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Why I’m Looking to Buy Property in Johor Bahru

Calvin Lo

I just read an article from ST today regarding renewed interest in Johor Bahru (JB) properties from Malaysians and Singaporeans alike with progress on the Rapid Transit System (RTS) Link. RTS Link will connect Woodland North MRT in Singapore with Bukit Chagar in JB. I’ve been toying with the idea myself of buying a property in JB, so I wanted to share my initial thoughts while doing further research.

SG property is expensive

I think most Singaporeans regard property as a staple in their investment portfolios. Currently, I don’t own any investment property besides my owner-occupied HDB flat. My family of 4 currently reside in a 3-room flat in mature estate, within walking distance to a primary school I hope my kids can get into come P1 registration next year. We have also fulfilled MOP so that’s not an issue to buy another property.

Owning a 2nd property in Singapore is out of reach for us at the moment, especially considering the ABSD of 20% (increased from 17% on 29 Apr 2023) for SC buying 2nd property. That’s in addition to BSD of 1-6% (tiered). Refer to IRAS website. Even without BSD and ABSD, private property prices are already so expensive.

Why JB?

Naturally in conjunction with strong SGD, we might be tempted to look overseas for that 2nd property purchase. Since I have family in Malaysia and Australia, those were the first places I looked. Then, I expanded my search to include New Zealand since conditions are quite favourable for Singaporeans to buy property there, e.g. no stamp duty.

So far, JB seems to be the more affordable option based on the prices I’ve seen so far. Since the pandemic, there’s been an oversupply of housing inventory which has resulted in falling house prices there. Of course, it won’t make sense to buy property if prices are expected to continue falling, but recently there seems to optimism that prices could recover or at least stabilise a bit.

For me, I’m looking at JB property mainly because I can buy a landed property with much larger liveable space at a fraction of the cost vs Singapore.

Why buy?

However, I’m not thinking of buying purely for investment purposes at the moment, so I’m not targeting prime condominium or apartments in JB city or close to RTS station at Bukit Chagar.

My current thinking is for a landed property closer to Second Link, which also happens to be closer to our HDB in Singapore so we can reach it easily especially for short vacations. If the property is not too old, it could be a viable retirement option too.

Besides affordability and space, owning a landed property in JB would also allow me to host my family members so they can use it as a base to visit Singapore. As my kids grow up, our HDB has become too small to host my parents, siblings or friends when they come to visit.

Having to cross the border is not ideal of course, but hopefully with RTS Link and if our governments can sort out the bottlenecks at customs and immigration, the traffic congestion situation might improve.

Risks to be wary of

As a result of over enthusiasm by property developers both local and from China (e.g. Country Garden), there has been a long-standing oversupply of houses resulting in ghost towns like Forest City.

Especially when buying project under construction, the risk of developers facing delays or unable to complete projects is higher in Malaysia than in Singapore.

Then, there’s the risk of further depreciation in the Malaysian ringgit, which is one of the worst performing currencies this year. Ringgit has fallen to 3.52 to SGD as at time of writing, and could continue to fall further if Malaysia’s long-term economic fundamentals don’t improve.

Another risk has to do with our current housing situation. As our kids grow up, we might find our current 3-room HDB flat too constrained. If we intend to move maybe to a bigger resale HDB flat in future, we might have to dispose of our JB property and wait 15 months before being able to buy another HDB.

Read: 15-month wait for private home owners to buy resale HDB ‘a form of deterrence for buyers with deep pockets’: Analysts

Proper due diligence

As of now, I’m still early in my research and due diligence process. I’m currently focusing on new launches and will need to go into JB to visit sales galleries and ask questions to find out more.

I’m also not sure about the financing options, since I will definitely need a housing loan (can’t use CPF). From what I’ve read so far, foreigners might be eligible for a loan up to 70%, but I’ve yet to confirm this. I’ll probably need to liquidate some stocks and dedicate a portion of monthly investment fund contributions to service the loan if we do go ahead with any purchase.

I also need to figure out if rental income is a viable option to offset loan repayments, both long-term and short-term (i.e. Airbnb). Airbnb seems unlikely to landed property, and long-term rental might not make sense if we want to use the place occasionally for short trips or host family and friends.

Once I’ve gathered the information, I would need to work out whether the purchase makes financial sense before moving ahead.

At the moment, I don’t feel the need to rush into a decision. From my research, it seems that the JB property market is still recovering and hasn’t taken off yet. Also, my intention of buying is not purely for investment, but as a vacation or retirement home.

For vacation, there are many affordable Airbnb and hotel options so there’s no compelling reason to own my own property. Retirement is also still pretty far off, and I can always relook at JB properties then.

However, if JB property prices start to rise quickly and Ringgit strengthens against SGD meaningfully, there might be more urgency to decide. Till then, I’ll take my time to shop around. Nevertheless, it’s an exciting prospect.

Are you looking at buying overseas properties? In JB or elsewhere?

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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

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