Under the Spotlight: Johor Enters a Growth Era with Major Developments on the Horizon
All eyes are on Johor as a slew of state government initiatives begin to take shape. From the highly anticipated Rail Transit System (RTS) to the Johor-Singapore Special Economic Zone (JSSEZ), investors should watch out for upcoming economic incentives and infrastructure upgrades that promise to transform the region’s property market. Here’s a look at the key projects driving Johor’s growth.
Johor’s property market is entering an exciting new phase, positioning itself as a key player in Malaysia’s real estate scene. According to the National Property Information Centre’s (NAPIC) H1 2024 Property Market Report, Johor accounted for 15.3% of residential transactions nationwide, with 18,648 units sold, contributing a hefty RM9.02 billion in property value. This ranks Johor as the second most active state for property sales, signalling healthy demand. Not only that, Johor led the country in terms of new property launches, claiming 23.6% of the total with over 5,300 new units hitting the market in H1 2024. With a notable sales performance of 38.3% out of the national total, it’s clear that both buyers and investors have their eyes set on this southern state.
Recent government initiatives will further stimulate Johor’s property market. Among the key measures introduced in 2024 are the extension of full stamp duty exemptions for first-time homebuyers purchasing properties valued at up to RM500,000, applicable until the end of 2025. Additionally, foreign investors are being enticed with a flat 4% stamp duty on land transfers for non-citizens and foreign-owned companies. Moreover, the easing of Malaysia My Second Home (MM2H) requirements is expected to attract a new wave of international buyers, boosting both the residential and commercial sectors. These strategic measures will amplify the ongoing infrastructure projects and exciting development in the state.
RTS is the connectivity game-changer Johor has been waiting for
The Rapid Transit System (RTS) Link between Johor Bahru and Singapore is widely regarded as a transformative project that will redefine connectivity between the two countries. Spanning 4km, it will connect Bukit Chagar in Johor Bahru to Woodlands North in Singapore, slashing commuting time to just 5 minutes. Once completed, the RTS will be able to handle 10,000 passengers per hour each way, helping to ease the heavy traffic on the Johor-Singapore Causeway. As of May 2024, the project was 80% complete, and it remains on track to begin operations by the end of 2026—a timeline eagerly anticipated by daily commuters and visitors alike.
The RTS already had a significant impact on Johor Bahru’s property market, driving up demand in key areas. After Malaysia entered the endemic phase in April 2022, PropertyGuru Malaysia recorded a 29% surge in Johor Bahru’s property demand index. This trend continued as the RTS project reached 50% completion in 2023, where a 17% increase in residential property demand was observed. According to NAPIC, Johor also led the nation in the 2023 Malaysian House Price Index (MHPI), posting an annual home price growth of 6.2%. With property prices expected to rise even further as the RTS nears completion, homes located near the link will undeniably enjoy good capital appreciation.
Special Financial Zone (SFZ) Drums up Excitement in Forest City
The recent announcement of a Special Financial Zone (SFZ) in Forest City has sparked fresh excitement, particularly with the attractive incentives laid out by Finance Minister II, Datuk Seri Amir Hamzah. Key benefits include a 0% tax rate for single-family offices, a competitive corporate tax rate between 0% and 5%, and a special individual income tax rate of 15% for knowledge workers who choose to work in the area. Besides that, foreign banks operating in Malaysia will have more flexibility to open new branches within the SFZ and benefit from relaxed foreign exchange rules for offshore borrowing and investments.
These incentives are designed to draw in high-net-worth individuals, businesses, and professionals, making Forest City an appealing destination for both local and international talent. The aim is clear: to transform the area into a financial and economic hub that attracts long-term investments. Earlier this year, Prime Minister Anwar Ibrahim expressed that the 2832.8 hectares SFZ has the potential to give Johor’s economy a significant boost, possibly allowing it to outpace other Malaysian states within the next few years. This, coupled with Forest City’s newly granted duty-free island status on 18th October 2024, is expected to increase tourism and spur property demand.
