Why Invest in Johor Now?

By Ed Cheong –

 

May 4, 2016

 

Lately, there are plenty of negative news from declining growth numbers in many countries (especially China and Singapore) to declining investments, impaired currency exchange rates, lower commodity prices and increasing job losses.

The Star newspaper recently reported that Petronas Chemicals Group Bhd scrapped a giant elastomers project worth US$1.3bil as part of the Refinery and Petrochemicals Integrated Development (RAPID) project in Johor.

Moreover, although the Ringgit has regained some strength in the market (trading at 2.90 to the SGD), an oversupplied oil market and slower demand for fuel continue to pose great pressure on the currency.

So why invest in Johor now?

As the only state linked to the third largest financial centre in Singapore, Johor has been catching up with synergies long overdue. The good bilateral relation between Malaysia and Singapore established by the Prime Ministers of both countries has given Johor tremendous advancement momentum.

While other states in Malaysia suffer from lower trade receipts, tourism spending in Johor has increased with the strong Singapore dollar.

The state will also see better transportation links to Singapore in particular via the Causeway and second link. Both countries are meeting in June for their yearly leaders’ retreat which is expected to progress transportation links further. The MoU for high speed rail links has been reported to be signed then.

One more exciting prospect is having direct air links to China. This will begin soon between Senai Airport and Guangzhou, China. The AirAsia route will be expected to bring in thousands of wallet-padded Chinese tourists to Johor.

Johor also has a relatively low population density.  With large growth in business, Johor will see a greater influx of workers and talent from other states in the near future.  This new migrant population will need housing and services. It means existing home owners will see greater demand for rental returns.

Across the causeway, Singapore economy continues to restructure. Many companies both large and small will look to move operations to lower cost destinations. Johor with its vast land and good links will be the single biggest beneficiary.  Many individuals especially Malaysians working in Singapore will look at Johor as the secondary home base either for recreation or retirement.

There has been little academic research on this future trend.  But I am certain that Johor will be the first port of call for both companies and individuals alike.

I believe many buyers do not study enough the future housing demand for rental.  Most buyers just buy what they can afford without evaluating other risks.  This is logical but inadequate. Mass buying causes developers to react in reciprocation. For example, many small or mini apartments were sold in the last few years to cater to affordability.  Sadly, equally many were returned to developers when fear set in.

You need to buy a good property when you can afford it.  Migrant workers and retiring Malaysians will not live in small cramped apartments. Many prefer better quality homes which mean securing places with facilities in a good neighbourhood.

As prices continue to increase, it is still much better to buy earlier than later.