly was the market value of property, the actual price on which the transaction
happens of a particular property. Demand for landed house remains strong. The take-up rate
is 30% to 100%, most 2-storey terraced houses are priced from RM 700,000 to RM 900,000
each. The rental demand for Johor Bahru homes has increased due to high rents in Singapore.
Some rentals have increased more than 50% from 2021 levels. Buyers are looking to benefit
from an upcoming railway shuttle link with Singapore. The RTS Link seeks to improve
connection between Singapore and Johor by offering a cutting-edge and effective transit
system. It’s started from Bukit Chagar Station in Johor Bahru, Malaysia to Woodlands North
Station in Singapore. The link will be able to handle 10,000 people per hour, per direction. It is
anticipated to serve 40,000 people a day when it opens. Building Immigration, Customs, and

17
Quarantine (ICQ) facilities adjacent to the Bukit Chagar Station in Malaysia is part of the
project. Similar facilities for Customs, Immigration, and Quarantine (CIQ) will be available
at Woodlands North Station, Singapore. Notably, passengers border crossing procedures will
be streamlined by having both the Singaporean CIQ and Malaysian ICQ facilities co-located
in the same structure.

Further, were the attractive things that increase the property value in Johor Bahru such
as amenities and facilities. The city of Johor Bahru, which is expanding quickly, provides a
range of amenities that enhance the general standard of living for its citizens and draw in
investors. These facilities cover a variety of industries, such as healthcare, education,
transportation, and recreation. The first one is education facilities colleges and institutions.
Johor Bahru is home to a few colleges and institutions that offer educational opportunities to
students, including Universiti Teknologi Malaysia (UTM) and Raffles University Iskandar.
Johor Bahru also has healthcare facilities such as Gleneagles Medini Hospital and Hospital
Sultanah Aminah (HSA).

The third one is commercial facilities. With a plethora of retail, dining, and
entertainment options, Johor Bahru is home to several shopping malls, including Johor Bahru
City Square, Paradigm Mall, and Mid Valley Southkey, and some businesses hubs attracting
companies and investors. Residents can do exercise activities at the recreational facilities
provided. Johor Bahru has parks and green spaces such as Hutan Bandar Recreation Park, that
offer spaces for leisure and outdoor activities. Theme parks like Legoland Malaysia, Angry
Birds Activity Park, and Danga Bay offers many interesting things like family-friendly theme
park with exciting rides, water attractions and a Lego-themed hotel. Danga Bay is a
waterfront area featuring dining options, recreational space, and night market. Plus, fans of
golf can enjoy a variety of golf courses, such as Horizon Hills Golf & Country Club.

18
 Figure 1: Map showing SR Boundaries and DLC Boundaries of Johor Bahru city.

The number of overhang units in Johor Bahru has decreased from 7,030 in 2020 to 4,717
in 2023. The median list price for residential property in Johor Bahru is RM 430,000, with
median per square foot of RM 311. Here are a few Johor Bahru property listings:

Property type Price

5-bedroom bungalow RM 691,000
4-bedroom condominium RM 648,000
5-bedroom cluster homes RM 729,000
3-bedroom serviced residence RM 371,000

Table 1: Property type and their prices

19
 Figure 2: Johor Bahru median per sq. ft. from August 2022 – July 2023

Johor Baru's property market is expected to expand when borders were reopened in the
first half of 2022. Most pandemic restrictions have been withdrawn as the nation moves into
the Covid-19 endemic phase, allowing fully vaccinated travellers to pass the Malaysia-
Singapore border without testing or quarantine. This element is essential to the growth of the
real estate sector in Johor. Presenting The Edge, KGV International Property Consultants
Johor Baru Housing Property Monitor 1Q2022, executive director Samuel Tan of KGV
International Property Consultants (Johor) Sdn Bhd observes that following two years of the
Covid-19 onslaught, the nation has made significant progress toward economic recovery.

A physical survey was used to identify factors in the case studies that were done, and
valuers and builder’s responses were used to determine the relevance of the discovered
characteristics as well as current property trends in Johor Bahru.

20
Johor Bahru Property Insights on EdgeProp.my. EdgeProp.my. (n.d.),
https://www.edgeprop.my/area-outlook/johor/johor-bahru , accessed 1 December 2023.

Johor Bahru Residential Transaction Prices - iProperty.com.my. (n.d.),

https://www.iproperty.com.my/transaction-price/residential/johor/johor-bahru-
mycty_52038/terrace-house/ , accessed 30 November 2023.