Special Economic Zone (JSSEZ) Set to Catalyse Growth in Johor
The Johor-Singapore Special Economic Zone (JSSEZ) is shaping up to be a major catalyst for Johor’s growth, spanning 3,505 square kilometres across six local authorities including Johor Bahru, Iskandar Puteri, and Pasir Gudang. By creating a well-integrated space for various sectors to flourish, namely education, financial services, energy, pharmaceuticals, aviation, logistics, and the digital economy; the JSSEZ is positioned to attract significant foreign investment and expand Johor’s economic base. Both the Johor and Malaysian governments have expressed a strong commitment to finalizing the JSSEZ agreement with Singapore by the end of 2024, a move that will further unlock cross-border synergies.
Lee Kun Thye, Director of Knight Frank (Johor Branch) opines that the key to JSSEZ’s success will be the incentives provided, such as tailored tax and trade benefits that align with the needs of targeted sectors, including finance, logistics, and technology. With the potential for streamlined regulatory processes and efficient implementation, the JSSEZ could foster a more diverse economic ecosystem in Johor. This would not only enrich the region’s industry base but also reinforce its role as a hub for cross-border trade and investment.
Interest from Singaporean businesses is high too, with a report from the Singapore Business Federation showing that 93% of surveyed companies consider Johor an attractive investment destination, while 50% already have a presence there. The establishment of the JSSEZ is expected to drive up demand for office space, with businesses relocating and expanding within the zone. Lee notes that Johor’s industrial properties, traditionally popular among Singapore-based manufacturers for relocation and expansion, are now attracting even greater interest. These manufacturers are drawn by Johor’s strategic advantages, including streamlined goods transport via the Causeway and Second Link, lower operational costs, and access to a skilled workforce.
She adds, “We’re seeing a notable increase in inquiries from Singapore for office spaces in Johor, especially for fitted units and Grade A office buildings near the RTS Link and Second Link. Many businesses are looking to establish satellite offices or relocate back-office functions to take advantage of Johor’s connectivity and lower costs.”
For residential real estate, Lee anticipates sustained demand for high-rise units near the RTS Link and Causeway, driven by improved travel ease and rising interest from Singapore dollar earners. “The stronger currency of the Singapore dollar gives both Singaporeans and Malaysians working in Singapore greater purchasing power,” she explains. “City fringe areas like Skudai, Tebrau, Permas, and Medini may also see spillover demand as interest in these convenient, connected neighbourhoods grows.”
Proliferation of data centres to boost industrial property market
The trend of data centre operators choosing Johor as their base has been gaining momentum, with local developers welcoming these high-tech facilities into their industrial parks. According to Sr Tan Wee Tiam, Executive Director of Olive Tree Property Consultants, Johor’s data centres are currently concentrated in Iskandar Puteri, where the Nusajaya Tech Park and Nusa Cemerlang Industrial Park are located as well as the Sedenak-Kulai corridor, which is home to Ibrahim Technopolis and the YTL Green Data Centre Park. He says, “The growing number of data centres in the market shows that Johor’s authorities have worked quickly to ramp up power and water capacities to support the rising demand. We can expect to see sustained interest from digital, e-commerce, cloud services, and AI industries”.
Sr Tan explains that the strong interest in Johor’s data centre market is partly due to capacity restrictions in neighbouring Singapore. “After Singapore imposed a moratorium on new data centres in 2019 due to sustainability concerns, Johor became an alternative hub for operators seeking space and resources. Although this moratorium was lifted in 2022, stricter conditions now limit data centre capacities. Thus, by the end of 2024, Johor is expected to see approximately RM17 billion in new data centre investments,” he adds.
However, Sr Tan cautions that the billion-dollar investments seen so far largely cover land and construction, hence the full economic impact remains to be seen. He hopes these data centres will act as a draw for more MNCs and service providers in high-tech fields, boosting sectors such as education, real estate, healthcare, financial services, and logistics. This in turn would create a broader ecosystem around Johor’s growing tech industry and thus generate more high-value jobs in software development, cybersecurity, AI and cloud computing.
