Is buying a property in Johor Bahru a good investment?

Last updated on December 20, 2023

Yes, the analysis of Johor's property market is included in our pack

If you've embraced the diverse culture and business opportunities in Johor Bahru, you might have thought about making this dynamic Malaysian city your home, immersing yourself in its cosmopolitan atmosphere and commercial conveniences.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Malaysia, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in Johor Bahru?

Johor Bahru, often referred to as JB, stands out as a prime location for property buyers due to several key factors that distinguish it from other real estate markets, not only within Johor but also in Malaysia as a whole.

The city's unique attributes and its evolving status in the real estate market make it an interesting case for potential investors and homebuyers.

Firstly, what sets Johor Bahru apart is its strategic location. Nestled at the southern tip of Peninsular Malaysia, it's just a stone's throw away from Singapore. This proximity to one of Asia's economic powerhouses makes it an ideal spot for those who work in Singapore but prefer more affordable living options.

This cross-border dynamic started gaining traction in the early 2000s when the cost of living and property prices in Singapore began to skyrocket, making Johor Bahru an attractive alternative.

Another aspect that boosts Johor Bahru's appeal is its comprehensive development. The city has seen a surge in high-quality residential, commercial, and entertainment projects. These developments offer modern amenities and a higher standard of living compared to many other areas in Johor.

This contrast is particularly noticeable when you compare Johor Bahru to other parts of the state, where development might be less intense or focused on different sectors.

The type of people attracted to Johor Bahru is quite diverse. You have expatriates working in Singapore, retirees looking for a comfortable yet affordable lifestyle, and young professionals drawn by the burgeoning job market and urban lifestyle. This melting pot creates a dynamic community, adding to the city's appeal.

However, it's also important to consider some potential weaknesses. The very factor that makes Johor Bahru attractive, its proximity to Singapore, also makes it somewhat dependent on its neighbor's economic health. Any downturn in Singapore could have a ripple effect on Johor Bahru’s market.

Additionally, the rapid pace of development raises concerns about sustainability and overcrowding, potentially leading to issues like increased traffic and strain on infrastructure.

As for whether the hype around Johor Bahru will remain, it largely depends on how the city navigates its growth challenges and maintains its appeal to a diverse population.

The ongoing developments, if managed well, can sustain the city's attractiveness. Yet, it's crucial to balance growth with sustainability to ensure long-term desirability.

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Why is Johor Bahru a nice place to live?

Johor Bahru has a lot going for it as a place to live, offering a unique blend of lifestyle and cultural experiences.

This city in the southern part of Malaysia, right next to Singapore, presents an interesting mix that appeals to locals and expatriates alike.

One of the first things you'll notice about life in Johor Bahru is its vibrant culture. The city is a melting pot of Malaysian, Chinese, and Indian influences, which is reflected in its festivals, cuisine, and daily life.

There's always something happening, from lively street markets to cultural events. This cultural diversity not only makes for an enriching experience but also fosters a sense of community and belonging.

The expatriate community in Johor Bahru is thriving, thanks in part to its proximity to Singapore. Many expats work in Singapore but choose to live in Johor Bahru for its more relaxed pace of life and lower cost of living.

Speaking of costs, living in Johor Bahru is generally more affordable compared to Kuala Lumpur or Singapore. Housing, food, and general expenses are quite reasonable, making it an attractive option for those who want to enjoy a good quality of life without the high price tag.

Safety is a consideration anywhere, and in Johor Bahru, it's a mixed bag. Like any large city, it has its safer and less safe areas. It's always wise to be cautious and aware of your surroundings, especially in crowded or less well-lit areas. But many residents find that by taking standard precautions, they feel secure in their day-to-day lives.

Johor Bahru is well-equipped in terms of amenities and facilities. You have reputable schools such as the Austin Heights Schools and Sunway College Johor Bahru, catering to different educational needs.

Healthcare is top-notch, with hospitals like Sultanah Aminah Hospital and Gleneagles Medini Hospital offering quality medical care. For shopping and leisure, places like Johor Bahru City Square and KSL City Mall are popular hotspots.

The city's infrastructure is constantly improving. Roads are generally in good condition, and ongoing development projects aim to enhance connectivity.

Utility services like electricity and water supply are reliable, and internet connectivity is generally good, catering well to the modern lifestyle.

