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Why You Should Invest In Property In Johor

With its strategic location bordering Singapore and its rapidly developing economy, the Malaysian state of Johor has attracted property investors from around the world. Flavia Galeotti tells us what all of the buzz is about.

Meridin Medini, Iskandar Malaysia

Thanks to a massive development push by the Malaysian government and private sector, Johor is quickly gaining the attention of investors from across the world as a great place to live, work, and play and a hot property market to invest in. The influx of interest and investment from China, Korea, Russia, the US, and Japan in the southern Malaysia state is an indication that more positive growth and modernisation are on the horizon, and a sign for potential investors that now is the ideal time to act.

No matter what type of real estate you are looking for – whether it’s residential or commercial – Johor has it in abundance. Here are four reasons why you should strike while the iron is hot and put Johor on your list of property markets to invest in:

1. The low ringgit gets you more bang for your buck
Over the last few years the Malaysian economy has been hit by an economic slowdown following the contraction of the oil and gas industry, and the ringgit has fallen sharply – plunging to a rate of US$1 to RM4.486 at the end of 2016. This marks a depreciation of 4.3%, higher than the drop at the peak of the Asian Financial Crisis of 1998, and means that, for foreign investors, there are major bargains to be found in the Malaysian property market – and Johor is no exception.

The CBRE 2017 outlook for Malaysia suggests that while the overall property market for the main southern development corridor in Johor – Iskandar Malaysia – is expected to remain soft in the short term, it will gain strength upon recovery of the national and regional economy. As such, foreign investors are well-positioned to make a foray into Johor’s real estate market, where property prices are lower than in neighbouring Singapore (which is only a short drive away) and properties are aplenty. Which leads to the next point…

2. The great variety of property types to choose from
Despite initial fears that Johor had been developing residential areas too quickly without demand to meet the supply, the end result is that now there is a great variety of properties that are available for prospective buyers. This includes the famous four-island, integrated high-rise project Forest City, developed by Chinese company Country Gardens (of which some 80-90% had been sold by the end of last year); the Pengerang Integrated Petroleum Complex; Senibong Cove, a 84-hectare, 5,000-residence luxury residential community situated on the waterfront across the Johor Strait from Singapore; UM Land’s Suasana Iskandar Malaysia, an integrated development containing a 36-storey serviced residence tower, a hotel, and retail and entertainment facilities, and Shama Medini, a serviced apartment complex built on top of a shopping mall in the mixed integrated development of UMCity Medini Lakeside; and landed properties like Meridin East township in Zone D of Iskandar Malaysia, which has an estimated gross development value of RM5 billion (US$1.17 billion).

According to property consultancy Knight Frank Malaysia, five districts in Johor for investors to keep an eye on in 2017 are Johor Baru, Pontian, Kulai, Batu Pahat, and Kluang.

3. Improved infrastructure and facilities
In addition to the brand new, 157,500-square-foot hospital to be built by KPJ Healthcare Bhd in Batu Pahat, a number of projects are underway to make road and rail connectivity from Johor to the Klang Valley and Singapore more efficient: a new expressway linking Senai to the North-South Expressway will make a lot of Iskandar Malaysia much more accessible; the Coastal Highway connecting to the Tuas Second Link via Medini is slated for completion this year; and also the highly-anticipated Singapore-Kuala Lumpur High-Speed Rail (HSR) project, which has three stops in the state (Iskandar Puteri, Batu Pahat, and Muar), will commence operations on 31 December 2026. Knight Frank Malaysia advises investors to look closely at properties located near these new stations, as property values naturally are expected to rise as the project materialises and transit oriented developments (TOD) along the route pick up.

4. A booming economy
Since early 2016, numerous foreign multinational companies (MNCs) have indicated interest in relocating or have actually shifted their facilities to Johor. Some examples are Microsoft, which is building a data centre in Sedanak; Coca-Cola, which moved its previous location in Tuas, Singapore to Iskandar Malaysia; and Alibaba, which announced plans to set up a logistics hub in Johor (and this is slated to be completed by the end of 2019). This is all a part of a larger plan by the Malaysian government to build an “e-hub” in Johor’s designated free trade zone. Data from the Malaysian Industrial Development Authority (MIDA) shows that the Johor manufacturing sector attracted more than RM18 billion (US$4.2 billion) in total proposed capital investment from January to September 2016 – the highest among all of the states in the country – with the ratio of domestic to foreign investment at 52:48%.

There are still lingering concerns that Johor’s property market has an oversupply of residential projects, but property consultancy JLL offered some assurances that this issue will solved once these factories and offices are opened, bringing with them potential tenants.

For foreign property investors looking for great value and opportunity, Johor is the place and the time is now.

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