Mohan, M. (2021, 21 July 21). RTS link will improve connectivity between Singapore and
Johor, further strengthen ties: Iswaran. CNA.
https://www.channelnewsasia.com/singapore/rts-link-johor-singapore-woodlands-
north-terminus-johor-sultan-site-visit-iswaran-2825876 , accessed 1 December 2023.

MRT Corp. (2023, November 27). RTS LINK - MRT Corp. MRT Corp - the Official Website
of Mass Rapid Transit Corporation Sdn Bhd (MRT Corp), the Developer of Klang Valley
MRT. https://www.mymrt.com.my/projects/rts-link/ , accessed 1 December 2023.

AECOM. (2023, May 19). The Johor Bahru–Singapore Rapid transit System | AECOM.
https://aecom.com/projects/the-johor-bahru-singapore-rapid-transit-system/ , accessed 1
December 2023.

21
V. DATA COLLECTION

Johor Bahru, often referred to as JB, is a bustling city in the southern part of
Malaysia. It is known for its rich history, diverse culture, and delicious food. The city is a hub
of economic and cultural activity, which makes it an excellent place to live. From shopping
malls to theme parks, Johor Bahru offers something for everyone. Like any other place, Johor's
property values are determined by a confluence of social, economic, and environmental
factors. The real estate market is ever-changing, with multiple factors influencing the increase
or decrease in property values. The one of the factors is urbanization and population growth.
The rate of population expansion and urbanization may have an impact on housing demand.
The demand for housing may rise as more individuals relocate to urban regions like Johor
Bahru in search of better job prospects and lifestyles, which would affect property values.
The research method is divided into two, namely the primary method and the
secondary method. In addition, research methods are also divided into quantitative and
qualitative methods. Quantitative methods involve numbers and statistics. Qualitative
methods involve words or interviews. Secondary research, sometimes referred to as desk
research, is the use of pre-existing data or information that has been gathered for a different
reason by another party
This thesis seeks to identify the variables that affect property values and determine the
nature of the relationship between these variables and property value in Johor, Malaysia. The
main conclusions from the completed case studies are covered in this chapter. The entire
chapter provides an explanation of how data is gathered and key indicators that have an
impact on property prices are chosen.

5.1 Property Transactions

Valuers, brokers, real estate agents, and the Registration and Stamping Department
provided a variety of data that was gathered to examine the housing trend and transactions that
occur in the Johor Bahru housing market.

22
 Tan reports that the volume and value of residential property transactions increased by
43% and 57%, respectively, in the first quarter of 2023. While transaction value increased
5.1% in 1Q2023 compared to a 4.9% quarterly decline in residential transaction volume.
In 4Q2022, seven new landed residential developments with two-story terraced and
two-story semi-detached residences were launched. These developments were in Mukim
Pulai, Mukim Tebrau, and Mukim Plentong. Tan claims that there is still a high demand in
Johor Baru for landed homes.
Considering that it was only introduced a few months ago, the healthy [take-up] rate of
30% to 100% illustrates this. Most two-story terraced homes currently range in price from
RM700,000 to RM 900,000. Terraced homes in the prior "sweet spot" of RM500,000 to
RM600,000 seem to be getting harder to come by, according to Tan.
It's also noteworthy to observe that developers are beginning to introduce larger landed
property types, like semi-detached and two-story cluster homes, with an increasing amount of
confidence. The larger units are selling well as well; some are even completely sold out. This
reflects the return of the feel-good vibe following the most trying moment in the previous three
years.
On the other hand, Johor Baru's property overhang has proven to be a persistent
problem, particularly for residential high-rises. Completed homes that haven't sold in over
nine months are referred to as "overhang" in this context.

