Prospects Bright for Real Estate in Johor-Singapore SEZ

Real estate sector will be the biggest beneficiary of the Johor-Singapore Special Economic Zone (JS-SEZ) which was launched on Tuesday, according to major investment banks in Malaysia.

In its latest research, Hong Leong Investment Bank Berhard (HLIB) said that the implementation of the JS -SEZ is positive for contractors and property developers and the potential stock plays on the JS-SEZ include Kimlun Corp Bhd, Sunway Construction Group Bhd (SunCon), Sunway Bhd, IOI Properties Group Bhd, UEM Sunrise Bhd and ITMAX System Bhd.

The HLIB Research also said that contractors are the immediate beneficiaries of the JS-SEZ via construction jobs in the zone such as the need to establish basic infrastructure including waste, water, electricity and roads, alongside industrial buildings and possible renewable energy opportunities.

“The Johor-based contractors such as Kimlun and Ekovest Bhd could stand to benefit from the state’s developmental boost. Apart from that, the rollout of more data centres in Johor could potentially benefit SunCon which is currently undertaking two data centre jobs there totalling $530 million,” the HLIB said.

Furthermore, HLIB expects a significant increase in people mobility between Johor and Singapore upon the rapid transit system (RTS) completion, alongside other measures such as passport free QR code travel.

All these factors including others including the positive spill-overs from the JS-SEZ as well as Forest City special financial zone and better connectivity from the potential light rail transit (LRT) and autonomous rapid transit (ART), should be a boon for Johor’s property market, the HLIB research noted.

“We also expect further developments on this urban mobility project to gain traction in 2025 given the pressing need for a dispersal network once the Johor Bahru-Singapore RTS is completed in January 2027, alongside connectivity to ensure the success of the JS-SEZ,” HLIB explained.

Positive Signs

Meanwhile, CIMB Securities Sdn Bhd said that it was generally positive about the signing of the JS-SEZ agreement, as it marked a significant step forward in implementing the SEZ. However, details such as tax incentives and funding commitments, are still being finalised as some investors may await the release of the government’s blueprint for further clarity.

CIMB expects that the SEZ could lift the prospects of property developers in Johor as increased movement of people and trade could stimulate demand for housing, particularly within Greater Johor Bahru.

Furthermore, it said based on the amount of investments pledged, the Malaysian government will create a federal-backed infrastructure fund to develop new rail and road links that support JS-SEZ’s rapid development.

“By leveraging digitisation and Industrialised Building System facilities, we believe that Gamuda Bhd, IJM Corp Bhd, and SunCon would be at the forefront of bids for more industrial buildings and high-tech facilities (including DCs), as the global realignment of trade and investments intensifies,” CIMB said adding that the JS-SEZ is also expected to have medium-term spillover benefits for plantation companies with land exposure in Johor.

“This includes companies such as SD Guthrie Bhd, Kuala Lumpur Kepong Bhd (KLK), Genting Plantations Bhd, and Johor Plantations Group Bhd, which own plantation land in Johor that could benefit from the JS-SEZ through potential ventures into industrial park developments or land sales for property projects,” CIMB said.

Growth Engine for Economy

Echoing similar feelings, RHB Investment Bank Bhd (RHB Research) also believes the JS-SEZ has the potential to propel Johor to become the southern growth engine for the economy. It said the news flow on foreign direct investments (FDIs) from across the region will fuel Johor-centric plays.

“We remain positive on the broader market – with external volatility offset by domestic stability and bolstered byample liquidity, steady corporate earnings and attractive valuations. Top JS-SEZ stock ideas include UEM Sunrise Bhd , Sunway Bhd, Southern Cable Group Bhd, IJM and Dialog Bhd,” RHB Investment Bank said.

It also added that the corporate and personal income tax incentives, the commitment by the establishment for a one-stop centre to facilitate processes, and establishment of an infrastructure fund is “icing on the cake” for potential investors.

As far as construction sector is concerned, RHB Investment said that the infrastructure fund, which will set up by the Malaysian government, is expected offer job opportunities in the development of road infrastructure as JS-SEZ covers nine flagship zones.

For the property sector, it said the influx of FDIs, the opening of new offices by local and foreign financial institutions in the Forest City, as well as the higher number of travellers from Singapore should have a strong positive spill over effect on the real estate sector.