_Ten-Year Review of Iskandar Malaysia Real Estate Investment Market 2007 - 2016

Established in late 2006, the special economic zone of Iskandar Malaysia with five flagship zones spread across Southern Johor is envisioned to be the next Shenzhen given its locational advantage, growing population and immense economic potential. 

From 2007 to 2016, Iskandar Malaysia recorded a total sale of investment properties of more than US$8.1 billion. In 2013, investment sales volume into Iskandar Malaysia peaked when more than US$3.3 billion worth of investment properties were transacted and over 76.4% them were purchased by foreign investors.

During this ten-year span, foreign investments accounted for 47.7% of the total investments into land, residential, commercial, industrial and specialised properties. China was the major foreign investor group, with close to $3 billion invested solely in development sites. Coming in second was Iskandar Malaysia’s closest neighbour – Singapore, who poured $826.7 million into development sites (86.7%) as well as industrial and warehouse properties (13.3%). 

High industrial property price, manpower and utilities costs as well as tight foreign labour rules in Singapore continue to encourage the move of manufacturing and warehouse operations to the more affordable Iskandar Malaysia. Notably, Japanese retail developer and operator Aeon was the only Japanese investor here, having acquired three sites for the construction of Aeon shopping malls.

In the past ten years, the biggest deals were residential development sites especially those around Danga Bay and Medini/ Iskandar Puteri areas. Notable deals include:

In addition, enbloc deals for several malls were done in conjunction with the authority’s plan to gentrify parts of Johor Bahru (JB). A good example would be Kemayan City, a site abandoned during the 1997-98 Asian Financial Crisis. In 2013, it was sold and redeveloped into the soon-to-be-opened Paradigm Mall that comes with hotel and serviced apartments as part of its future phases. Another example is Menara Landmark, which was long dilapidated and subsequently changed hands and was redeveloped into a prime office building, medical suites and a DoubleTree by Hilton hotel.

Ricky Lee, Knight Frank Johor Executive Director of Research and Consultancy comments: “The increased transactions and development activities from domestic and foreign investors in Southern Johor would certainly create more employment opportunities as well as demand for residential and commercial properties. We remain positive about the property outlook for Iskandar Malaysia in the medium to long term.”

The ongoing transport connectivity improvements and developments bode well for Iskandar Malaysia. The development of the High Speed Rail connecting Kuala Lumpur and Singapore will see investors compete for positions close to the proposed station locations which includes a station in Iskandar Puteri (formerly known as Nusajaya), part of Iskandar Malaysia. Also, a cross-border MRT from Singapore to JB is being materialised. Additionally, the Coastal Highway Southern Link, which is set to open by 2017, will be another strong catalyst as traffic will be directed through the Medini/ Iskandar Puteri areas from JB city centre. 

For parties interested in research and consultancy work in Iskandar Malaysia, please contact Ricky Lee at +607 3382 888 or ricky.lee@my.knightfrank.com