This week's signing of the agreement to create the Johor- Singapore Special Economic Zone (JS-SEZ) is a landmark event that will transform real estate markets in both countries, according to comments released today by Juwai IQI Co-Founder and Group CEO Kashif Ansari.
Firm Economic Benefits
Depending on how much the two countries commit to the SEZ, Kashif said he expects it to drive new foreign direct investment, manufacturing activity, tourism, and real estate activity in Johor. That growth will have spillover effects for the rest of Malaysia, spreading the benefits more widely.
Johor would experience more rapid economic growth, resulting in an estimated 0.5 to 0.9 percent to the GDP growth this it can contribute RM 20 billion in the short run and can exceed RM30 to 50 billion, the magnitude, scale, and size of the project at the macro level. This is in line with the forecast projected in the latest report by the IMF. In its latest report, the IMF forecasts Malaysia's 2025 GDP will be RM2.245 trillion (US$488.25 billion). Based on the premise that massive FDI coming over here is mostly from China and USA.
Real Estate Demand to Grow
With real estate, Juwai says the SEZ will begin to attract more businesses and individuals to Johor. Greater activity will increase demand in the residential, office, industrial, and logistics real estate markets and boost prices for developable land.
"We can see the impact on real estate transaction volume and values has increased. However, you could expect to see a further reduction in the residential overhang in Johor. Homeowners could benefit from value growth. And commercial and industrial real estate markets could benefit from increased demand."
"We can see the huge impact and increase on real estate transaction volume and values. New and greater opportunities are on the horizon with the launch of amazing projects that have been met with great response. These projects fit the pricing and location criteria and preference of the market, making them highly desirable."
Key Facts About the Special Economic Zone
When you have a near-seamless flow of goods, people, and businesses between Johor and Singapore, both economies will accelerate. Companies won't have to choose to locate in either Malaysia or Singapore, because the JS-SEZ will give them the advantages of both countries plus additional incentives.
Singapore will provide capital, technology, and expertise, while Malaysia will contribute a highly skilled workforce, renewable energy, land, and other resources. By reducing the cost of transport and taxes, the SEZ will allow firms to grow more quickly, hire more workers, and take risks they otherwise could not.
One big-ticket infrastructure item is riding on the success of the new Special Economic Zone. If the SEZ is successful, it will give momentum to those who want to relaunch the high-speed rail project connecting Singapore and Malaysia.
