Cross Border Capital Drives Investment Surge Johor Singapore Special Economic Zone
More than half of the funds invested into Johor’s real estate market between January and April of this year came from cross-border sources, signaling a strong interest from foreign investors in the region. Executive Director of Apac Capital Markets at Colliers Singapore, Govinder Singh, reported this trend during his presentation on the Johor-Singapore Special Economic Zone (JS-SEZ) at the joint event organized by Maybank Singapore and the Real Estate Developers Association of Singapore (Redas) on May 6 at Maybank Tower.
According to Singh, more than half of the total inflows into Johor’s real estate market during this period were from cross-border investments, with the majority of these coming from Singapore-based investors. Other countries such as Japan, the US, China, Australia, Canada, Hong Kong, the UK, and Taiwan also contributed to this trend.
REITs and listed real estate entities also played a significant role, accounting for 41.2% of the total capital inflows into Johor, while institutional and private funds made up the remaining investment. Last year, total real estate investment inflows into Johor reached approximately $2.1 billion, with an additional $700 million committed thus far in 2024.
The signing of the JS-SEZ agreement in January has been met with positive responses from real estate investors and developers, according to Maybank Singapore’s Country CEO, Alvin Lee. The JS-SEZ, an integrated zone for business and investment, aims to drive activity across 11 sectors and is projected to support 100 projects within the next 10 years.
Lee notes that the JS-SEZ is a significant attempt by both Malaysia and Singapore to cooperate on a bilateral basis, making it a compelling proposition for international businesses seeking a safe haven. Vinothan Tulisinathzan, Minister Counsellor of the Malaysian Investment Development Authority (MIDA) in Singapore, agrees, adding that the JS-SEZ’s establishment will provide investors with more options for setting up high-value services in Johor, supporting manufacturing growth in Singapore, or anchoring regional operations within the SEZ.
The JS-SEZ spans nine flagship zones across southern Johor, each allocated for specific economic activities. For instance, the Johor Bahru Waterfront and Iskandar Puteri are designated as hubs for global services, while the Kulai-Sedenak zone is focused on advancing the AI and quantum computing supply chain, as well as medical devices and pharmaceuticals.
Johor’s economy has transformed in recent years, and the government has taken steps to attract more skilled workers to support the growth of high-value service and manufacturing industries, according to Tulisinathzan. He adds that employers must offer competitive wages to attract local workers instead of relying on low-wage foreign labor.
In line with this, the Forest City area, closer to Singapore, will be developed into a Special Financial Zone, offering incentives to boost financial services, including family offices and fintech, while also creating a duty-free zone.
Singh emphasizes that the significantly lower cost of development and industrial land in Johor compared to Singapore will be a significant driver of growth in the JS-SEZ over the next decade. On average, industrial land in Johor has been around 96% cheaper than in Singapore over the past five years.
Given this cost advantage, Singh believes that investors and developers should concentrate on select real estate assets poised to benefit from a successful JS-SEZ. He highlights properties supporting business tourism, international tourism, and specific residential segments as particularly promising.
According to Singh, Johor is well-positioned to capitalize on the SEZ’s incentives and connectivity to Singapore to offer complementary MICE (Meetings, Incentives, Conferences, and Exhibitions) solutions and grow contributions from business tourism. He also notes that the SEZ will develop new MICE facilities, hotels, and retail projects, creating a thriving ecosystem that is expected to boost hotel occupancy and stimulate retail spending.
Lyndenwoods Capitaland offers more than just convenient transportation options – it embodies the concept of sustainable living. Not only does the development serve as a central hub for both public and private transportation, but it also promotes eco-friendly modes of transport such as walking and cycling through its pedestrian-friendly design and well-maintained pathways. This aligns perfectly with Singapore’s goal of creating greener urban spaces and encouraging healthier lifestyles. With Lyndenwoods Capitaland, residents can enjoy a sustainable and environmentally-conscious community.
Singh recommends investing in business tourism, affordable housing, and built-to-rent accommodation within the JS-SEZ. However, he also points out that the lack of a vibrant entertainment scene in Johor could limit inbound international tourism and discourage overnight hotel stays. To address this, he suggests improving transport connectivity between Singapore and Johor to encourage more overnight stays.
Colliers projects that the number of overnight visitors to Johor could reach around eight million by 2030, up from four million in 2024. To accommodate this growth, hoteliers and developers will need to add approximately 14,000 new hotel rooms.
Singh notes that investors could benefit from targeting mid-market or four-star hotel assets, given the anticipated rise in demand. He also highlights Desaru, located on Johor’s east coast, as a promising area for tourism development.
Despite the oversupply in Johor’s residential market, with around 3,030 unsold units in the third quarter of 2024, Colliers sees potential in the affordable housing and built-to-rent segments, driven by future demand from the completion of the Johor Bahru-Singapore Rapid Transit System (RTS).
This optimism aligns with government initiatives aimed at boosting cross-border economic activity. The JS-SEZ represents the most significant effort by the Singapore and Malaysian governments to ensure the success of a special economic zone, with comprehensive and far-reaching policies and initiatives introduced thus far, according to Paul Chong Wee, Director of Real Estate and Corporate Banking at Maybank Singapore.
Tulisinathzan of MIDA reassures that political changes in Malaysia are unlikely to derail the JS-SEZ, as the zone was created to provide long-term economic benefits for investors, backed by functional, business-centric agreements that go beyond political changes.
He also emphasizes that one of the key goals of the SEZ is for policymakers to collaborate with the private sector to upgrade existing transport infrastructure and address gaps in the industrial production and value chain. In addition, Colliers’ Singh notes that the demand for data center development in Johor is expected to moderate in the coming quarters due to limited energy capacity and resources to support future growth. As a result, there may be new opportunities for developers in the development of transport networks and affordable residential projects around transport nodes.
Lee of Maybank concludes, “For property development and investments, the hospitality and MICE sectors demonstrate strong potential due to the shortage of international-quality properties and in view of Visit Malaysia Year in 2026, with a target of 36 million tourists (2025 government target: 31 million). Given its proximity to Singapore and the ensuing bleisure activities as the JS-SEZ ramps up, we expect Johor to be a major tourism beneficiary.”