Elevated Automated Rapid Transit (ART) to Enhance Intra-state Connectivity
The Elevated Automated Rapid Transit (ART) system promises to bring a new level of connectivity within Johor, combining the convenience of a train with the flexibility of a bus. Developed by China’s CRRC, this innovative hybrid vehicle operates autonomously on designated roadways and is already in use in cities like Perth, Australia, and Monterrey, Mexico. Johor’s ART system will feature three primary lines: the 14.78 km Iskandar Puteri line, the 18.8 km Skudai line, and the 14 km Tebrau line. Each line is strategically planned to connect high-traffic zones, helping to ease movement across the state and reducing reliance on car travel.
Chief Minister of Johor Onn Hafiz Ghazi has shared that the ART will operate on a combination of ground-level roads in less congested areas and elevated tracks (viaducts and bridges) in busier zones. This adaptable design allows it to bypass traffic bottlenecks during peak hours, potentially making it a preferred choice for commuters in bustling business districts. Should the ART be seamlessly connected to the upcoming RTS, it would provide Singaporean business travellers with more efficient travel options as well. Property investors should act fast – positioning themselves near ART lines will allow them to capitalise on future rental demand from working professionals who prioritize connected, transit-friendly locations.
IIB to Shape a Digital Economy in Iskandar Puteri
Iskandar Investment Bhd (IIB), the main developer behind Iskandar Puteri, is working to shape the region into a digitally powered economy, laying the groundwork for a smart, tech-driven future. In a major leap forward, IIB recently joined forces with TM-Nxera—a collaboration between Telekom Malaysia and Singtel—to establish state-of-the-art digital infrastructure in the region. This partnership aims to make digital services faster, smarter, and more accessible, setting the stage for an ecosystem where both government and private sectors can thrive with advanced technology.
Iskandar Investment Berhad (IIB) has also launched Tech Medini, a 160-acre zone aimed at establishing Medini as Johor’s top Digital and Innovation Hub. Designed for the development of emerging technologies like AI, robotics, and cybersecurity, Tech Medini aims to attract US$1.9 billion in investments and create 65,000 jobs in the Medini area. The tech zone will also offer support services, namely Medini Nexus and Medini Soft Landing Programme – where startups will have access to co-working spaces, mentorship by seasoned entrepreneurs and test site environments. By providing a space where businesses can thrive on innovation, Tech Medini is expected to attract high-tech companies and skilled talent to Iskandar Puteri, positioning it as a top destination for digital transformation and growth in Malaysia.
East Coast Expressway Phase 4 (LPT4) to Drive Trade and Boost Tourism
Yet another feather in Johor’s transportation infrastructure cap is the East Coast Expressway Phase 4 (LPT4). Measuring 250km, LPT4 will enhance connectivity in southern Johor, linking key residential areas like Johor Bahru, Kota Tinggi, and Mersing. By improving traffic flow and easing congestion, this new route will provide smoother access to Johor’s coastal towns, making travel easier for both residents and visitors. More importantly, LPT4 will play a role in boosting regional trade and tourism, with Mersing expected to see growth as a coastal tourist destination.
LPT4 will also support Johor’s broader infrastructure and public transport plans, aligning with projects such as the Elevated ART system to create a more connected and accessible state. The East Coast Expressway is actually part of the Government’s aspiration to narrow the socioeconomic gap between the East and West coasts of Peninsular Malaysia – it is anticipated to create numerous jobs in the construction sector and related fields, contributing to local economic growth and supporting communities along the route.
Johor’s Transition from Overhang to Opportunity
Johor’s transformation from a state bearing the highest property overhangs in Malaysia to a promising driver of national growth signals a remarkable shift. With ambitious initiatives and special economic incentives in place, the state government aims to boost Johor’s GDP by 7.8% annually, reaching RM260 billion by 2030—up from RM142.1 billion in 2022 and a pre-pandemic growth average of 5.1%. As Johor develops into a more active economic centre, its real estate market presents new investment possibilities. Enhanced connectivity and development initiatives are likely to improve property values, while sectors such as retail and hospitality are likely to benefit from increased visitor spending. For investors and homebuyers alike, Johor’s ongoing evolution opens up a wealth of real estate opportunities.