23
 Tan has gathered information on all kinds of high-rise residential properties in Johor
Baru, such as SoHos, flats, serviced apartments, and condominiums. In 1Q2023 the overhang
number increased 4.9% QoQ from 16,799 in 4Q2022 but decreased 8.6% y-o-y to 17,625,
from 19,285.
Perhaps it is still too soon to declare that Johor Baru's real estate market is
experiencing a significant upturn based on the data. However, with the historic Covid-19
outbreak, the worst is probably gone. With encouraging transaction volume and value,
reasonably controlled incoming supply, and overhang figures, the real estate market has
bounced back from its low point.
Tan emphasizes, "Hopefully, before starting a high-rise residential building, the
developers and authorities would be more cautious to avoid the supply and demand mismatch
as a result of "wrong pricing," "wrong product," and "wrong time."
Conversely, he claims that this quarter has seen a robust and lively rental market in Johor
Baru. "With regard to landed houses, we observed that a few well-liked housing estates with
easy access, particularly to the Second Linkway, like Bukit Indah and Horizon Hills,
registered a growth rate that was higher than average, ranging from nearly 10% to over 5%."
In 1Q2023, the rent for a 1,400 square foot, two-story apartment in Horizon Hills
increased to RM2,400 from RM2,200 in 4Q2022. In a same vein, the monthly rent for a 2,400
square foot, three-story semi-detached apartment increased to RM3,200 in 1Q2023, up from
RM3,000 in 4Q2022.
Tan states: "High-rise apartment rental rates went up from 1.5% to 10.3% overall." We
have seen that since borders have reopened, high-rise apartment rentals have been rising.
The monitor shows that the monthly rental of a 750 square foot serviced apartment unit
at The Sky Executive Suites at Bukit Indah increased to RM1,500 in 1Q2023, up from
RM1,300 in 4Q2022.

5.2 Johor Bahru Property Transactions Snapshot

All data shown is based on a maximum of 12-month – From Aug 2022 to Jul 2023

Median price Median price per sq.ft. (psf)

RM 430,000 RM 310/sq. ft.

7.5% YoY 5.96% YoY
Lower: RM 320,000 Lower: RM 250
Upper: RM 550,000 Upper: RM 383

PSF
01 AUG 2022 176
01 SEP 2022 179

24
01 OCT 2022 177
01 NOV 2022 179
01 DEC 2022 170
01 JAN 2023 177
01 FEB 2023 171
01 MAR 2023 179
01 APR 2023 193
01 MAY 2023 200
01 JUN 2023 185
01 JUL 2023 159

25
5.3. DLC Rates and Market Price

‘DLC (District level committee) Rates ’, is the land valuation rate which is based on
the average rates laid down by the District level committee (DLC) for registration of sale deeds
under stamps and registration act.
The maps below shows the variation of the DLC rates in the DLC zone. The maximum
value among the maximum value of each DLC zone is in Iskandar Malaysia, situated on the
southern corridors of the state of Johor, has become one of the most exciting township
developments in Malaysia since its inception in 2006. The 2,300-sq km township sits on a
prime location of being just minutes away from the Malaysia-Singapore Second Link, which
makes traveling to neighboring country Singapore easy.

Due to its strategic location, Iskandar Malaysia, which is three times the size of
Singapore has attracted many foreign companies who want to tap into its vast lands and
affordable operating costs to build manufacturing facilities and offices in the township.
As of September 2022, Iskandar Malaysia has accumulated foreign investments of RM375.70
billion with future plans to set up a specialized financial zone that will bring even more job
opportunities to the locals.

On the lifestyle front, the township offers various amenities of global standards including
an education hub consisting of international schools, private healthcare service, shopping and
entertainment destinations such as the Johor Premium Outlet as well as Legoland Malaysia
Iskandar Malaysia was initially identified as one of the five key areas for development to spur
economic activities in the country under the Ninth Malaysia Plan (2006 – 2010). The
government aims to transform Iskandar Malaysia into “a strong and sustainable metropolis of
international standing” by the year 2025.

The township is divided into five flagship development zones that comprise of Johor
Bahru City Centre, Iskandar Puteri, Western Gate Development, Eastern Gate Development
and Senai-Skudai.
In 2019, it was announced that there are plans for expansion for Iskandar Malaysia to cover
areas including Kluang, Kota Tinggi, Pontian, Simpang Renggam, Renggam, Pengarang and
Desaru that will reach a total size of 4,749 sq km – around double of its current size.

26
 Thirdly collected was the Market value of the property, the actual price on which the
transaction happens of a particular property. Usually, this market value is very high as
compared to the DLC rates available. This was collected from the various real estate brokers
and a valuer available is that particular zone.
The map below shows the maximum and minimum market value range with a given
DLC zone. The DLC having the minimum value in the minimum value range is in Nala area
DLC of Johor Bahru region whereas the maximum value in the maximum range is of Johor
Bahru . Johor’s property market is finally seeing some signs of recovery, with the majority of
new launches (604 units) located within the state in the first quarter of 2022, data from the
National Property and Information Centre (NAPIC) showed.

