Johor’s proximity to Singapore and lower living costs have always been an attractive proposition for Singaporean investors.
With a slew of infrastructure improvements coupled with the completion of mega developments, Malaysia continues to lure investors despite weak market sentiments.
By Michelle Yee
Despite the challenging market conditions and slowing economy caused by several factors such as the Trump presidency, Brexit, the outlook on oil prices, the weakened ringgit and more, investors looking for investment opportunities can still expect to find good deals in Malaysia, namely in
Iskandar, Kuala Lumpur and Malacca, experts said.
“Iskandar is a top performing region in attracting economic investments in Malaysia. This has primarily been from manufacturing and logistic firms setting up shop here, using Iskandar as a back office or manufacturing hub, while using Singapore as a front office. Other sectors have also welcomed investments to Iskandar, such as healthcare, finance, tourism, education and more. Over RM150 billion in investment commitments were made in Iskandar by 2015, with more slated to come.
“The two biggest catalysts, however, are the High Speed Rail (HSR) and the Johor Bahru Singapore Rapid Transit System (RTS), which will remove the connectivity bottlenecks. The biggest beneficiaries will be Iskandar, followed by Singapore and then Kuala Lumpur, as people movement will improve, and so will trade and commerce. Investors looking at Iskandar Malaysia are basically looking at this, which is a permanent positive to the region,” shared Ryan Khoo, Director at Alpha Marketing, a real estate research and investment consultancy that specialises in the Singapore and Malaysia markets with a particular emphasis on Iskandar Malaysia.
YY Lau, Country Head of JLL Malaysia), also agrees that there are many opportunities to be sought in both Iskandar and Malacca, thanks to the upcoming HSR. “The potential capital appreciation arising from the proposed HSR that will traverse past Malacca to Iskandar is also another factor that has attracted foreign investor interest in these two states,” she said.
While some might be sceptical about Iskandar’s future, experts say it is well on track to achieving what it set out in 2006 – to turn South Johor into a flourishing economic zone with three million people, 1.46 million jobs, and a GDP of US$93.3 billion by 2025.
An Iskandar Regional Development Authority (IRDA) spokesman said the area’s population has increased by 39 percent, from 1,297,000 in 2008 to 1,805,000 in 2013, and is well on its way to hitting the three million target by 2025.
Furthermore, the project has achieved around half of its goal of attracting RM383 billion of investments, driven by the manufacturing sector which accounts for about RM52.10 billion of committed investments to date. This translates into steady demand for industrial space.
Looking ahead, experts foresee foreign buyers continuing to invest in Iskandar properties, propelled by affordable prices, improved infrastructure and the enhancement of connectivity.
“In the short term, this is likely the Chinese who are looking for alternative investments overseas, attracted by the low prices, proximity to Singapore, as well as the confidence given by Chinese developer presence in Iskandar. In the medium- to longterm, we foresee Singaporean buyers returning because once the HSR and RTS connectivity links are in place, travelling time will no longer be an issue, and the Singapore economic spillover effect can occur. This could be in the form of Singaporeans buying a weekend home or retirement home in Iskandar. That said, a large portion of demand might also come from Malaysians working in Singapore – as buying properties in Singapore is relatively expensive, furthermore, they do not enjoy government subsidies,” Khoo said.
Adding to this, the Sultan of Johor was quoted as saying in a recent interview, “Once the links are in place, it will become the norm for Singaporeans to live in Johor and work in Singapore. That is the future.”
Why invest in Iskandar?
Top performing economic corridor in Malaysia
“Due to its proximity to Singapore, Iskandar Malaysia is the most successful out of the five economic corridors in Malaysia. Latest figures from Iskandar Regional Development Authority (IRDA) show that Singapore is the top foreign investor followed by China, the US, Spain and Japan. The total cumulative investment from 2006 to October 2015 is now RM78.53 billion, with the manufacturing sector leading the way at RM50.82 billion,” said Khalil Adis, Founder of property consultancy firm Khalil Adis Consultancy, and a best-selling co-author of Get It Right, Iskandar – the first book ever written on investing in Iskandar Malaysia.
Medical tourism set to boost economy
Johor looks set to follow South Korea’s footsteps to become the next medical tourism destination in ASEAN.
“Medical tourism is a growing segment in the region, and with the right marketing and promotion activities, Iskandar Malaysia can emerge as the leading medical tourism destination in ASEAN,” Johor Head, Mohamed Khaled Nordin, was quoted as saying recently.
