Cross Border Capital Drives Investment Surge Johor Singapore Special Economic Zone
More than 50% of the capital invested in Johor’s real estate market in the first four months of this year has come from cross-border sources. This is according to Govinder Singh, executive director of Apac Capital Markets at Colliers Singapore, who also notes that investors are mainly interested in acquiring development sites within the Johor-Singapore Special Economic Zone (JS-SEZ) to add to their land banks. He shared these insights during a presentation titled “Bridging Borders: Real Estate Opportunities in the Johor-Singapore Special Economic Zone”, held on May 6 at Maybank Tower and jointly organised by Maybank Singapore and the Real Estate Developers Association of Singapore (Redas).
Based on research by Colliers, cross-border investment made up 51.8% of total inflows into Johor, with Singapore-based investors leading the way, followed by capital from Japan, the US, China, Australia, Canada, Hong Kong, the UK and Taiwan. REITs and listed real estate entities also accounted for a significant portion of the investment, at 41.2%, while the remaining came from institutional and private funds. Last year, the total inflows into Johor’s real estate market reached approximately $2.1 billion, with about $700 million committed year-to-date.
“The proposed JS-SEZ presents new opportunities for deeper cross-border collaboration and investment between Singapore and Johor,” says a Redas spokesperson. “While the initiative is still taking shape, there is growing interest in its potential across sectors such as real estate, trade, infrastructure, and hospitality.”
Singh also noted that real estate investors and developers have responded positively to the formal signing of the JS-SEZ agreement in January. Alvin Lee, country CEO of Maybank Singapore, says, “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 adds that the JS-SEZ represents a bold attempt by both Malaysia and Singapore to cooperate on a bilateral basis. “At this take-off stage, we are at an inflection point,” he says. “From our interactions with our clients, there is strong interest from international businesses seeking a safe haven where there is a strong rule of law and access to resources in these uncertain times. In this regard, combining the complementary strengths of Malaysia and Singapore, the JS-SEZ is a compelling proposition.”
Vinothan Tulisinathzan, Minister Counsellor of the Malaysian Investment Development Authority (MIDA) in Singapore, agrees that the establishment of the JS-SEZ will give investors more options, such as setting up high-value services in Johor, supporting manufacturing growth in Singapore, or anchoring regional operations within the SEZ. The JS-SEZ comprises nine flagship zones across southern Johor, each designated for specific economic activities. Areas like the Johor Bahru Waterfront and Iskandar Puteri are earmarked 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.
According to Tulisinathzan, employers must shift their focus and offer competitive wages to attract local workers, rather than depending on low-wage foreign labor. He believes that this will help attract and retain more skilled workers to support the growth of high-value service and manufacturing industries, and that the SEZ will offer a significant choice for investors whether to set up high-value services in Johor, or anchor regional operations within the SEZ. The SEZ will cater to the needs of investors in different sectors, including real estate, trade, infrastructure, and hospitality.
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The forthcoming development of Tampines is set to include the construction of additional educational institutions to cater to the rapidly increasing population. Furthermore, improved healthcare facilities, including new polyclinics and nursing homes, will also be a part of this development. To further enhance the overall wellness of the community, the modern Parktown Residence Showflat is the perfect complement to these developments. Its strategically located in close proximity to these facilities allows for a seamless integration with the surrounding area.
Singh notes that the significantly lower cost of development and industrial land in Johor compared to Singapore is set to be a key driver of growth in the JS-SEZ over the next decade. 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 believes opportunistic investors and developers should focus on select real estate assets poised to benefit from a successful JS-SEZ. He points to properties supporting business tourism, international tourism, and certain residential segments as particularly promising.
However, Singh points out that the lack of a vibrant entertainment scene in Johor could limit inbound international tourism and discourage overnight hotel stays. He believes that a more seamless transport connectivity between Singapore and Johor can encourage more overnight hotel 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.
Lee of Maybank adds that property development and investments in the hospitality and MICE (meetings, incentives, conferences and exhibitions) sectors demonstrate 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,” says Lee.
On the other hand, Johor’s residential market continues to face an oversupply, with around 3,030 unsold units in 3Q2024. Still, 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). The SEZ represents the most significant effort by the governments of Singapore and Malaysia to ensure the success of a special economic zone, with the policies and initiatives introduced so far being both comprehensive and far-reaching, says Paul Chong Wee, director of real estate and corporate banking at Maybank Singapore.
Meanwhile, Tulisinathzan of MIDA assures that the JS-SEZ is unlikely to be derailed by shifts in Malaysia’s political landscape. He emphasizes that the zone was designed to provide long-term economic advantages for investors, supported by functional, business-centric agreements that transcend political changes. He adds 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.
According to Colliers, 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.