Seizing opportunities across the Causeway
SPURRED by restrictions back home, Singaporeans have now cast their eyes on Malaysia, particularly the Iskandar region. The close proximity and warmer economic ties with Malaysia have sparked increased interest from investors keen on buying property across the Causeway.
Iskandar Malaysia (IM) is estimated to have 1.35 million people, or 43 per cent of Johor's population of 3.17 million. Some 66 per cent of the population is of working age.
A slew of high-end property projects have already hit the market to cater to the workforce and student populations that are expected to grow once IM reaches a tipping point. Investors also appear to be more confident now that much of the infrastructure and a number of catalytic projects are in place.
Demand from foreign investors from Singapore, mainland China and Japan has been robust since the last couple of years. IM encompasses a land area of 2,217 sq km, about thrice the size of Singapore. It consists of five flagship zones - Johor Baru city, Nusajaya, Western Gate Development, Eastern Gate Development and Senai-Skudai. Each has a specific development master plan. They are carefully calibrated to achieve the long-term vision for Iskandar, which is to be "a strong and sustainable metropolis of international standing".
In the past decade, property prices in Johor have not been able to keep up with other Malaysian cities like Kuala Lumpur and Penang. The main reason is that Johor was perceived as a local's market which international investors paid little attention to.
In the last two years, development ramped up sharply, and The Financial Times newspaper reported that it attracted about US$35 billion in cumulative investments as of November 2012.
Perceivable improvements to IM have also injected confidence into Johor real estate. Johoreans and investors from other parts of Malaysia are now drawn to IM by the prospects of capital appreciation and a reasonable income return.
One key project is EduCity, a spacious campus housing some leading schools and tertiary institutions, including Singapore's Raffles University Iskandar, Newcastle, Reading and Southampton universities and Marlborough College. Johor Premium Outlets, which features more than 80 brands such as Armani, Coach, Nike, Ralph Lauren, Swiss Watch Gallery and Tommy Hilfiger opened its doors in Kulaijaya in 2011.
Legoland Malaysia, the first of its kind in Asia, opened last September. These attractions have since become a magnet for regional tourists. Kota Iskandar and the Puteri Harbour waterfront development are also undergoing massive transformation and will eventually emerge as vibrant and dynamic destinations for work, live and play.
Rising Chinese interest
Mainland Chinese investors have recently emerged as a new force in IM. In the past, the Malaysia My Second Home (MM2H) programme attracted few applicants from China because Malaysia was not a popular destination for emigration. Even among those who apply to stay, most of them favoured Kuala Lumpur over other cities.
In the past, many would have chosen the United States, Australia, Canada and Singapore as their top choices for emigration, but some of these countries have since tightened their immigration rules and the entry requirements have become more stringent. It benefited countries like Malaysia where there is still a sizeable local Chinese community that shares a similar language and culture with China. The number of mainland Chinese applying for MM2H has soared to the top of the list.
Meanwhile, the country's bilateral relations with China have also reached an unprecedented level after the first Malaysia-China industrial park was launched in February 2013. Hong Kong-listed Chinese developer Country Garden has geared up to build a RM18 billion (S$7.2 billion) integrated waterfront development in Danga Bay after its maiden township projects in Kajang and Rawang Malaysia.
China-based developer Zhuoda Real Estate Group has also tied up with Iskandar Investment Bhd to develop mixed residential and commercial projects in Medini International. The gross development value of the project is estimated at RM2.5 billion. Chinese investors who are on the lookout for capital appreciation will soon be able to have a slice of this growing investment pie.
In the past, many Singaporeans were not keen to buy homes in Johor Baru because of a perceived high crime rate. Investors mainly focused on Kuala Lumpur and Penang as they were considered safer bets.
However, as prices in these traditional hotspots soared to new highs, the lure of living larger for less has drawn more Singaporeans to Johor.