“Plastic surgery in South Korea is a multi-million dollar business attracting not only South Koreans but also foreign tourists. Both men and women who underwent plastic and reconstructive surgery procedures in South Korea were those with high spending power.
“We are looking at the middleclass group from Indonesia and India, and even Singaporeans with a strong purchasing power to come to Iskandar Malaysia as medical tourists,” he added.
Mohamed Khaled said that for years, many middle-class Indonesians went to Singapore to seek medical treatment at private hospitals although the cost was much higher compared with Malaysia. “Johor Bahru’s proximity to Singapore is an advantage in attracting the middle-class Indonesians to come for treatment at Iskandar Malaysia,” he said.
With the HSR linking Kuala Lumpur to Singapore set to commence operations sometime around 2025, and the RTS expected to come online in 2019, Singaporean investors will find it much easier to commute to and from Johor. In addition, Malaysians who would like to work in Singapore to earn in Singapore dollars but spend in Malaysian ringgit can live in Johor and commute to and from Singapore. The HSR and RTS are also expected to push up prices of property in Iskandar and Johor Bahru.
Meanwhile, the Bus Rapid Transit (BRT) lines are expected to commence their services soon with the interchange station at Bukit Chagar.
“The interchange station will feature a dedicated bus lane with three lines. Therefore, this will increase the desirability for properties that are located along the lines. BRT Line 1 will span from Bukit Chagar to Tebrau, BRT Line 2 from Bukit Chagar to Senai, and BRT Line 3 from Bukit Chagar to Nusajaya,” Adis said.
Iskandar poised for more growth
“With phase one of Iskandar Malaysia successfully launched in Nusajaya in 2006, and phase two currently taking place in Johor Bahru, the Eastern Gate is what many perceive as phase three of Iskandar Malaysia’s economic development.
“With the Pengerang RAPID project and a new business park in Pasir Gudang as the major economic drivers, these are expected to create job opportunities for Johoreans.
“The business park, for instance, is anticipated to create around 12,100 jobs in the sectors of food and beverage production, garment manufacturing, printing and packaging industries, electronics, storage and warehousing, services, information technology, machinery spare parts, carpentry and furniture production, and automotive workshops.
“Meanwhile, the RM70 billion Pengerang RAPID project spanning 2,000ha has already created 40,000 jobs in the construction industry, 400 jobs for engineers and a further 4,000 jobs for trained technical staff. With the further allocation of RM18 billion, more jobs will be created,” said Adis.
Other infrastructure improvements in the pipeline include seaport and airport upgrades.
“To maximise the strength and future potential of its location along one of the busiest sea trade routes in the world, Iskandar Malaysia is placing considerable emphasis on upgrading its seaport infrastructure. This includes an RM8.6 billion allocation to double the capacity of the Port of Tanjung Pelepas (PTP) to 22 million 20 foot equivalent units (TEU) by 2030, in addition to the modernisation of cargo-handling and storage facilities at Johor Port.
“Major upgrades have also been taking place at Senai International Airport, including runway extensions and improvements to passenger and cargo facilities,” said JLL’s Lau.
“For the state of Johor, there is a minimum RM1million (S$315,818) purchase price required for foreigners. However, there is an exemption in Medini, where foreigners can purchase at any price point, even below RM1 million. Foreigners also have to make a one-off payment of two percent of the purchase price for every purchase. Otherwise, the rules for foreigners are pretty similar to Malaysians.
“Property tax rates, maintenance fees and fire insurance are all charged at the same rates whether the buyer is a foreigner or Malaysian. Even banks in Malaysia are quite open to financing from Singaporeans, who can typically finance 70 to 80 percent of the property value,” Khoo shared.
Several large-scale projects are currently underway in KL, which are expected to transform Malaysia’s capital into a global metropolis.
Relook Malaysia’s capital city
According to experts, another area in Malaysia that investors can look at for good investment opportunities is none other than its capital city, Kuala Lumpur, as positive news of the Tun Razak Exchange (TRX), Bandar Malaysia and KL Metropolis developments, coupled with the announcement of the HSR project, has drawn market attention back to the city centre.
“There are many new exciting developments, both in terms of properties and businesses in the KL city area. It continues to attract large global hospitality brands, while the upcoming TRX area promises key landmark developments. Coupled with the HSR, the city is poised to become even more vibrant and rewarding for investors and residents alike,” said Eric Lim, Group Managing Director at Hartamas Real Estate Sdn Bhd.
