The recent historic agreement between Malaysia and Singapore to settle the long-standing railway land issue which runs through Singapore to Malaysia will open up property development opportunities in Singapore and Iskandar Malaysia not envisaged before, a property consultant said.
According to DTZ Research in its latest report, the warmer bilateral relations, and smoother and cheaper transport system arising from the agreement will give a boost across all property sectors in Iskandar Malaysia.
“With a proposed mass rapid transit (MRT) line linking Johor Baru city centre to Nusajaya, there will be a tendency for a shift in value towards Nusajaya as more newer physical developments take place and the cost of using the Second Link becomes more competitive,” the report added.
For Singapore, judicious land allocation has always been an integral part of real estate planning and development given its limited land size. The reversion of the railway land will thus enable the authorities to amalgamate the track land with adjacent sites and bring about more optimal use of the land.
The station site at Tanjong Pagar has the greatest redevelopment potential
DTZ Malaysia executive director Brian Koh said the railway agreement had unfolded a new chapter for Malaysia and Singapore and both countries can co-build a new growth story that resembles the Hong Kong-Shenzhen Metropolis model.
However, unlike Hong Kong and Shenzhen which are both under one country, a lot more co-operation and government involvement is needed between Singapore and Malaysia to overcome two distinct economic and legal systems and build trust and co-operation, while pursuing their respective national and economic objectives.
“The degree of success of Iskandar Malaysia will be partially determined by political co-operation with neighbouring Singapore as well as by economic factors,” Koh said.
More skilled and semi-skilled migrants from other parts of Malaysia may be attracted to reside in Iskandar Malaysia to take advantage of the employment opportunities in Singapore through daily commute without having to pay for the high residential cost of living across the causeway.
“Demand for homes from foreign buyers, particularly Singaporeans, is envisaged to improve due to the higher confidence level in Iskandar Malaysia from the warming bilateral ties,” he added. In the office sector, there is potential for a shift of low-end commercial service activities, namely back office processes, from Singapore into the Johor Baru central business district to take advantage of cost arbitration, given the widespread use of the English language and the general availability of mid-level executives in Johor.
The retail and hotel sectors will also benefit from the higher tourist flow into Johor, while more industrial and logistics investments can also be expected from Singapore.
DTZ head of South-East Asia Research Chua Chor Hoon said that among the returned railway land in Singapore, the railway station site at Tanjong Pagar had the greatest redevelopment potential given its size and the government's plans for this district.
While the rest of the returned land are unlikely to be developed anytime soon, one area that is likely to see some earlier new developments will be at Bukit Panjang where a MRT station would be ready in 2015, providing some impetus to develop the vacant land around it.
The once sleepy Tanjong Pagar area is perking up with newly completed and pipeline offices, hotels and apartments. Higher rents and prices are being achieved and more investors are becoming interested in the area.
“The Spottiswoode area just north of the railway station may be totally rejuvenated as the old existing residential developments are prime candidates for redevelopment,” Chua said.