Is it time to relook Iskandar Malaysia?

By Ryan Khoo

/ Alpha Marketing |

March 13, 2018 9:25 AM SGT

I recently encountered a new dilemma when asked where I live. My answer used to be “Singapore” without hesitation, as the city state has been my home for a good eight years now. Considering the amount of time I spend at my second home in Johor Bahru today, however, I now give a vague answer about how I work and live in both cities.

Judging from the heavy cross-border traffic between Singapore and Iskandar Malaysia, I know I am not alone. Despite the typical misgivings on Iskandar Malaysia, there is still a large, silent (or perhaps not-so-silent nowadays) population enjoying the benefits of cross-border living. And with recent events, perhaps it is time to relook at the real estate market in Iskandar Malaysia. Here are five reasons to do so.

With the Singapore dollar now hovering around $1/ RM3, retirement living in Iskandar becomes an increasingly attractive option (Credit: EdgeProp Singapore)

Property prices are as attractive as ever

The property market in Iskandar Malaysia has been in a downturn since late 2014. The oversupply has been limited to high-end residential homes, and prices have largely mirrored Singapore’s private property price index, falling between 5% and 15% from the peak in 2013. Fire sales and auctions have been fairly few so far, however, and most owners have been willing to hold on, especially once they have found tenants.

Some property developers have also slashed prices to entice buyers, so better deals can be found compared with a few years ago.

Opportunities exist for buyers who are willing to scour the market and buy in the current downturn while prices and sentiment remain depressed. High-quality completed freehold properties can be found from RM750 psf ($250 psf), still a veritable bargain considering how fast land prices are moving up in Singapore, owing to en bloc sales and government land sale sites.

Projects like Puteri Cove Residences (show unit pictured) appeal to Singaporeans considering treating their property in Iskandar as their primary residence, a weekend home or future retirement home (Credit: Albert Chua/EdgeProp Singapore)

Rent out your Singapore home and live in Iskandar or vice versa

One scenario that a number of Singaporeans take advantage of is to rent out their homes in Singapore and live in Iskandar. Many Singaporeans have fully paid up HDB flats that can be rented out from at least $2,000 a month. A two-bedroom condominium in Iskandar can be bought from as low as RM750,000 ($250,000) or rented at RM2,000 a month. This gives you gross savings of at least RM4,000, which is more than enough for living expenses in Iskandar.

A second scenario is for Singaporeans to buy properties in Iskandar with 100% cash. Rental yields for high-end residential property in Iskandar range from 3% to 4% a year, which is a decent return for an up-and-coming city bordering Singapore. Most Singaporean buyers who opt for this scenario treat their Iskandar property as a future retirement home or weekend home in old age. Perhaps it is a tempting option for all the en bloc millionaires in Singapore?

University of Reading, one of the international tertiary institutions that opened in Iskandar Malaysia's EduCity, where expatriate residents send their children (Credit: Samuel Isaac Chua/EdgeProp Singapore)

Retirement living in Iskandar with affordable healthcare and education

With the Singapore dollar now hovering around $1/ RM3, retirement living in Iskandar becomes an increasingly attractive option, especially if you consider using your Central Provident Fund monies to live out your retirement comfortably in style (three times of CPF savings!). A cup of coffee in a hawker centre is RM1.60 (53 cents) and a bowl of noodles is typically RM6 ($2). The price of a typical meal in a food court in Singapore can buy you a mid-range restaurant meal in Malaysia.

Singapore is an expensive country, especially when it comes to healthcare. Healthcare costs in Malaysia is remarkably cheaper and you have the option to choose from high-quality services from Parkway Health’s Gleneagles and Singaporean-operated Regency Hospital. You can also use Medisave to pay for medical costs in selected private hospitals in Iskandar Malaysia.

Buying a car is also an interesting option for those who choose to live in Iskandar Malaysia. A new Toyota four-door sedan costs about RM85,000 ($28,400), and does not require a Certificate of Entitlement (COE), unlike in Singapore. And you can drive it indefinitely, unlike in Singapore. Singaporeans can apply for vehicle financing from banks and check out second-hand vehicles for even better bargains. Buying a car gives you the freedom to travel not only within Iskandar Malaysia, but also to explore Melaka, Kuala Lumpur and even Thailand.

Interestingly enough, today we see other nationalities besides Singaporeans who are choosing to live and work in Iskandar Malaysia. More and more Chinese, Japanese and Koreans have become residents in Iskandar, either operating small businesses or having their children educated at the international schools there.

Entrance to LegoLand Malaysia, which will see the Sea Life Aquarium opening at year-end (Credit: Samuel Isaac Chua/EdgeProp Singapore)

More shopping and entertainment options to enjoy

The shopping and entertainment scene in Iskandar Malaysia has expanded and is fast growing. IKEA opened its first store in Johor Bahru in October 2017, with the Singapore media and online shopping portals creating a buzz by making price comparisons with IKEA Singapore. Paradigm Mall Johor Bahru opened last year, boasting more than one million sq ft of gross floor area (as large as Singapore’s VivoCity). This year, Capital 21 is expected to launch its indoor theme parks of Cartoon World, Movie World and Music World.

Legoland will be opening its Sea Life Aquarium at year-end. Fans of extreme sports will be delighted by X-Park’s opening in Medini later this year, offering a host of outdoor activities such as paintball, wall climbing, glamping, archery. A virtual reality indoor theme park will also be opening in Medini by early next year.

Tourists and visitors have also been making a beeline to the heritage areas of Johor Bahru city centre, where massive rejuvenation is taking place. Heritage shophouses are being converted into hip trendy cafés and boutiques that showcase young designers, including those from Singapore.

Other related hotspots include the relaunching of Desaru’s white pristine beaches (about an hour’s drive away from Johor Bahru), with water sports, golf courses and high-end hotels such as Aman and Hard Rock Hotel.

The Rapid Transit System will have a link from Singapore's Woodlands MRT station (pictured) to Johor Bahru (Credit: Samuel Isaac Chua/EdgeProp Singapore)

High Speed Rail and Rapid Transit System have firm delivery deadlines

In recent years, the governments of Singapore and Malaysia have signed legally binding bilateral agreements to construct the Rapid Transit System (an MRT link into Johor Bahru from Woodlands MRT) and High-Speed Rail (high-speed trains linking Jurong East and Iskandar Malaysia to Kuala Lumpur) by 2024 and 2026, respectively.

The HSR and RTS will help cement the prospects and liveability of Iskandar Malaysia. Between 150,000 and 300,000 people travel across the border daily, and the HSR and RTS will help create more economic activity in Iskandar Malaysia.

What to look out for

There is a plethora of choices for the interested buyer. I always recommend checking out the secondary/resale markets, as you can immediately view the property and judge the build quality as well as its occupants in the area or building.

Buying real estate is a long-term commitment and, given the many upside catalysts for Iskandar Malaysia, as long as you choose a decent property and have patience, you will be better off in the long run.

Ryan Khoo is founder and director of Alpha Marketing, a real estate consultancy focused on the Malaysian property market, especially Iskandar Malaysia.

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