Why your retirement plan is good news for Iskandar Malaysia

By Ryan Khoo

/ Alpha Marketing, The Edge Property |

December 22, 2015 10:00 AM SGT

One major trend that is highly positive for Iskandar Malaysia is Singapore’s ageing population. According to Singapore’s Department of Statistics, there will be 900,000 residents aged at least 65 by 2030 in the city-state.

This effectively creates two outcomes. The first is that Singapore, with its low birth rates and an ageing society, has to continue its policy of population growth via immigration. The old age support ratio (OASR) was 6:1 in 2014, which means there were six working adults to support each retiree in the country. By 2030, the ratio could fall to 2:1, which would be disastrous for economic productivity. A clear example of that today is Japan, where the economy has stagnated for more than two decades.

To avoid a similar fate, Singapore would have to continue pursuing population growth via immigration — thereby increasing population density on the island owing to limited land — as per the much-maligned 2013 Population White Paper, to hit a 6.9 million population by 2030. Singapore is currently the third most-densely-populated country in the world, according to a recent government statistic. Hence, the cost of space here will remain high and climb higher in the longer run, making the business case for Iskandar Malaysia stronger.

The second outcome is how Iskandar Malaysia has become an option for retirement planning for Singapore’s elderly. The median age for Singapore today is 40 years, and observations on the ground show that much of the real demand for properties in Iskandar Malaysia has been by the country’s older population. Many in this segment are sitting on cash savings of $100,000 to $200,000, yet are notable to buy a second or third property because of lower loan amounts owing to the total debt servicing ratio and additional buyer’s stamp duty for additional properties. So, buying a property in Iskandar Malaysia becomes a viable option because of the affordable pricing and the proximity to Singapore.

Property in Iskandar Malaysia can serve as a potential retirement home and an investment. Other overseas property investments will not be able to achieve both these objectives. Those who buy properties in faraway locations such as Australia or the UK cannot possibly expect to retire there unless they emigrate, thus weakening links to Singapore, and only if they can afford the higher cost of living in these countries. Iskandar remains the only practical retirement option as they can enjoy Malaysia’s lower cost of living, a bigger living space, and family ties, convenience and a sense of familiarity.

Many who buy properties in Iskandar today may not have retired yet, but are planning for when they do. With another 10 to 15 years to go before retirement, they can afford to look at the long term for Malaysian properties and not be affected by short-term market sentiments. There are several more reasons why retiring in Malaysia is attractive.

Healthcare options in Malaysia are attractive

Healthcare is one promising area for Iskandar to target as the Singapore consumer gets older, richer and better informed. Healthcare costs in Malaysia are between 30% and 50% cheaper than in Singapore and Iskandar is just an hour’s drive from most parts of the city state. The local healthcare market is also significant and growing as Malaysians living in Iskandar— many of whom work or do business with Singapore — become more affluent as well.

Private healthcare in Iskandar Malaysia is still underdeveloped, but big plans are on the cards. Gleneagles Medini, which was recently launched, is emblematic of the rapid growth in greenfield Nusajaya, located just across the famed Legoland Theme Park and Afiniti Medini, the urban wellness joint-venture project by Singapore’s Temasek and Malaysia’s Khazanah. Gleneagles Medini has a generous 15 acres of land for future expansion and immediate plans include a 17-storey tower for specialist suites.

The next highly anticipated player is billionaire Peter Lim’s Vantage Bay healthcare city in Johor Baru City Centre. Lim’s Vantage Bay mixed-development project covers 23 acres, with plans of it being a healthcare and wellness hub, and healthcare education hub. His privately owned Thomson Medical will operate the recently named Iskandariah Hospital, scheduled to open by 2018.

Other private players in the market include US-based Columbia Asia, Singapore-operated Regency Specialist Hospital and Malaysia- listed KPJ Healthcare. There are also numerous smaller operators that cater for another tier of the healthcare market — nursing homes and privately managed retirement villages.

A little known fact is that Singaporeans can use their Medisave in selected Medisave accredited hospitals in Malaysia. Today, this includes Regency Specialist Hospital in Johor Baru and Gleneagles Medini, and will likely be extended to all other privately operated hospitals in Iskandar Malaysia in the future.