Echoing similar sentiments, Erick Kho, Chief Executive Officer of Mapleland Properties Sdn Bhd said, “KLCC is certainly not affordable, but it is full of potential as KL is the capital city of Malaysia, a place where MNCs and big corporations will want to have a presence. Once the economy recovers, there will be increased demand for residential property here.
“Major infrastructure developments, such as the MRT, TRX and the future HSR will support the growth of these areas by creating more job and business opportunities.
“As the mega projects take place gradually, there will be a spillover effect onto the neighbouring areas such as Mont Kiara, Damansara Heights and Mid Valley.”
Why invest in Kuala Lumpur?
Bright prospects due to completion of major developments
“The city area will continue to be vibrant as major top global hospitality brands such as Kempinski, Ritz Carlton Residences and W Hotel will be entering the market. There are also new brands planning to expand their presence including SO Sofitel, Jumeirah and Waldorf Astoria.
“Besides that, the upcoming release of office space and residential developments in the TRX area will create another boom due to its position as Malaysia’s financial district,” shared Lim.
Eddy Wong, Managing Director at Nawawi Tie Leung Real Estate Sdn Bhd Consultants, added: “In KL city centre, the TRX project looks very exciting. It is positioned as the new Central Business District for KL.
“The project will encompass an area of 70 acres, with some 10 million sq ft of office space, a two million sq ft retail mall and about 3,800 residential units. It will have excellent connectivity, with easy access to highways such as the Maju Expressway and the SMART tunnel, as well as an MRT station.”
Opportunities in a slow property market
“Prime residential properties in KL prime fringe have held relatively well, easing 0.1 percent year on-year (y-o-y) in Q3 2016 in contrast to those in KL city centre, which have fallen seven percent y-o-y.
Capital values for prime high-rise residential properties in Damansara Heights appreciated 3.4 percent y-o-y in Q3 2016 due to new pricier launches, whereas Mid Valley has seen a drop of 3.1 percent y-o-y. Generally, we are of the opinion that prices in Greater KL will continue to ease a little in 2017, with some exceptions like Damansara Heights, which happen to have new developments and a new MRT linkage,” Lau shared.
Overall, experts say property prices in KL are likely to remain stable or drop two to three percent in 2017, which could be a good thing for bargain hunters seeking a good deal. Nevertheless, they expect property prices to pick up when the local and global economies recover and when mega projects and infrastructure developments such as the TRX, the Merdeka PNB 118 building and Bandar Malaysia kick in, as these developments will likely rekindle interest in the city.
Make the most of the weakened ringgit
While the weakened ringgit will no doubt attract more foreign buyers into the Malaysian property market, there are some cautious investors who are not committing themselves to any investments as yet for fear that any further fall in the ringgit would mean an erosion of the value of their investments, but experts say that investors can rest assured that the ringgit will not likely fall any further.
“While the ringgit remains volatile, investors may prefer to adopt a waitand- see attitude. No doubt, with a weaker ringgit, Malaysian properties appear cheap. Nevertheless, foreign investors need to be assured that the currency depreciation will not continue,” Lau said.
In fact, experts said that investors who are on the lookout for a good deal should capitalise on the weakened ringgit and pick out units that have desirable attributes in the current sluggish market, as their prices are expected to appreciate in the longer term. That said, buyers will need to take a mid- to longer-term perspective and be able to lock away the investment and ride through the cycle.
“With the weak ringgit, it is absolutely the best time for foreign purchasers to look into the ever affluent Mont Kiara market, which is always a preferred international hub.
“For Mont Kiara, residential property prices are flat but holding steady. It is a good opportunity to explore and look into the market there. There are also new developments where developers may be prepared to offer good deals as well as good and practical products,” said Jonathan Lee, Chief Operating Officer of Reapfield Group.
Highlighting the allure of KL, Jerome Hong, Managing Director of PA International Property Consultants (KL) Sdn Bhd said, “As a cosmopolitan city with good grade office buildings, regional shopping malls, world-class hotels and high-end residential units, KL city centre will always be the choice for expatriates and foreigners to rent or buy their properties.”
The historic charm of Malacca has always been a huge draw for tourists. Future developments are expected to boost the state’s economy even further.
Malacca – The next hotspot for investment
Located just 2.5 hours by car from Singapore, the historic and charming city of Malacca is fast becoming a hotspot for investors, thanks to a slew of mega developments that are currently underway, as well as its strong tourist arrivals. Between 2005 and 2015, the city saw more than a 200 percent jump in tourist arrivals. The city’s low crime rates are also another plus point for investors.
