The Malaysian ringgit’s recent rise has not dampened strong demand among Singaporeans for properties in Johor as the state continues to be a magnet for those seeking to buy another home to meet their retirement, investment and holiday needs.
Among them is corporate solutions specialist Stephanie Koh, who plans to retreat to a 2,659 sq ft, 40th floor flat in Johor that overlooks the northern end of Singapore upon her retirement.
The unit, which the 45-year-old Singaporean bought about a month and a half ago, is nearly twice the size of her condominium in the city state where she currently lives with her husband and 11-year-old daughter.
On Monday, the ringgit jumped the most in nine years on bets foreign capital will flood into Malaysia amid optimism about its economic outlook. The currency surged by as much as 2.3 per cent to 4.3945 against the US dollar on Monday and is on course to rise to its highest level since October 2015.
Koh said that she had factored in the volatile ringgit movements when she decided to purchase her flat at The Astaka for 2.5 million ringgit (US$556,000).
“I understand that people lost money about 10 years ago but the market now is different. The ringgit is still lower compared to last time. This, with the RTS and the value of the home, prompted us to buy it,” said Koh, referring to the coming Johor Bahru-Singapore Rapid Transit System (RTS) Link.
The RTS, a 4km rail shuttle service, is targeted to start by December 2026 and will cut travel time between the two cities to about 15 minutes, officials have said.
“It’s nice to have an alternative accommodation, we will use this property as our family holiday home,” she added.
Koh’s plan is to enjoy the condominium while travelling around the world. She noted that the proximity to Singapore meant she could still be close to her family.
Singaporean buyers told This Week in Asia that the impact of Singapore’s cost of living compared with Johor outweighed that of the ringgit’s movements in recent weeks.
A 52-year-old private tutor, who wished to be known only as Tan, bought a 1,300 sq ft unit with unblocked views of the Johor Strait at R&F Princess Cove last year as her retirement home.
“In Singapore, retirement means downsizing and downgrading; selling your car, moving from condos to HDB flats. It’s like everybody is downgrading to afford to retire,” said Tan, referring to public housing flats run by the Housing and Development Board.
Similar to Koh, Tan’s flat at Princess Cove is more than twice the size of her two-room public housing flat in Singapore, and she plans to rent the latter out when she retires.
The cost of living and the RTS link were key reasons more Singaporeans were buying properties in Johor, said real property agents and experts.
The RTS will carry up to 10,000 people per hour in each direction between Bukit Chagar in Johor and Woodlands North, absorbing at least 35 per cent of the human traffic at the Causeway and easing the congestion which has long plagued the land link between Singapore and Malaysia.
Tan Tee Khoon, country manager of Singapore at PropertyGuru, said based on the company’s data, demand for residential homes for sale in Johor Bahru has been steadily increasing since October 2019.
The PropertyGuru demand index for such properties, which is calculated based on the number of visitors to property listings and weighted by their engagement and search behaviour, jumped almost three times from October 2019 to April this year.
Nearly 44 per cent of property seekers looking for a residential property in Johor Bahru in April were from Singapore.
High rents and a strong Singaporean currency make owning a home in Johor Bahru more attractive
The demand index for residential homes for rent in Johor Bahru also jumped significantly after the reopening of the Johor-Singapore border in February 2022, and has remained largely stable since, Tan said.
“High rents and a strong Singaporean currency make owning a home in Johor Bahru more attractive. Additionally, the announcement of the Johor-Singapore Special Economic Zone and the RTS further drove up rental prices,” he added.
Eve Ang, a property agent from ERA Real Estate Johor, said while the exchange rate, coming RTS link and lower costs have made Johor properties more attractive to Singaporeans, they should be aware of some potential risks. These include a slew of new developments in Johor which could lead to supply outpacing demand, and maintenance and tenant management issues surfacing when property owners are not around.
“The Malaysian government might change policies or there could be economic instability, which can affect property values,” Ang added.
Founder and chief executive of Far Capital Faizul Ridzuan noted that property developers in Johor were catering mainly to foreign buyers.
For recent launches, the selling price was above 1,000 ringgit per square foot on average which Faizul said was a “crazy price point” for Malaysians, he added: “They would pay 600 ringgit per square foot maximum so the only people who would pay that kind of money are Singaporeans.”
He said that investors who bought properties in Johor a decade ago were “burned” because the nearby infrastructure was not ready but this has been resolved with the coming RTS.
“Finally, the infrastructure is able to reasonably cater to people who are looking to commute on a daily basis,” said Faizul, who added that Johor has become much safer compared with a decade ago.
Faizul noted that the lack of knowledge of how the local markets work in Malaysia had also made it difficult for investors to profit in the past. He said: “They’ve heard the story before of empty promises and supposed infrastructure that never happened. But today as far as RTS is concerned, it’s a certainty now because the key infrastructure has been installed so people can see it is becoming a reality.”
But the main drivers behind their buying decisions are the cost of living and the rental pressures coming out of Singapore, according to Faizul.
He said: “Malaysia is still as politically volatile as it can be but the difference in the cost of living pressures and the quality of life, what can buyers afford to eat the next day is more important to them than who’s going to become a prime minister.”