Of the total of 2,961 units launched across the state of Johor, Melaka, Selangor and
Pahang, 164 units (5.6 per cent) were sold.

The majority of them (2,657 units or 90.5 per cent) were landed properties
while the remaining 279 units (9.5 per cent) were high-rise apartments.

Landed homes proved to be popular across these states with 164 units sold (6.2 per
cent) out of the 2,657 units launched.

5.4 DLC Rates Vs Market Value

The DLC rates are an essential guideline for the assessment of the calculation of stamp
duty. The Stamp Duty and Registration Fees are to be valued at the prescribed market rates
as per the provisions of the relevant Act/Rules and Departmental instructions. The non-
compliance of the relevant Act/Rules and Departmental instructions by the SRs resulted in
a short levy of Stamp Duty and Registration Fees. Stamp Duty is payable at the time of
transfer agreement according to the DLC Rates. In this document price of each land is
decided by revenue department of state government depending on its Location. Stamp Duty

27
is the fixed percentage of tax payable to the government on registration of each property
ownership transaction.

Table 4: Market price Vs DLC Rates

SR Zones Market Price Vs DLC Price

SR-1 4.64
SR-2 4.92
SR-3 5.51
SR-4 5.31
SR-5 4.38
SR-6 4.78
SR-7 3.55
SR-8 5.64
SR-9 3.58
SR-10 8.92
SR-11 8.82
5.5 Inference

As the comparison table (Annexure1) above shows that prevailing market rates
as well as market rates of 2012 are 6 times higher than the DLC Rates with maximum
variation seen in Peripheral areas such as SR-10 and SR-11 because the growth is in
that particular direction of the city rather than Amer which is also in periphery but is
restricted by mountains. The DLC 2012, made effective from 01-04-2012 which was
prepared as on market situation of 2011.Hence, DLC still needs to be updated to get
exact current market prices of the property. With the latest computer technology, it is
possible to come to very close to realistic price of each and every plot of land within
identified value zone, which will help to make the new and updated DLC Rates very
scientific and simple in use and will not burden the end user

28
VI. ANALYSIS
A qualitative and quantitative analysis is done from the data collected in the following areas:

 Identifying the factors that have major positive and negative impacts on the value of the
property.
 Computing price variation for undertaken case studies
 To find out the significant effect of each factor on the value of the property at:
Neighbourhood Level
City Level
Statistical Analysis of Property Values

6.1. Neighbourhood Level

Statistical methodology: Stepwise Linear Regression Analysis.

Dependent variable: Property Price in Rs./Sq.mt

Independent Variables Land use, Distance to main road, Quality of Air pollution,
Traffic congestion, Distance to Kindergarten, Distance to School, Distance to office, Distance
to temple, Distance to hospital, Distance to Police office, Distance to Park, Distance to
convenient shopping, Distance to Bus stand, Distance to metro and auto stand. We have
considered that the following factors may or may not affect the value of the property. As we
move close to the following factors the property values will: +ve: increase or -ve: decrease.

So, first correlation analysis is performed and then regression analysis is performed to
understand the effect empirically.

Correlation Analysis

A correlation analysis attempts to understand the relationship between various factors

and their influence on property values. The basic objective of this exercise is to determine the
parameters that affect the property values of residential properties within the JMC limit of
Johor Bahru City. The exercise is done to see what variables are responsible for the impact on
property values within the study area and to what level.

29
 Table 5: Variable significance at Neighborhood level

Independent Variables (+ve or -ve value) Significance

LANDUSE Negative Significant
DIST_MAINRD Positive Significant
TRAFFCONGES T Negative Non-Significant
DIST_KG Negative Non-Significant
DIST_SCH Positive Non-Significant
DIST_OFFC Positive Non-Significant
DIST_TEMPLE Positive Non-Significant
DIST_HOSP Positive Significant
DIST_RECREAT Positive Significant
DIST_PO Positive Significant
DIST_PARK Negative Significant
DIST_SHPG Positive Significant
DIST_PARTY PLOT Negative Non-Significant
DIST_BS Positive Non-Significant
DIST_METRO Positive Significant
DIST_AUTO Positive Non-Significant

The correlation matrix is compiled to determine the correlation variables' shape and
statistical significance level. Only the most significantly correlated variables were used for
further analysis which is for regression analysis.