Iskandar Malaysia seems to have changed the way people look at Johor. Located just 20 minutes from the Tuas checkpoint, many up-and-coming housing estates there have drawn investors with their premium quality and effective security systems. Coupled with lower cost of living and ease of access, more Singaporeans have started to explore the possibilities of retiring in Johor. The investment properties they purchased in Johor today may well be their ideal retirement homes for tomorrow.
In addition, the latest moves by the Singapore government to curb buoyant prices with measures that affect all residential properties have also fuelled demand for IM projects. Mortgage financing for Iskandar homes at both the local and Malaysian banks are also made available to Singaporeans.
On the business front, the Iskandar region has also stood out from countries like China, Myanmar and Vietnam as one of the top business locations due to its close proximity to Singapore.
A growing number of Singaporean companies have relocated or expanded in Malaysia in recent years due to improved accessibility and low business cost. Companies are much more comfortable investing in IM now as the investment landscape has changed dramatically. Temasek Holdings, CapitaLand and Ascendas have also invested heavily in Iskandar. More international players will certainly follow suit in future.
Ease of travel
A new high-speed rail train between Kuala Lumpur and Singapore to be built by 2020 will take just 90 minutes to travel between the two cities, while progress has also been reported on the rapid transit link between Johor and Woodlands. There is definitely a lot more to look forward to just across the Causeway.
Investors should do their homework before venturing into property investment. Malaysia has a different set of legal framework and taxation structure. Effective from Sept 1, 2012, gains from the disposal of residential and commercial properties are taxed between zero and 15 per cent, depending on the holding period of real properties. The real property gains tax is 15 per cent if the property is bought and sold within two years. Buyers also need to take note of the additional costs such as state consent fee and loan legal fee for property investment.
Like all other investments, buying a property in IM is also not risk-free. How the IM real estate market fares in the long run will also depend on the health of its rental market, quality of the estate management and investment outlook for the region. It would thus be wise for buyers to beware of the risks and manage them with some flexibility.
In conclusion, Iskandar Malaysia yields some potentially profitable opportunities given the latest developments. The market has caught the attention of some local and overseas investors and is certainly one to watch in the near term.
The writers are from the International Projects Department at OrangeTee.com Pte Ltd.
SPURRED by restrictions back home, Singaporeans have now cast their eyes on Malaysia, particularly the Iskandar region. The close proximity and warmer economic ties with Malaysia have sparked increased interest from investors keen on buying property across the Causeway.
Iskandar Malaysia (IM) is estimated to have 1.35 million people, or 43 per cent of Johor's population of 3.17 million. Some 66 per cent of the population is of working age.
A slew of high-end property projects have already hit the market to cater to the workforce and student populations that are expected to grow once IM reaches a tipping point. Investors also appear to be more confident now that much of the infrastructure and a number of catalytic projects are in place.
Demand from foreign investors from Singapore, mainland China and Japan has been robust since the last couple of years. IM encompasses a land area of 2,217 sq km, about thrice the size of Singapore. It consists of five flagship zones - Johor Baru city, Nusajaya, Western Gate Development, Eastern Gate Development and Senai-Skudai. Each has a specific development master plan. They are carefully calibrated to achieve the long-term vision for Iskandar, which is to be "a strong and sustainable metropolis of international standing".
In the past decade, property prices in Johor have not been able to keep up with other Malaysian cities like Kuala Lumpur and Penang. The main reason is that Johor was perceived as a local's market which international investors paid little attention to.
In the last two years, development ramped up sharply, and The Financial Times newspaper reported that it attracted about US$35 billion in cumulative investments as of November 2012.
Perceivable improvements to IM have also injected confidence into Johor real estate. Johoreans and investors from other parts of Malaysia are now drawn to IM by the prospects of capital appreciation and a reasonable income return.
One key project is EduCity, a spacious campus housing some leading schools and tertiary institutions, including Singapore's Raffles University Iskandar, Newcastle, Reading and Southampton universities and Marlborough College. Johor Premium Outlets, which features more than 80 brands such as Armani, Coach, Nike, Ralph Lauren, Swiss Watch Gallery and Tommy Hilfiger opened its doors in Kulaijaya in 2011.
