Cross Border Capital Drives Investment Surge Johor Singapore Special Economic Zone
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In the first four months of this year, more than half of the real estate investment capital that flowed into Johor’s property market came from cross-border sources. According to Apac Capital Markets’ executive director at Colliers Singapore, Govinder Singh, these investors are primarily interested in purchasing development sites within the Johor-Singapore Special Economic Zone (JS-SEZ) to expand their land holdings. Singh shared this information during a presentation titled “Bridging Borders: Real Estate Opportunities in the Johor-Singapore Special Economic Zone”, which was held on May 6 at Maybank Tower and was jointly organized by Maybank Singapore and the Real Estate Developers Association of Singapore (Redas).
Based on research from Colliers, cross-border investment accounted for 51.8% of the total inflow of capital, led by investors from Singapore, followed by Japan, the US, China, Australia, Canada, Hong Kong, the UK, and Taiwan. Additionally, REITs and listed real estate entities contributed to 41.2% of the capital inflow into Johor during the first four months of this year, with institutional and private funds making up the remainder. Last year, total real estate investment in Johor reached approximately $2.1 billion, with about $700 million committed year-to-date.
A Redas spokesperson stated, “The proposed JS-SEZ presents new opportunities for deeper cross-border collaboration and investment between Singapore and Johor. While the initiative is still in its early stages, there is a growing interest in its potential across various sectors, including real estate, trade, infrastructure, and hospitality.”
Real estate investors and developers have responded positively to the formal signing of the JS-SEZ agreement in January, according to Alvin Lee, Maybank Singapore’s country CEO. He added, “As an integrated zone for business and investment, the JS-SEZ aims to drive activity across 11 sectors, with a 10-year goal of supporting the expansion of 100 projects.” Lee pointed out that the JS-SEZ represents a bold attempt by both Malaysia and Singapore to cooperate on a bilateral basis. “At this stage, we are at a turning point. Based on our interactions with clients, there is a strong interest from international businesses seeking a safe haven with strong rule of law and access to resources in these uncertain times. In this regard, combining the strengths of Malaysia and Singapore, the JS-SEZ is a compelling proposition,” he explained.
John Griffith-Jones, country CEO of Maybank Singapore, said that the SEZ complements the economies of both countries. (Picture: Albert Chua/)
Vinothan Tulisinathzan, Minister Counsellor of the Malaysian Investment Development Authority (MIDA) in Singapore, echoed this sentiment. “The establishment of the JS-SEZ will give investors more options – whether to set up high-value services in Johor, support manufacturing growth in Singapore, or establish regional operations within the SEZ,” he said.
The JS-SEZ spans nine flagship zones across southern Johor, with each zone designated for specific economic activities. Zones such as 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.
Tulisinathzan said, “Johor’s economy has undergone a significant transformation in recent years, and the government is eager to attract and retain more skilled workers to support the growth of high-value service and manufacturing industries.” He added that employers must shift their focus and offer competitive wages to attract local workers, rather than solely depending on low-wage foreign labor.
As a result, the Forest City area, which is closer to Singapore, is set to be developed into a Special Financial Zone. This initiative will offer incentives to boost financial services, including family offices and Fintech, while also transforming the area into a duty-free zone.
Singh pointed out that the significantly lower cost of developing and industrial land in Johor compared to Singapore is expected to be a key driver of growth in the JS-SEZ over the next decade. He highlighted that, on average over the past five years, industrial land in Johor has been around 96% cheaper than in Singapore. Building on this cost advantage, Singh believed that opportunistic investors and developers should focus on select real estate assets that are poised to benefit from a successful JS-SEZ. He pointed to properties supporting business tourism, international tourism, and certain residential segments as particularly promising.
“Johor is well-positioned to capitalize on the incentives from the SEZ and connectivity to Singapore to offer complementary meetings, incentives, conferences, and exhibitions (Mice) solutions and grow contributions from business tourism into Johor,” he said. Singh also added that the SEZ is set to develop new Mice facilities, hotels, and retail projects, creating a thriving Mice ecosystem that is expected to boost hotel occupancy and stimulate retail spending.
Singh recommended investing in business tourism, affordable housing, and built-to-rent accommodation within the JS-SEZ. (Picture: Albert Chua/)
However, Singh noted that the lack of a vibrant entertainment scene in Johor could limit inbound international tourism and discourage overnight hotel stays. He suggested, “A more seamless transport connectivity between Singapore and Johor can encourage more overnight hotel stays.” According to Colliers, 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 believed that investors could benefit from targeting mid-market or four-star hotel assets, given the expected increase in demand. Additionally, there may be room for a five-star property catering to Mice-related travel. He highlighted Desaru, located on Johor’s east coast, as a promising area for tourism development.
The Johor residential market continues to face oversupply, with approximately 3,030 unsold units in 3Q2024, according to Colliers. However, the consultancy 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 broader government initiatives aimed at boosting cross-border economic activity.
Paul Chong Wee, director of real estate and corporate banking at Maybank Singapore, said, “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 so far.”
Tulisinathzan of MIDA further reassured that the JS-SEZ is unlikely to be affected by shifts in Malaysia’s political landscape. He emphasized that the zone was designed to provide long-term economic advantages for investors, supported by practical, business-centric agreements that transcend political changes. He added 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.
Meanwhile, Colliers’ Singh noted that 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, the development of transport networks and affordable residential projects around transport nodes presents new opportunities for developers.
Alvin Lee, Maybank Singapore’s country CEO, stated, “For property development and investments, the hospitality and Mice sectors show strong potential due to the shortage of international quality properties and in view of Visit Malaysia Year in 2026, where 36 million tourists are targeted (2025 government target: 31 million). We expect Johor to be a major tourism beneficiary given its proximity to Singapore and ensuing bleisure (business-leisure) activities as the JS-SEZ ramps up.”