Inference: From the correlation matrix (Appendix 3) except for distance to easy
shopping, recreation zone, and metro station no other factors show a significant correlation
with current property prices. Therefore, the results show no significance after carrying out
correlations so we further expanded our research and requirements, and regression analysis was
performed for further data sets.

30
Stepwise Linear Regression Analysis

Stepwise regression was conducted on the entire data set. Here we can consider the Property
value as the dependent variable (Y) and all factors as an independent variable (X). This
stepwise regression was run in the SPSS program, this is to eliminate non-significant variables
at the first stage automatically and further divide variables into the model that gives the most
appropriate results Therefore the model with the maximum number of significant variables
with the highest value of R2 is achieved. This process is carried out for the data set.
Neighborhood level, to achieve significant results. The table shows the results of four models.

Table 6: Results of Regression at Neighborhood level

Model
Summary
Model R R square Adjusted R Std.
Square Error of
the
Estimate
.734a .539 .534 154.239
dimension0 .824b .679 .671 129.560
.877c .769 .761 110.370
.886d .785 .775 107.267
a. (Constatant), DIST_METRO
Predictors:
b.Predictors (Constant), DIST_ METRO,DIST MAINRD
: _
c.Predictors (Constant), DIST _METRO,DIS _MAINRD,DIST RECREA
T _ T
d.Predictors (Constant),DIST_MET ,DiST_MAINR DIST_RECREAT DIST_
: R TEMPLE

Of the models mentioned above, Model 4 is used to be the most prominent model. This
is because R2 = 0.785 which means the model shows 78% of the variation in property value
due to this variable, Distance to the Metro Station, Distance to the main road, Distance to the
Temple, and Distance to the Recreation area.

31
The equation we get here is:
Property Price (Y) = 234.98 + 0.180*(D_Metro Station)

+ 1.25* (D_Main Road) +0.284* (D_Recreational)

+.197*(D_Temple)

Equation 1: Regression equation for factors affecting property value at the neighborhood
level.

This equation shows the significance of individual independent variables, and a t-test
is performed. The results show significant results for all 4 selected factors. After reaching the
results from the correlation and regression analysis, we can say that they do not fully match the
supposed assumptions and the results cannot be concluded. Therefore, a clear decision cannot
be reached that can help us analyze the effect of the considered factors on the value of the
property. Now to get a clearer result about these factors and to understand the impact and check
their importance spatially, the Geographically Weighted Regression (GWR) method in GIS is
used for detailed analysis.

32
6.2 City Level
Statistical methodology: Correlation and Regression Analysis.

Dependent variable: Property Price in Rs./Sq.mt

Independent variable: Distances from open area, Distances from Airports, Distances
from Train station, Distance from Mall, Distance from Highway, Distance from Historical Sites
and Distance from Hotel. We have thought about the fact that the following elements may or
may not have an impact on the property’s value. When we approach the following variables,
the property values will either -ve or +ve. Thus, the relationship and the purpose of regression
analysis is to determine the impact practically.

Correlation Analysis
An attempt is made to comprehend the relationship between the various elements and
how they affect the values of the properties using a correlation analysis. The principal aim of
this the task is to determine what additional factors influence the residential properties' property
values within cities the JMC limit of Johor Bahru city. The purpose of the exercise is to
determine which variables within the research area have an impact on property values.

Table 7: Significance of variables at city level

Independent Variables (+ve or -ve value) Significant / Non-Significant

DISTOPENAREA Positive Significant
DIST_AIRPORT Positive Significant
DIST_TS Positive Significant
DIST_MALL Positive Significant
DIST_HIGHWAY Negative Non-significant
DIST_HSTRYSITES Positive Significant
DIST_HOTEL Positive Significant

To determine the correlated variables and their level of statistical significance, a

correlation matrix is created. For regression analysis, for example, only substantially
correlated variables are considered for additional analysis.

33
Inference: Based on the correlation matrix (Annexure 5), all other factors—aside from
proximity to open space, historic buildings, and highways—show a strong link with the price
of a property today.

However, we will extend our research and perform regression analysis on the dataset in
order to validate the outcome.

Linear Regression Analysis

For every data set containing city level parameters, a stepwise regression has been
performed. Considering all other aspects as independent variables (X) and property values as
dependent variables (Y).

When stepwise regression is used in the SPSS program, the non-significant variables
are automatically eliminated at the first stage, and the variables are then further divided into
models that produce the best fit outcome. This results in a model that has the greatest number
of significant variables and a high R2 value.