Legoland Malaysia, the first of its kind in Asia, opened last September. These attractions have since become a magnet for regional tourists. Kota Iskandar and the Puteri Harbour waterfront development are also undergoing massive transformation and will eventually emerge as vibrant and dynamic destinations for work, live and play.
Rising Chinese interest
Mainland Chinese investors have recently emerged as a new force in IM. In the past, the Malaysia My Second Home (MM2H) programme attracted few applicants from China because Malaysia was not a popular destination for emigration. Even among those who apply to stay, most of them favoured Kuala Lumpur over other cities.
In the past, many would have chosen the United States, Australia, Canada and Singapore as their top choices for emigration, but some of these countries have since tightened their immigration rules and the entry requirements have become more stringent. It benefited countries like Malaysia where there is still a sizeable local Chinese community that shares a similar language and culture with China. The number of mainland Chinese applying for MM2H has soared to the top of the list.
Meanwhile, the country's bilateral relations with China have also reached an unprecedented level after the first Malaysia-China industrial park was launched in February 2013. Hong Kong-listed Chinese developer Country Garden has geared up to build a RM18 billion (S$7.2 billion) integrated waterfront development in Danga Bay after its maiden township projects in Kajang and Rawang Malaysia.
China-based developer Zhuoda Real Estate Group has also tied up with Iskandar Investment Bhd to develop mixed residential and commercial projects in Medini International. The gross development value of the project is estimated at RM2.5 billion. Chinese investors who are on the lookout for capital appreciation will soon be able to have a slice of this growing investment pie.
In the past, many Singaporeans were not keen to buy homes in Johor Baru because of a perceived high crime rate. Investors mainly focused on Kuala Lumpur and Penang as they were considered safer bets.
However, as prices in these traditional hotspots soared to new highs, the lure of living larger for less has drawn more Singaporeans to Johor.
Iskandar Malaysia seems to have changed the way people look at Johor. Located just 20 minutes from the Tuas checkpoint, many up-and-coming housing estates there have drawn investors with their premium quality and effective security systems. Coupled with lower cost of living and ease of access, more Singaporeans have started to explore the possibilities of retiring in Johor. The investment properties they purchased in Johor today may well be their ideal retirement homes for tomorrow.
In addition, the latest moves by the Singapore government to curb buoyant prices with measures that affect all residential properties have also fuelled demand for IM projects. Mortgage financing for Iskandar homes at both the local and Malaysian banks are also made available to Singaporeans.
On the business front, the Iskandar region has also stood out from countries like China, Myanmar and Vietnam as one of the top business locations due to its close proximity to Singapore.
A growing number of Singaporean companies have relocated or expanded in Malaysia in recent years due to improved accessibility and low business cost. Companies are much more comfortable investing in IM now as the investment landscape has changed dramatically. Temasek Holdings, CapitaLand and Ascendas have also invested heavily in Iskandar. More international players will certainly follow suit in future.
Ease of travel
A new high-speed rail train between Kuala Lumpur and Singapore to be built by 2020 will take just 90 minutes to travel between the two cities, while progress has also been reported on the rapid transit link between Johor and Woodlands. There is definitely a lot more to look forward to just across the Causeway.
Investors should do their homework before venturing into property investment. Malaysia has a different set of legal framework and taxation structure. Effective from Sept 1, 2012, gains from the disposal of residential and commercial properties are taxed between zero and 15 per cent, depending on the holding period of real properties. The real property gains tax is 15 per cent if the property is bought and sold within two years. Buyers also need to take note of the additional costs such as state consent fee and loan legal fee for property investment.
Like all other investments, buying a property in IM is also not risk-free. How the IM real estate market fares in the long run will also depend on the health of its rental market, quality of the estate management and investment outlook for the region. It would thus be wise for buyers to beware of the risks and manage them with some flexibility.
In conclusion, Iskandar Malaysia yields some potentially profitable opportunities given the latest developments. The market has caught the attention of some local and overseas investors and is certainly one to watch in the near term.
The writers are from the International Projects Department at OrangeTee.com Pte Ltd.