According to reports, real estate values in Malacca have shot up by more than 400 percent over the past few years, from RM250 psf (S$84 psf) in 2008 to RM1,100 psf (S$369) in 2015.
And experts say that prices are likely to continue on an upward trend, attributed by upcoming mega developments and the HSR.
“Malacca has seen a steady increase in land prices over the years. With the HSR having a stop in Malacca, we will see tourism growing at even more rapid pace, especially around the Air Keroh, Krubong, Durian Tunggal and Gapam areas.
“Furthermore, as the house prices in Seremban have increased tremendously in the past few years, Malacca will be the next “suburb” option for those who work in Klang Valley as they can commute via the HSR. There will be a growing demand for residential properties in the area and this would cause an increase in property prices down the road,” Dato’ Anthony Adam Cho, Branch Chairman of the Real Estate & Housing Developers Association Malaysia (REHDA) was quoted as saying in a recent interview.
Why invest in Malacca
Affordability and potential for capital gains
“Property prices in Malacca are still undervalued, so there are a lot of opportunities for investors. This is reflected in our sales, which have been encouraging,” Dato’ Colin Tan, Executive Chairman and Managing Director of Hatten Group said, adding that 65 percent of Hatten property buyers were local.
He noted that the state has attracted interest from as far away as Singapore, Indonesia, China and Taiwan despite the present challenging market conditions.
Strong growth in tourist arrivals
Tourism is a major factor for Malacca, with tourist numbers increasing from 8.48 million in 2015 to 12.74 million in 2016, an increase of about 50 percent.
In a recent news article, Dato’ Ghazale Muhammad, Deputy Chairman of the Tourism, River, Beach and Islands Development Committee, said that out of the 12.74 million visitors, at least 8.48 million represented domestic tourists and the rest were foreigners. For the latter, it has been reported that the highest number of tourists arrived from China at 1.14 million, followed closely by Singapore (1.08 million), Indonesia (563,941), Taiwan (128,504) and Japan (96,917).
And the numbers are set to continue soaring, with one of the grandest theatres called Impression Melaka expected to be ready in 2018. Once it is completed, it would also be a major driver for growth of tourist arrivals in Malaysia.
Malacca Gateway project to redefine the city
In addition to that, the upcoming Malacca Gateway project, which is developed by KAJ Development Sdn Bhd (the master developer of the project) and Powerchina International Group Limited, will comprise 12 precincts. Among the planned facilities are a marina for yachts, luxury condominiums and bungalows with private marinas, tourist eco-parks, theme parks and ports for cruise ships, which will attract visitors from around the world, as well as boost the state’s economy.
The 12 precincts are Gateway Entertainment Precinct, Melaka Marina & Cruise Centre, Melaka Historical Walk, Gateway Maritime Arena & Beacon, Branded Fashion District, International Theme Park, Melaka Cultural Walk, Waterfront Marina Villas & Resorts, Gateway Wellness & Lifestyle Precinct, Melaka Skyline Apartments, Lohas Park & Residences and Eco Isle Resorts.
Once completed in 2025, the marina terminal is expected to be the largest private marina in Southeast Asia.
Bright economic prospects
Looking ahead, experts expect the upcoming RM8 billion Malacca Gateway port to significantly boost the country’s economy.
Located in Pulau Panjang, off Malacca, the new trading port is a joint venture between Guangzhou-based companies Shenzhen Yantian Port Group Co. and Rizhao Port Group Co. with local Malaysian company KAJ Development Sdn Bhd.
Transport Minister Dato’ Seri Liow Tiong Lai, who attended the inaugural foundation laying ceremony of the port in October last year, reportedly said the port is set to attract 100,000 vessels annually once the project is completed in 2019.
Compared to the other Malaysian cities, restrictions on foreign property ownership in Malacca are not as rigid. Foreigners only need to make a minimum investment of RM500,000 (S$168,000), versus RM1 million (S$335,000) in KL and Penang’s RM1 million to RM2 million (S$335,000 – S$670,000).
With plenty of residential and commercial properties being built in Malaysia, we decided to focus our attention on four new projects that are sure to tempt foreign investors on the lookout for quality assets.