To get noteworthy outcomes, this procedure is applied to the dataset at the city level.
Four models' results are displayed in the table.

Table 8: Regression result for variables at city level.

Model summary
Model R R Square Adjusted R Std. Error of
Square the Estimate
Dimension0 1 .743a .552 .547 160.409
2 .859b .738 .732 123.363
3 .905c .820 .813 102.930
4 .910d .828 .820 101.018
a. Predictors: (Constant), DIST_HSTRYSIDES
b. Predictors: (Constant), DIST_HSTRYSIDES, DIST_TS
c. Predictors: (Constant), DIST_HSTRYSIDES, DIST_TS,
DIST_AIRPORT
d. Predictors: (Constant), DIST_HSTRYSIDES, DIST_TS,
DIST_AIRPORT, DIST_HOTEL

34
 Of the models listed above, Model 4 is regarded as the most significant because of its
R2= 0.828, which indicates that these four variables: Distance to the Airport, Distance to
History Sites, Distance to Train station, and Distance to Hotel account for 83% of the
variation in property values.

The equation we get here is:

Property Price (Y) = 89.340 + 0.141*(D_Airport) + 0.179*

(D_HSTRYSITES) +0.143* (D_Train Station) + .095* (D_Hotel)

Equation 2: Equation showing relation between factors affecting and property value.

We might conclude that the correlation and regression analysis results do not fully
support the underlying hypotheses, and that the outcome was inconclusive. As a result, a
definitive outcome that could aid in analysing the impact of the factors taken into
consideration on property values is not obtained.

Table 9: Breakdown Of Value of Residential Property Transactions

According to Type
Property Type Quarter RM Billion
Vacant Plot Q3 2021 46.07
Q2 2022 51.27
Q3 2022 37.82
Single Storey Terrace 159.49
210.63
268.71
2 - 3 Storey Terrace 419.92
614.62
852.80
Single Storey Semi-Detach 10.61
16.12
22.34
2 - 3 Storey Semi-Detach 94.71
88.55
140.52
Detach 86.26
123.18

35
 105.98
Condominium/Apartment 148.50
138.15
175.13
Cluster House 73.34
100.24
132.01
Town House 3.66
8.86
12.63
Flat 10.49
12.36
15.43
Low-Cost House 53.37
73.59
86.64
Low-Cost Flat 25.31
23.77
26.37
Others 0.00
1.99
0.00
Total 1,131.74
1,463.33
1,876.37

Based on table 9, vacant plots in Q3 2021 show a value of RM 46.07 billion. In Q3

2022 it shows an increase of RM 5.2 billion to RM 51.27 billion. Q3 2022 is RM 37.82
billion. Single Storey Terrace is RM 159.49 billion in Q3 2021 increasing to RM 210.63
billion in Q2 2022. An increase of RM 51.14 billion. For Q3 2022, it is RM 268.71 billion. 2-
3 Storey Terrace is RM 419.92 billion in Q3 2021 increasing to RM 614.62 which is an
increase of RM 194.70 billion. In Q3 2022, it will be RM 852.80 billion. Single Storey Semi-
Detach was RM 10.61 billion in Q3 2021 and increased to RM 16.12 billion in Q2 2022,
while in Q3 2022 it was RM 22.34 billion. 2-3 Storey Semi-Detach in Q3 2021 was RM 94.71
and increased to RM 88.55 billion in Q2 2022. Q3 2022 showed RM 140.52 billion. The

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 detach type property is RM 86.2 billion in Q3 2021 increasing to RM 123.18 billion in Q2
2022 and then RM 105.98 billion in Q3 2022. For condominium/apartment houses, RM
148.50 billion in Q3 2021, increased to RM 138.15 billion in Q2 2022, and then increased to
RM 175.13 billion in Q3 2022. Cluster House is worth RM 73.34 billion in Q3 2021, and
increased to RM 100.24 billion in Q2 2022, and then RM 132.01 billion in Q3 2022. Town
House on the other hand was RM 3.66 billion in Q3 2021, increased to RM 8.86 billion in Q2
2022, and then became RM 12.63 billion in Q3 2022. Flats were worth RM 10.49 billion in Q3
2021, increased to RM 12.36 billion in Q2 2022, and increased to RM 15.43 billion in Q3
2022. Low-Cost House in Q3 2021 was worth RM 53.37 billion, increased to RM 73.59
billion in Q2 2022, and increased to RM 86.64 billion in Q3 2022. Low-Cost Flat in Q3 2021
was worth RM 25.31 billion, increased to RM 23.77 billion in Q2 2022, and increased to RM
26.37 billion in Q3 2022. There is no property value recorded in Q3 2021 and Q3 2022 for
other properties, only the value in Q2 2022 which is RM 1.99 billion.

