KUALA LUMPUR: Johor should implement several strategies to boost real estate development and transactions while drawing foreign direct investment (FDI).
According to an expert in the field, attracting FDI requires a planned approach and a favourable business environment.
"The government of Johor State must make sure that its infrastructure, including its ports, airports, and utility systems, is well-developed while Malaysia seeks concept proposals to revive the high-speed rail project with Singapore. This encourages the establishment of commercial activities and brings down operating costs," he told NST Property.
He said that further incentives should be given to foreign investors, such as tax breaks, grants for investments, or land with subsidies, to help them with their first financial burden and persuade them to invest in Johor.
Other considerations include reducing bureaucracy, enhancing the efficiency of administrative procedures, facilitating corporate transactions, and investing in educational and vocational training programmes to develop a skilled workforce.
The development of a special financial zone in Iskandar Malaysia will rekindle interest in office space in Johor Bahru (JB), according to Samuel Tan, executive director of KGV International Property Consultants (M) Sdn Bhd.
He told NST Property that because of Singapore's high cost of doing business, back offices for banks, family offices, and other associated services would migrate to JB, particularly from Singapore.
"Another factor is the requirement for geographic diversification, which would eventually result in a thriving property market for Johor," he said.
According to Tan, there are a few areas where JB might better capitalise on its DNA and what they should do to advance.
He believes that the potential for medical tourism is enormous and just waiting to be realised.
"As it is, JB is already relatively popular in the region, especially for Indonesians to seek treatment and medical check-ups. There is so much potential in the field of medical tourism that needs to be tapped. To tap into our relatively affordable cost base and strategic location, we should position our medical tourism to cover holistic body check-ups, wellness programmes, and treatment," he said.
Tan said that there will be chances to collaborate more closely on trickier cases by forming connections with Singaporean medical facilities.
"Some will choose JB for rest and rejuvenation post-surgery. Wellness centres and retirement villages are popular concepts that have not been fully exploited but have great potential in JB," he said.
Private international education, according to Tan, is another potential development sector.
He said that although Singapore is renowned for its educational system, the cost of institutions in the Republic that provide international curricula has skyrocketed.
Another obstacle is the high cost of living for overseas students, which makes the issue worse, he said.
"It is time to develop our existing private educational institutions, especially within Educity Iskandar, and make them a hub offering a wide range of courses.
"High quality education for international students will attract foreigners, expatriates staying in Singapore, and even some Singaporeans. There are Singaporeans studying at our current private colleges and universities for some courses offered in the United Kingdom," he said.
Educity Iskandar is home to the University of Reading Malaysia, Newcastle University Medicine Malaysia, Raffles University, Kolej MDIS, Marlborough College, Netherlands Maritime University College, Educity International College, IDRISSI School, and Educity Academy.
Tan further said that JB should be marketed as a well-known travel destination on a worldwide basis.
He said that a trip to Malaysia may be paired with one of the many attractions in JB.
"Apart from visiting the usual theme parks and shopping destinations, other activities such as hiking, island-hopping, cultural tours, and kampong adventures packaged together with personal wellness and food adventures could be refreshing and fun for Singaporeans and foreign tourists scouting the region entering via Singapore," he said.
He said that the fields of health and wellness are also rising and are hot topics, even in growing countries like Malaysia.
"Malaysia benefits from the high cost of healthcare in its neighbouring countries. We see many Indonesians coming over to hospitals in JB, Melaka, KL, and Penang for their healthcare needs. Those who require a longer recuperation period are already using Malaysia, as the cost is much cheaper.
"'For wellness centres and retirement homes, these are already happening, and we anticipate more of these to mushroom here. We have both the space and the lower cost to draw them over for the same quality of treatments," he said.
Attracting FDIs to boost the real estate market
RHB Research analyst Loong Kok Wen said Johor has been one of the preferred destinations in Malaysia among multinational investors.
"The ready infrastructure and reasonable land prices are the key attractions in our view, given various road accessibility, airports, and sea ports, as well as proximity to Singapore," she said.
According to the Malaysian Investment Development Authority (MIDA), Malaysia has attracted RM264.6 billion (-14.5 per cent year-on-year) in approved investments in the services, manufacturing, and primary sectors in 2022.
Johor was the top state for FDI inflow, with RM70.6 billion recorded last year, representing 27 per cent of the total.
Loong said that in recent years, Johor has also become a popular area for data centre investments.
This is largely catalysed by the moratorium imposed by the Singapore Government in 2019 on data centre construction. The moratorium was lifted in 2022, but stringent conditions were imposed to enable the country to meet its carbon goals.
"In 2022, data centre investments alone contributed RM51.1 billion for Johor, and it was cited that the state would see RM17 billion worth of new investment in data centres in 2024," she said in a note.
Loong said that apart from data centres, Johor continues to see investments from many international manufacturers and pharmaceutical players.
Over the last one to two years, notable investors include Bucher Emhart Glass (an international glass container supplier), Colorcon Inc (a global healthcare company), HQ Pack (a high-tech packaging manufacturer), and Insulet Corp (a US-based medical device company).
Loong said the firm is looking forward to more updates on the Johor-Singapore special economic zone.
"We expect renewable energy to be a new economic driver for Johor in the coming years. Further economic collaboration between Johor and Singapore will likely result in positive spillover to the Iskandar property market given the low base in terms of property prices and the almost standstill demand situation over the last six to seven years," she said.