Accessibility is one of Johor Bahru's strong points. It's well-connected to other parts of Johor and to Singapore via road and rail.The Senai International Airport, while not as large as Kuala Lumpur International Airport, provides good connectivity for both domestic and international travel.

Public transportation options are decent, with bus services covering most of the city and taxis readily available.

However, like many growing cities, public transportation is still an area with room for improvement, especially in terms of coverage and frequency.

How much does it cost to buy real estate in Johor Bahru?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Malaysia.

When considering the cost of buying property in Johor Bahru, it's important to understand the diverse range of options available and how market trends are shaping prices.

Johor Bahru offers a variety of residential properties, including apartments, houses, and luxury villas, catering to different tastes and budgets.

In terms of property types, apartments and condominiums, especially those near the city center or close to the Singapore border, are in high demand. This demand is driven by the city's growing status as a commercial and business hub and its proximity to Singapore, making it attractive for both local and international buyers.

Houses, including terraced, semi-detached, and bungalows, are also popular, particularly among families looking for more space and privacy.

The real estate market in Johor Bahru is a mix of new developments and resale properties. In recent years, there has been a surge in new developments, with many projects offering modern amenities and facilities. These new developments are often priced higher but come with the advantage of contemporary designs and amenities.

The price range for properties in Johor Bahru varies widely based on location, property type, and size. On average, prices can range from about RM 300 to RM 2,000 per square meter, but this can go higher for luxury properties or those in prime locations.

It's worth noting that these prices have seen fluctuations in recent years. The market experienced a boom period, partly due to the Iskandar Malaysia development project, which increased interest in the region.

However, it has faced some cooling in response to economic factors and oversupply in certain segments.

Looking at the future, there are several developments and city planning changes that could impact property values. Projects like the Johor Bahru-Singapore Rapid Transit System (RTS) and ongoing Iskandar Malaysia developments are expected to boost the region's appeal and, potentially, property prices.

These developments could improve connectivity and infrastructure, making Johor Bahru even more attractive for investment and living.

Predicting the real estate market's direction in the coming years involves considering various factors, including economic policies, regional developments, and global economic trends.

If the current projects and improvements in infrastructure and connectivity go as planned, there could be a potential increase in property values in Johor Bahru.

Key indicators of a potential increase in property value include the continued interest from Singaporean investors, the development of new infrastructure and transport links, and the city's growing reputation as a business and leisure destination.

However, it's also crucial to be mindful of market dynamics, as the real estate market can be influenced by a wide array of local and international factors.

Where is the best area to buy a property in Johor Bahru?

When it comes to buying property in Johor Bahru, the best area for you largely depends on your personal needs and preferences, as different parts of the city offer varied atmospheres, property types, and price ranges.

Let's start with the central districts, like Johor Bahru City Center and Danga Bay. These areas are known for their bustling urban atmosphere, with a blend of high-rise apartments and commercial developments.

The properties here tend to be on the higher end of the price spectrum, catering to those who prefer a vibrant city lifestyle with easy access to amenities like shopping centers, restaurants, and entertainment.

On the other hand, areas like Iskandar Puteri (previously known as Nusajaya) and Medini are gaining attention for their up-and-coming developments. These parts of Johor Bahru are being developed with modern infrastructure and are home to attractions like Legoland Malaysia and EduCity.

The properties here vary from mid-range to luxury, and the area is becoming increasingly popular among expatriates and locals who are looking for a more suburban feel with the convenience of modern amenities.

Another area worth mentioning is Tebrau, located in the eastern part of Johor Bahru. Tebrau has been experiencing significant growth, with new housing developments and commercial centers.

The area offers a more laid-back atmosphere compared to the city center and is ideal for families looking for a balance between urban conveniences and a quieter environment. The property prices in Tebrau are generally more affordable compared to the central districts.

On the contrary, there are areas in Johor Bahru that might not be advisable for property investment, primarily due to factors like overdevelopment or lesser connectivity. Areas that are further away from the city center or major transport links might not offer the best value in terms of investment potential or convenience.

Additionally, some outskirts areas might not have the same level of amenities or infrastructure as the more developed parts of the city.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Malaysia.