Table 10: Comparison Table

SR Zone Predicted value/DLC Predicted Value/Market

Value
SR 1 7.48 0.83
SR 2 5.41 0.90
SR 3 48.48 0.91
SR 4 12.58 1.01
SR 5 14.65 0.83
SR 6 35.70 0.87
SR 7 47.18 0.92
SR 8 11.16 0.92
SR 9 58.61 0.91
SR 10 258.46 0.96
SR 11 294.57 0.94
Total 72.21 0.91

Following the calculation of all three values—market value, or the price at which the property
was purchased, DLC value, or the value of the property based on ASR rates, and predicted
values—for the surveyed properties (Annexure) after obtaining the equation for determining
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the value of the property.

Upon evaluation, it was found that PV exceeded the DLC value by an average of 72 times. This
could be the result of different property values from market prices, or it could be the result of
other factors being added to or removed from the list of chosen factors. The peripheral areas,
like SR 10 and SR 11, exhibit the greatest difference. This is primarily due to the upcoming
new development in these areas, as well as the recent land release by JDA. Over time, these
areas may yield high returns, in contrast to areas like SR-1 and SR-2, where land is scarce, and
prices are high.

In addition, there is a difference in SR 3 and SR-7, which are also in the periphery. However,
this gap is not as great as it is in SR-10 and SR-11 because development in these areas began
a long time ago, which resulted in somewhat expensive costs that may be beyond the means of
many people.

In all Sub registrar zones, the discrepancy between the Market value and the Predicted value
(Annexure) is quite constant and doesn't change significantly.

Consequently, it is evident that the DLC revision is more necessary in the outlying districts
than in the city's core, where the average difference is 250 times greater than it is in the latter,
which is only 10 times.

This could be the result of differences in property valuations from market prices or the inclusion
or exclusion of other criteria from the list of chosen factors.

In order to gain a more comprehensive understanding of these determinants, as well as to assess

their spatial significance, a detailed study using the Geographically Weighted Regression
(GWR) approach in GIS is being conducted.

Property Sales Data - Q3 2022. NAPIC. (2022). https://napic.jpph.gov.my/portal

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VII. CONCLUSION
The process of determining property values in Johor Bahru, Malaysia, is complex and
influenced by a multitude of factors. these determinants. Many significant factors contribute to
shaping property values in this area. To begin with, the location of a property is a crucial factor
that significantly influences its value. The proximity of a property to essential amenities like
educational institutions, medical facilities, commercial centers, and transportation hubs plays
a pivotal role in determining its worth. Properties situated closer to the city center or areas with
convenient access to major highways tend to have higher price tags because of the convenience
and connectivity they offer.
The economic factors in Johor Bahru play a significant role in determining the value of
properties. The stability of the economy, the potential for growth, and the availability of
employment opportunities all directly impact the demand for real estate in the area. When
industries flourish and job opportunities multiply, the demand for housing inevitably increases,
leading to a subsequent effect on property values.
Furthermore, the development of infrastructure holds immense importance in shaping
the value of properties. Government efforts like enhancing transportation systems, revitalizing
urban areas, or building new facilities have a profound impact on property valuations. The
enhancement of infrastructure not only improves the ease of accessing different areas but also
enhances the overall quality of life, thereby resulting in a considerable increase in property
values within the vicinity.
The sentiment prevailing in the market and the way investors perceive the situation hold
significant importance in the realm of real estate. Speculating and the confidence of investors
can cause significant fluctuations in property values. Several factors, such as foreign
investments, the current trends in the market, and the policies implemented by the government
concerning real estate ownership, possess the ability to influence how properties are perceived
in terms of their value and desirability.
The condition of the property plays a crucial role in determining its value, along with
other factors such as its age, size, and any distinctive features it may have. The value of a
property can be influenced by renovations, upkeep, and its overall visual appeal.
The impact of environmental factors on property values extends beyond just aesthetics.
Factors like the surrounding views, proximity to parks, and the presence of green spaces all
play a significant role in determining the desirability and the value of properties in Johor Bahru.
The city's abundant natural beauty and the availability of picturesque landscapes further
enhance the attractiveness of these properties, making them highly sought-after in the real
estate market.
Additionally, cultural shifts and changing lifestyle preferences influence the demand
for specific types of properties. For example, the growing trend towards sustainable living has
resulted in an increased demand for eco-friendly homes and energy-efficient buildings. This
shift in consumer preferences has not only affected property values but has also led to the
development of green communities and eco-friendly neighborhoods. Moreover, the desire for
modern amenities has become a crucial consideration for many potential buyers. With
advancements in technology and an increasing emphasis on convenience, properties equipped
with state-of-the-art features and smart home systems are highly sought after. This demand for

