If you frequently hop into Johor Bahru (JB) for weekend trips, you might probably have wondered if it’s worth buying a home in JB.
While the cross-border journey is by no means an arduous one, frequently having to travel across the Causeway can be tiring, so it could be nice to have a home base there as a getaway from Singapore. If you’re a Singaporean thinking of buying an investment property in Johor Bahru, here’s what to consider.
Is it worth buying JB investment property?
Image credit: MyMRT
Travelling from JB to Singapore will be easier once the Johor Bahru-Singapore Rapid Transit System (RTS) Link is completed. Not only is traffic congestion on the Causeway expected to ease, but it’ll only take you 5 minutes to cross the border. This, of course, has made buying a home in JB a more attractive prospect.
There are a few reasons to buy JB investment property:
- To rent out
- Retirement planning
- Waiting for the sale value to increase before selling it for a profit
- As a holiday home
Regardless of the why, it’s important to understand the Johor Bahru property market before making a decision.
1. Renting out your JB investment property
Green Haven @ Johor Bahru
Image credit: Jemima Lai
Passive income from rental properties is one of the main motivating factors for those who want to buy investment property. The April 2023 property cooling measures saw the Additional Buyer’s Stamp Duty (ABSD) rates being adjusted again. Combined with rising private home prices in Singapore, they created strong push factors for more Singaporean investors to look overseas when buying property.
During the Covid-19 Movement Control Order (MCO) or lockdown, rental prices for apartments in JB ranged between RM1,000-RM1,200 per month (~S$305.53-S$365.15) for a studio unit. These shot up early this year, and they now sit within the range of RM2,000-RM2,300 per month (~S$608.57-S$699.83).
However, strong rental yield is not a guaranteed outcome. Among other factors, your potential income is dependent on where your property is located and how well the project is maintained. Your tenant pool is likely to comprise Malaysian and Chinese citizens working in Singapore, as well as Singaporeans. Rental income depends greatly on the border being open, and the number of individuals willing to make the cross-border commute daily.
2. Retirement planning for Singaporeans
When the borders opened up after the pandemic in mid-2022, more Singaporeans turned towards JB investment properties. This interest was created in part by those in their 40s who started to look at retirement planning.
The lower cost of living in Malaysia, the strong Singapore dollar, and JB’s proximity to Singapore make Johor Bahru an appealing place for seniors to spend their golden years.
Image credit: Traveloka
While residing in JB is undoubtedly more affordable, this migration could potentially drive up living costs in Johor. The more well-developed parts of JB and its city centre could become wealthier districts and neighbourhoods, in turn raising the prices of commercial rent, labour, and goods and services, and thus increasing overall living expenses.
3. Buying a JB home to flip for profit
An artist’s impression of the future JB RTS station.
Image credit: MyMRT
In Singapore, homes within a 10-minute walk of MRT stations command price premiums due to their improved connectivity to the larger transportation network. Already, some Singaporeans understand how this “MRT effect” can be applied to properties in JB.
These savvy investors have bought homes near the JB RTS station, with properties around Bukit Chagar Station seeing the highest demand. There has also been interest in older properties in the same area.
While JB property prices have seen increases in the last 2 years, the cost is still relatively low. Experts expect property prices to further appreciate by up to 6% when the RTS link is fully operational, before eventually stabilising. Considering how the RTS link is on track to begin ferrying passengers by end-2026, there is still some time to take advantage of the opportunity and buy a JB home near the RTS stations.
Still, there is no guarantee your home will generate a profit. Risks of buying homes in JB include getting faulty apartments from disreputable developers, abandoned building projects, and even an oversupply of flats, which would drive down rental prices.
4. Holiday home
Various properties in Johor Bahru on Airbnb
Image credit: Airbnb
Having a holiday home in JB makes sense if you make frequent trips there. However, a consideration some may have is that the property remains empty and underutilised when you’re away.
One way to counteract this is to potentially rent out the property on Airbnb during the time you aren’t there. If you are considering that, you have to factor in finding someone to mind your property while you aren’t in town. Unless you have a trusted friend or family member to take care of your property, you might need to hire an agent or professional to do so.
This comes with its own disadvantages, since you can’t simply pop over to JB on a whim, especially if your home has been leased out to holidayers.
Commonly asked questions about buying a home in JB
Here are some of the most-asked questions about purchasing investment property in JB.
