This is an article from Wall Street Journal on 3 October 2012, which depicts the interconnectivity between Singapore and Iskandar Malaysia for their continued positive synergy and success into the future. Nusajaya and JB Centre are the hot spots in Iskandar Malaysia’s phenomemal growth story, where property investors should focus upon, as we are in the early stage stage of its growth cycle. To be updated regularly on investment opportunities in Iskandar, please follow my blog via your email subscription.
JOHOR BAHRU, Malaysia—For decades since gaining independence in 1965, Singapore has had a tense relationship with the nearby Malaysian state of Johor, competing with its neighbor for crucial resources like water and foreign investment.
Now, as Singapore runs out of land to expand, it is joining forces with Malaysia to develop the Johor area into Singapore’s new hinterland, with space for multinational companies, industry, tourist attractions and plenty of housing.
A Lego cruise ship at recently opened Legoland park in Johor Bahru.
If the Johor region in southern Malaysia thrives, the thinking goes, it also will help Singapore by ensuring big companies stay in the region instead of moving to lower-cost countries.
The main development in the area, known as Iskandar, is one of the biggest master-planned projects ever attempted in Southeast Asia, covering more than 2,100 square kilometers (811 square miles), with targeted spending of $115 billion in public and private money—if it all comes together.
Skeptical investors have questioned whether such an ambitious development about 40 minutes from central Singapore by car can succeed in an area known for high crime and mocked by residents as a poorer cousin to Singapore.
Although residents are starting to trickle in to large residential projects, and a number of condominiums and hotels are inching toward completion, much of the area is still occupied by plantations and little-trafficked roads. A smallish marina isn’t buzzing yet, with aging boats and the odd small yacht—a far cry from Singapore’s prestigious marinas and yacht clubs.
Yet, over the past year, a number of developments have started coming online, boosting backers’ hopes that Iskandar and the surrounding Johor region will hit a critical mass of new development and begin luring more expatriates and multinational companies. One of the latest highlights is Legoland Malaysia, which opened to large crowds Sept. 15 and has plans to add a water park and hotel.
Said Ismail Ibrahim, chairman of the Iskandar Regional Development Authority, which was set up to run the project: “2012 is our tipping point.”
Added Nicholas Holt, Asia-Pacific director at real-estate company Knight Frank, who visited the area recently: “For a project that has taken so long to get off the ground, 2012 may prove to be an inflection point where we see Iskandar really start to take off.” Singapore’s increasingly vocal support “has inspired confidence,” he said.
Conceived by Malaysian sovereign-wealth fund Khazanah Nasional Bhd. in 2005, Iskandar struggled at first to attract interest, partly because of a lack of infrastructure and still-empty land. Another problem was that some Singaporean officials weren’t sure whether to support the project, which they feared would compete with Singapore’s giant port and export-oriented industries.
That started to change as it became clearer that Singapore was bumping up against its growth limits. A large percentage of the city-state’s land mass now is covered with buildings, malls and other developments, and high labor and land costs have forced export industries to expand elsewhere. Steering some investment to the Johor area would at least help make sure business stayed in the region, with some of the jobs and support services potentially landing in Singapore.
Singaporean leaders began talking up the project in public and promised to improve causeway links between the two countries across the Straits of Johor. Plans are under way to connect Singapore to Johor via a high-speed rail link, expected in 2018.
Singaporean Prime Minister Lee Hsien Loong said early this year that it is “very much in Singapore’s interest” that Iskandar Malaysia should prosper.
“With Singapore and Malaysia there has been a love-hate relationship. But people realized we cannot continue like this,” said Mr. Ibrahim. “Singapore realized they need Malaysia as much as Malaysia needs them.”
Singapore also started ponying up some cash, becoming the largest source of foreign investment in Iskandar this year. A joint venture between Singapore’s state investment company Temasek Holdings Pte. Ltd. and Khazanah Nasional now aims to invest three billion Malaysian ringgit ($980 million) for a “wellness area” in Iskandar, with spas, serviced apartments and other wellness-related offerings, expected to be ready in six years.
Although most of the projects completed so far are modest, they have added buzz to the venture. The Legoland park, operated by U.K.-based Merlin Entertainment Group, is the first of its kind in Asia and includes 10-meter (32-foot) tall Lego models of icons like Malaysia’s Petronas Twin Towers and Cambodia’s Angkor Wat ruins.
“We view both Singapore and Malaysia as our resident market,” said General Manager Legoland Development John Ussher. With other theme parks coming soon, including Sanrio Co.’s first Hello Kitty Town outside of Japan later this year, developers are envisioning the region will become Southeast Asia’s version of Orlando, Florida, especially if Singapore’s existing Universal Studios theme park, which opened in 2010, is included.
Other recently opened projects include a Johor Premium Outlets mall developed in part by Simon Property Group Inc., which has similar investments in the U.S. A local campus of Marlborough College, an elite boarding school, whose Wiltshire, U.K., campus was attended by Kate Middleton, also opened its doors in Iskandar this year. Buses will carry Singapore students across the causeway every morning to school in Iskandar, according to Master of the College Bob Pick.
Developers are hoping those attractions can coexist with large industrial projects, which will be located in designated zones far from the main tourist and residential areas. In May, Malaysian state-run oil-and-gas company Petroliam Nasional Bhd., or Petronas, started work on a $19.5 billion oil refinery and petrochemical complex in Iskandar that will have the capacity to refine 300,000 barrels of oil a day.
A slowing global economy could stall or delay some of the plans for Iskandar. But some boosters argue it might actually help in the long run by making investors in Singapore and elsewhere more appreciative of the area’s lower costs. Singaporean residents who once turned up their noses at the idea of living across the causeways in Johor are increasingly expressing interest because their money goes further there, with even middle-class residents able to afford homes in gated communities with swimming pools and golf courses—rare luxuries in densely populated Singapore.
“Land and house prices in some [development zones] have already increased significantly over the last two or three years as investors and speculators have tried to get in early before demand takes off,” said Mr. Holt of Knight Frank. Iskandar’s executives say home prices in Nusajaya, the region of Iskandar where most tourist and education offerings are located, have risen 140% in the past five years, with two-story terrace houses costing 52% more than they did a year ago and apartments going for 106% more than in 2010.
- International units at Setia Sky 88 snapped up (investjohor.wordpress.com)
- Johor Bahru – a metropolis in the making (investjohor.wordpress.com)