Area	Atmosphere	Property Types	Price Range
Johor Bahru City Center & Danga Bay	Bustling urban atmosphere	High-rise apartments, commercial developments	Higher end
Iskandar Puteri (Nusajaya) & Medini	Modern, suburban feel	Mid-range to luxury properties	Mid-range to high
Tebrau	Laid-back, family-friendly	New housing developments, commercial centers	More affordable
Outskirts Areas	Varies, often less connected	Diverse, often less developed	Varies, potential lower investment value

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Is there a strong rental demand in Johor Bahru?

Johor Bahru has been experiencing a strong demand for rental properties, influenced by several factors including its strategic location, economic growth, and demographic trends.

Firstly, the rental demand in Johor Bahru is balanced between short-term and long-term rentals, each catering to different target demographics.

Short-term rentals are popular among tourists and business travelers, particularly in areas close to Singapore, like Danga Bay and Iskandar Puteri. These areas are attractive due to their proximity to attractions, business hubs, and the Singapore border.

Long-term rentals, on the other hand, are sought after by expatriates working in Singapore or in the various industries within Johor Bahru, local professionals, and students.

This demand is particularly strong in areas like Tebrau and Skudai, where there is a mix of residential and commercial developments, and in the vicinity of educational institutions like Universiti Teknologi Malaysia.

The profiles of potential tenants are quite diverse. Expatriates and professionals often look for modern apartments or condominiums with good security, amenities, and proximity to work or transport links.

Families might prefer landed houses or larger apartments in quieter, more residential areas. Students and young professionals are typically drawn to affordable yet comfortable living spaces, often near educational institutions or urban centers.

In terms of property types, there's a growing interest in well-facilitated condominiums and serviced apartments, especially those that offer amenities like swimming pools, gyms, and security features.

These amenities are not just luxuries; they can significantly reduce vacancy rates by making properties more attractive to potential tenants looking for convenience and lifestyle options.

Regarding the potential returns on investment, properties in Johor Bahru can offer attractive yields, although this depends on factors like location, property type, and market conditions.

On average, investors might expect rental yields of around 3% to 6%, with higher yields possible in sought-after areas or for properties with desirable features.

Properties that are getting more demand and could potentially offer better yields are those in well-developed areas with good connectivity, such as near the RTS link to Singapore, and in bustling commercial areas.

Newer developments with modern amenities, especially those catering to expatriates and professionals, are also likely to be in higher demand.

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Is it easy to buy a property as foreigner in Johor Bahru?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Malaysia.

Buying property in Johor Bahru, Johor, as a foreigner is feasible, but it's important to be aware of the specific regulations, processes, and potential risks involved.

Firstly, Malaysia has regulations in place for foreign property buyers, including a minimum purchase price threshold. In Johor, the minimum threshold for foreign buyers is generally higher compared to local buyers.

This threshold can vary depending on the type of property and its location. Certain types of property, such as Malay Reserved Land, are off-limits to foreigners.

The purchasing process in Johor Bahru involves several steps. Once you've chosen a property, you typically need to pay a booking fee, followed by the signing of a Sales and Purchase Agreement (SPA) and payment of a down payment.

The remaining balance is usually paid upon completion of the property transfer, which involves legal procedures and registration with the relevant authorities.

One of the primary risks associated with property investment in Johor Bahru for foreigners is the potential for market fluctuations and oversupply in certain segments, like luxury condos.

This can affect rental yields and resale values. It's also crucial to be aware of the legal and regulatory framework, as ignorance can lead to complications in the property acquisition process.

Classic pitfalls or common mistakes often involve not fully understanding the legalities and market dynamics unique to Malaysia. For instance, failing to account for the Real Property Gains Tax (RPGT), which is a tax on the profit gained from the sale of a property, can be a costly oversight.

Additionally, underestimating the importance of location and local market trends can also lead to poor investment decisions.

Working with a local real estate agent or lawyer is highly advisable. They can provide invaluable insights into the local market, assist in navigating the legal and regulatory landscape, and help avoid common pitfalls. They ensure that all necessary due diligence is conducted and that the transaction complies with Malaysian law.

Common exit strategies for property investors in Johor Bahru include selling the property for capital gain or holding onto the property and earning rental income. The choice of strategy should depend on market conditions, personal financial goals, and other individual factors.

It's important to keep in mind that the Malaysian property market, like any market, can be cyclical, and understanding these cycles can play a crucial role in determining the success of an investment.