Skip to main content



Avoid Malaysian property, especially Iskandar

Singapore and Malaysia signed a Memorandum of Understanding on July 19 to build the High Speed Rail (HSR) linking Singapore and Kuala Lumpur, a long-awaited update on the project that also revealed a more reasonable completion target of 2026.

Singapore and Malaysia signed a Memorandum of Understanding on July 19 to build the High Speed Rail (HSR) linking Singapore and Kuala Lumpur, a long-awaited update on the project that also revealed a more reasonable completion target of 2026.

In my most recent book, Weathering a Property Downturn, I had hazarded a guess that the earliest date for the HSR to begin operations would be the year 2025. Inter-city and international railway projects are never simple and deadlines get postponed all the time. Acquiring land across four Malaysian states, resettling affected families and businesses and, most importantly, the raising of funds for the entire project, will require a few more years, especially if local issues and politics disrupt the timeline.

The project has been repeatedly hailed by both governments as a “game changer” for our economies. Investment advisers are already spouting the economic benefits of the HSR and recommending various types of investments all over Peninsular Malaysia. However, to think that the HSR will change the game for the whole of Peninsular Malaysia, outside of Kuala Lumpur, we have to look deeper.

Dr Qin Yu, an assistant professor with the National University of Singapore, authored a paper titled No County Left Behind? The distributional impact of High-Speed Rail Upgrades in China, in which she concluded that “the reduction of transport costs for people between large cities may divert economic activities from counties to populous urban districts”. The paper, accepted and awaiting publication by the Journal of Economic Geography, also revealed that the major cities that host the terminus stations fare better, while the counties along the route of the high-speed rail saw 3 to 5 per cent declines in annual gross domestic product arising from a reduction of 9 to 11 per cent in fixed asset investment.

If the findings from this study are applicable to the Singapore-Malaysia HSR, we could expect to see the economies of Singapore and Kuala Lumpur expand while the economies around the six intermediate stations shrink: Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat and Nusajaya. For the cities and towns such as Port Dickson, Tampin and Kluang, which are bypassed, the economic outlook might even be more dire.

Depending on the price of the HSR tickets, some residents of Kuala Lumpur, Seremban and Malacca may find it ideal to work in Singapore, earning their incomes in Singapore dollars, while returning home every evening to be with their families. This could lead to a further brain drain or skills drain from various Malaysian cities to Singapore.


The MM2H programme started in 2002 and 29,814 applicants have been approved since. The current total number of participants could be lower, as there may be double counting in cases of renewals and there could also be dropouts along the way.

In the first four months of this year, approvals were given to 424 applicants, meaning that on an annualised basis we might expect a total of about 1,300 approved applicants this year, or a drop of about 40 per cent from 2015, which itself saw a decline of 28 per cent from 2014.

Compared with Singapore’s objectives of granting Permanent Residency status to 30,000 foreigners and citizenship status to about 15,000 to 25,000 Permanent Residents every year, based on the 2013 Population White Paper, the MM2H programme does not look popular.

Among the approved MM2H applicants are Singaporeans who have applied for the MM2H status to enjoy the privilege of buying cars at a discount for their relatives who reside in Malaysia. Each approved MM2H person is entitled to purchase “one new motor car made or assembled in Malaysia” with an exemption from excise duties, thus saving tens of thousands of ringgit for their families.

The cumulative 29,814 applicants added a mere 0.1 per cent to the 30 million population of Malaysia. Even if all the approved participants choose to reside in Iskandar, they will only fill up 10 per cent of the 300,000 residential units launched in the past five years. I am inclined to conclude that the 13-year-old MM2H programme has negligible impact on both the economy and demand for property.


Pundits continue to sing praises about the growth potential of Iskandar. In a drive around Nusajaya last month, we observed that the pace of construction seemed slow, with several projects that were fully sold years ago still under construction. One large billboard proclaimed “Akan Datang” and “Coming Soon” above a construction site hoarding for a luxury condominium project that failed to launch after the 2013 peak of the Iskandar hype. Needless to say, construction has not started.

As for the completed condominiums, banners displaying “For Sale” and “For Rent” are commonplace. A casual count estimates 10 per cent of the apartments are furnished with curtains. A medical centre that was launched with much fanfare was opened for business in late 2015. As of July, no more than a quarter of the clinics in the medical centre have been taken up by specialist doctors.

Some developers in Iskandar have dropped prices to move leftover apartments, adding downward pressure on valuations. Buyers who took deferred payment plans and paid down less than 10 per cent of purchase prices are walking away from their investments. Some investors have gone further, requesting developers to refund their downpayments by citing the inability to secure mortgages as the banks have tightened up on loans to foreigners.

The situation with commercial and industrial properties is similar. While millions of square feet of commercial and industrial space are completed and waiting for tenants, several high-profile projects have never broken ground.

We have scant information about the value of investments into Iskandar, in particular, how much went into businesses and factories that will create jobs. Of the much quoted RM202 billion (S$67.8 billion) invested into Iskandar between 2006 and March this year, how much was for the reclamation of land and for the purchase of land by developers? How much was due to the sales of strata-titled apartments, SOHOs, offices and industrial space by the same developers? What about the value of investments that have been withdrawn?

Malaysia held promise until over-development and overhyped promises propelled property valuations into the stratosphere, especially when Iskandar prices matched those in prime Kuala Lumpur districts. Investments from Singapore are unlikely to improve given the slump in trade, manufacturing and financial services in the Republic while corporate default risks are rising.

I am eager to be the first to upgrade my call on Malaysian properties to a “Buy”. However, against an uncertain political climate and economic outlook in the country, which could depress real estate valuations or further weaken the ringgit versus the Singapore dollar, my call on Malaysian real estate is an “Avoid” for now.


ABOUT THE AUTHOR: Ku Swee Yong is a licensed real estate agent and the CEO of Century 21 Singapore. His fourth book “Weathering a Property Downturn” is available in the bookstores.

Read more of the latest in




Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.