Another big opportunity for healthcare in Iskandar Malaysia is healthcare tourism, with Indonesians being the largest number of medical tourists in Malaysia today. Medical tourists from the West, China and Japan are also significant. Private hospitals in Singapore’s Novena and Orchard Road do big business in this sector and as more options open up in Iskandar Malaysia, there is a large opportunity to tap into the trend. Frost & Sullivan expects healthcare expenditure in Malaysia to hit US$25 billion ($35.3 billion)by 2020, growing at 8% to 10% per annum.

High Speed Rail and Rapid Transit System will improve links

Travelling between Singapore and Iskandar Malaysia today can be a big hassle. Thousands cross the border daily, with Malaysians going into Singapore during the morning rush hour, and heading back home in hordes in the evening. Traffic jams on the Causeway and the Second Link have throttled further growth. While plans for a third bridge are unlikely to materialise anytime soon, discussions on the Rapid Transit System linking Woodlands North and Johor Baru City Centre have been going on for several years. Recently, the site for the Johor Baru RTS station was identified at Bukit Chagar, an empty plot of land that currently serves as a huge open-air carpark. With this confirmation, plans can now proceed towards detailed engineering studies.

The High Speed Rail has also seen progress, with the Malaysian government setting up MyHSR Corp, a company dedicated to building the HSR in Malaysia. Recently a Request for Information initiated by Singapore’s Land Transport Authority and Malaysia’s SPAD (Land Public Transport Commission) saw more than 150 firms responding, indicating high interest to participate in this massive infrastructure project. The location of the HSR stations for Iskandar and Singapore will be at Gerbang Nusajaya and Jurong East (Jurong Country Club) respectively.

These rail links are important as experience in other cities show that three to six times more people can be moved when such rail links are in place. For Singaporeans planning to retire in Iskandar in the future, these rail links will make it easier to travel and save a lot of travel ling time, opening up opportunities in services and the retail industry, serving the Singapore market on top of its own growing local population. Imagine the economic benefits that Iskandar will enjoy if the Singapore consumer market can be unleashed onto Johor Baru in its entirety.

Because of the proximity of both countries, Singaporeans retiring in Iskandar will not need to apply for the Malaysia My Second Home (MM2H) programme. Singaporeans currently enjoy 30 days’ visa-free entry into Malaysia. My personal experience is that with the city state so close by, retirees can easily spend one day in 30 to renew their entry documents. Living here and in Iskandar concurrently will be a reality for many, especially with the upcoming rail links linking both cities.

Puteri Harbour residential and commercial development in Nusajaya. Buildings in Singapore can be seen in the distance.

Proximity to the city state is an attraction for retirees who plan to live in Iskandar Malaysia.

Cost of living in Malaysia is significantly lower than in Singapore

Depending on which survey you refer to, living costs in Iskandar Malaysia are between two and three times cheaper than in Singapore. Again, for retirees, this is an important consideration to stretch their savings. The lower costs of food and other essentials have been well documented, so let me focus on transport.

While public transport in Malaysia is still behind Singapore’s, you can consider buying a car in Iskandar. Say, a brand new car costs about RM85,000 ($28,333) in Malaysia. You could get as high as 90% financing and up to a 10-year loan. The car is “freehold”, with no Certificate of Entitlement cost; in Singapore, it comes with only a 10-year lease. A more practical option would be to get a second-hand car; small sedans are available for between RM15,000 and RM50,000.

What is a car worth to you if you live in Iskandar? Well, it buys you freedom of movement— something quite close to priceless if you have spent years travelling via buses and MRTs in Singapore. And that is part of the draw of having an Iskandar “retirement plan” and why an ageing Singapore population is good news for the Iskandar region.

Ryan Khoo is co-founder of Singapore-based Alpha Marketing, a real estate investment consultancy that focuses on the Malaysian market, especially Iskandar Malaysia. The views expressed here are his own. He can be contacted at ryan.khoo@alphamarketingsg.com.

This article appeared in The Edge Property Pullout, Issue 708 (December 21, 2015) of The Edge Singapore.

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