1. Can Singaporeans own a home in Malaysia and Singapore at the same time?
The Setia Sky 88 in Johor Bahru
Image credit: S P Setia
Singaporeans who have a home in Singapore can own Malaysian property at the same time. If you have an HDB flat, you need to ensure that you have fulfilled your Minimum Occupation Period (MOP) first. As you are buying an overseas property, you will not need to pay Additional Buyer’s Stamp Duty (ABSD).
Like any foreigner buying property in Malaysia, Singaporeans will have to abide by various foreign property ownership rules. One important rule is that you can only buy property which is valued above RM1m (~S$304,283.65). There are some housing types which are the exception, so do be sure to check carefully.
2. What kinds of property can Singaporeans buy in Johor?
Image adapted from: GDP Architects, Puteri Cove Quaysides, UEM Sunrise Berhad
Popular neighbourhoods in JB for Singaporeans to buy a home in are:
- Skudai
- Iskandar Puteri (Nusajaya)
- Taman Mount Austin
- Bandar Seri Alam
- Taman Pelangi
- Johor Jaya
- Taman Molek
- R&F Princess Cove
Here’s a table to sum up the types of properties Singaporeans can and cannot purchase:
| Eligible to purchase | Cannot purchase |
| Industrial properties | Agricultural land (unless if the land is over five acres and is meant for commercial use) |
| Condos | Low- to medium-cost units |
| Freehold commercial properties | Bumi lots (which sit on land reserved for Bumiputeras and indigenous Malaysians) |
| Vacant land | Malay Reserve Land (MRL) |
| Bungalows | The property needs to be at least RM1m (~S$304,283.65) in Johor |
| Orchard and farmhouses | – |
| Terrace houses and semi-detached homes | – |
3. What kind of property tax do I need to pay?
In Malaysia, there are 5 types of property taxes to be aware of:
- Stamp Duty Tax: tiered tax amount incurred during the sale of the property, usually capped at 0.5% of your loan
- Goods and Services Tax: for commercial property only
- Property Tax Assessment tax: maintenance tax which is based on the annual rental value of the property, pegged at 7% for apartments and 4% for landed property
- Quit Rent: annual payable tax for owners of freehold and leasehold property
- Real Property Gain Tax (RPGT): tax profit when you sell a property
Additionally, if you sell your JB home within 5 years of purchase, you have to pay a Capital Gains Tax (CGT) of 30%. For those who decide to hold on to their properties for more than 5 years, there is a 5% tax when you sell your property━except for the Medini township in Iskandar.
To know exactly how much tax you have to pay, you can use an online calculator to get an estimate. However, it is always better to consult a professional for a second opinion.
4. What is the MM2H visa? Do I need one?
Do note that if you are intending to retire in JB, you can apply for the Malaysia My 2nd Home (MM2H) renewable visa. Depending on the category you apply for, eligible applicants need to:
- Have bank deposits of between US$150,000-US$1m (~S$197,154.64-S$1,314,364.31)
- Buy a property and hold the property for at least 10 years
Image credit: The Straits Times
However, the MM2H rules were recently revamped. While it is still possible to buy a property without it, you may be subject to higher property prices, have to reapply for visas to reside in Malaysia since Singaporeans can only stay in Malaysia for up to 30 days, and require permission to purchase property from the relevant authorities.
5. How do I fund my JB property purchase?
You cannot use CPF to buy property in Malaysia. To finance your property, you either need to have lots of cash on hand or apply for an overseas property loan from a financial institute in Singapore or Malaysia.
Taking an overseas property loan counts as part of your Total Debt Servicing Ratio (TDSR). So, if you have debt obligations or are still servicing your existing home loan, it would be wise to ensure you are not overextending yourself.
There are also basic financial requirements to own a property in Malaysia. If you are below 50, you are required to have liquid assets of at least RM500,000 (~S$151,793.26) and an offshore monthly income of RM10,000 (~S$3,035.76). Furthermore, you need to have a fixed deposit account containing at least RM300,000 (~S$91,072.84) with a Malaysian bank in Malaysia.
Buying a home in Johor Bahru
If you do decide to buy a home in JB, the best way to go about it is to go through a local property agent and engage a lawyer. These professionals can help you navigate the Malaysian property laws and housing market.
Before making your property purchase, do consult a property expert for tailored home financing and property advice. Additionally, consider your financing situation and risk appetite before you purchase a property.
For more JB content:
Cover image adapted from: Traveloka, MyMRT
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