39
modern amenities has led to a rise in property values for homes that offer these desirable
features. Furthermore, societal changes, such as the rise of remote work and the increasing
importance of work-life balance, have also impacted the real estate market. With more
individuals opting for flexible work arrangements, the demand for properties in suburban or
rural areas has grown. People are now prioritizing larger homes with home offices and outdoor
spaces to accommodate their changing work habits and lifestyle choices. In conclusion, various
societal and demographic factors have a significant impact on the real estate market. One of
the key factors is population growth, which directly affects the demand for properties. As the
population increases, the need for housing also rises, leading to a surge in property values. In
summary, the real estate market is influenced by a myriad of societal and demographic changes.
Population growth, cultural shifts, and changing lifestyle preferences all contribute to the
demand for certain types of properties and subsequently impact property values. It is crucial
for real estate professionals to stay informed about these evolving trends to better understand
and cater to the needs of potential buyers and sellers.
To summarize, the process of determining property values in Johor Bahru is a
multifaceted and intricate one. Various elements such as the location of the property, the overall
economic stability of the area, the quality of infrastructure, the prevailing market sentiment,
the condition of the property itself, any environmental considerations, and even societal
changes all come together to influence the real estate landscape. It is imperative for
stakeholders to grasp these factors to make well-informed decisions within the constantly
evolving property market of Johor Bahru.

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VIII. SUGGESTION AND RECOMMENDATIONS
Property valuation is a crucial process that involves determining the monetary worth of
a real estate asset. In the context of Johor Bahru or any real estate market, various valuation
methods are employed to access the value of properties. These methods encompass traditional
approaches, modern techniques, and a blend of both to provide a comprehensive understanding
of a property’s worth.

The value of a property depends on various factors, such as location, size, condition,
amenities, market trends, supply, and demand, etc. So that

One way to estimate the value of a property is to use the fair market value, which is the
amount that a willing buyer would give to a willing seller in an arms-length transaction. Market
research also be a crucial process to staying informed about local market trends, demand-
supply dynamics, and economic indicators. Regular research contributes valuable insight to the
property valuation process.

Another way to estimate the value of a property is to use the cost approach, which is the
cost of acquiring a similar land and constructing an identical building on it. The cost approach
involves determining the property’s value by assessing the cost of reproducing or replacing it,
accounting for depreciation. This method is often employed for newer or unique properties in
JB.

A third way to estimate the value of a property is to use the value in use, which is the
value that the property generates for its owner or user. Commonly used in property
development, residual valuation estimates a property’s value based on the projected future
income it will generate, minus the cost associated with development.

Consulting real estate professionals is another way to estimate the value of a property.
Seek advice from local real estate agents and experts. They have firsthand knowledge of the
market and can offer insight into current trends and property values in the specific location.

Government assessments also be the other suggestion to estimate the value of a

property. This way reviewing local government assessment and property tax records can offer
insight into the valuation methods applied. Understanding how authorities assess property
values contributes to a comprehensive valuation strategy.

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 Some of the factors that can increase the value of a property are good location,
proximity to public transport, schools, shops, parks, spacious rooms, natural light, modern
design, energy efficiency, security, parking, etc.

Some of the factors that can decrease the value of a property are poor location, noise,
pollution, crime, lack of amenities, small rooms, dark or damp conditions, outdated or damaged
features and high maintenance costs. At Johor Bahru, some of the areas that have high property
values are Iskandar Puteri, Medini, Danga Bay, Tebrau and Skudai.

Some of the strategies for managing educational facilities infrastructure, which can
affect the property values of nearby areas, are establishing a condition survey, appointing
realistic costs to needs, establishing standards, convincing authorities, ensuring financing,
ensuring adequate management, and reviewing performance.

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