Bandar Baru Permas Jaya, 81750 Johor Bahru
Type: Shops and offices
Facilities: Private lifts, parking bays, lush landscaping
Nearby Key Amenities: Banks, restaurants, shops, hotels, hypermarket
Nearest Transport: North-South Expressway, JB East Coast Highway
Starting Price: RM1.49 million (S$470,821)
Whether you’re a business owner looking for a commercial unit in Iskandar Malaysia or an investor seeking good opportunities beyond the shores of Singapore, The Boulevard, located within the highly sought-after Permas Jaya township, will make an excellent choice. Thanks to its strategic location, one will find that it is easy to get around as the development is located just 10 minutes from Singapore and the Johor Bahru city centre.
The 62-unit development by Bandar Raya Development Bhd (BRDB) is the only commercial hub fronting the JB East Coast Highway, and comprises 40 intermediate three-storey shop offices and 22 corner four-storey shop offices with lifts.
While perfect for all types of businesses, the corner units with wider frontage are particularly suitable for F&B outlets. For those who require more space and privacy, the four–storey units, which come fitted with private lifts and ample parking bays, will make a better option.
Elita @ The Straits View Condominium
Jalan Permas Selatan, Bandar Baru Permas Jaya, 81750 Johor Bahru
Facilities: Swimming pool, children’s playground, tennis courts, jogging tracks, gymnasium,
Nearby Key Amenities: Shopping centre, sports complex, golf course, banks
Nearest Transport: Eastern Dispersal Link, North-South Expressway, JB East Coast Highway
Starting Price: RM1.08 million (S$340,754)
Seeking the perfect holiday home that offers a respite from the hustle and bustle of the city, but yet still offers convenient access to a slew of amenities? Look no further than Elita @ The Straits View. Situated in the well-established suburb of Permas Jaya, the Elita is built on a sprawling 17-acre site surrounded by lush greenery.
Coming home is truly akin to stepping into a resort. This 113-unit freehold residential development also offers residents with stunning views of Singapore’s skyline and the Straits of Johor.
Ranging in size from 1,765 sq ft for an apartment to 4,920 sq ft for a penthouse unit, prices range between RM1.08 million (S$340,754) and RM3.69 million (S$1.16 million) each.
Lot 74, Jalan Tun Sambanthan, Seksyen 70, 50470 Kuala Lumpur
Type: Shops and offices
Facilities: Infinity lap pool, playground, basketball court, barbecue area, gymnasium, multipurpose hall
Nearby Key Amenities: Luxury hotels, offices, restaurants, schools, shopping malls
Nearest Transport: Kuala Lumpur Sentral railway station
Starting Price: RM730,000 (S$230,419)
Strategically located in KL Sentral, Sentral Suites is a luxurious residential development that offers residents the best of both worlds – an urban lifestyle thanks to its strategic location close to a slew of conveniences, and a tranquil and quiet sanctuary, made possible by the designers who weaved in elements of nature.
Comprising 1,434 apartments and 41 retail units spread across three towers, the sizes of the residential units range from 650 sq ft to 1,166 sq ft, and are priced from RM730,000 (S$230,419) to RM1.3 million (S$410,335) each. Buyers can choose from 10 different types of layouts ranging from single-room units to dual-key concept units.
Accessibility is another highlight of this development, which is within walking distance to Stesen Sentral, Malaysia’s largest transportation hub. Several world-class hotels, lifestyle shopping malls and restaurants are also nearby.
Bangsar South, 59200 Kuala Lumpur
Developer: Bon Estates Sdn Bhd
Facilities: Grand lobby, swimming pool, gymnasium, playground, barbecue area, sky dining, café
Nearby Key Amenities: Offices, hotels, shopping centres
Nearest Transport: Universiti LRT station, Federal Highway, Sprint Expressway
Starting Price: RM1.76 million (S$555,693)
Located exclusively within Jalan Pantai Prima off Jalan Kerinchi in Bangsar, The Estate, which is developed by Bon Estates Sdn Bhd, is a luxurious 328-unit freehold residential development. Comprising two 46-storey towers nestled within lush greenery, The Estate offers residents sweeping views of the Bukit Gasing Forest reserve.
Despite being so close to nature, residents can still enjoy public transport connectivity via the Universiti LRT station, which is located just 300m away from the development. As for amenities, the site is within proximity to several shopping malls, such as The Sphere and the upcoming KL Gateway.
Another highlight of The Estate is definitely its energy-efficient design. The Estate features low shading coefficient single-glazed windows, shading devices, LED lighting and inverter air-conditioning, among others. Prices start from RM750 psf (S$237 psf), with the unit sizes ranging from 2,246 sq ft to 3,110 sq ft.