With the backing of Singapore and Malaysia’s governments, Iskandar is anticipated to transform into a thriving production and technology hub just like what happened to China’s Shenzhen, Hong Kong’s neighbour, reported The Financial Times.
Prime Minister Najib Razak said Malaysia, particularly Iskandar, can have a mutually beneficial relationship with Singapore, similar to New Jersey’s close ties with Manhattan.
Ravi Menon, the Head of the Monetary Authority of Singapore (MAS), has also proposed that the city-state and Iskandar be considered as a single economic zone that would give investors an “integrated production and services base” in the ASEAN region.
“Policymakers see the possibility of businesses being co-located in Iskandar and Singapore,” said Singapore Management University Associate Professor Eugene Tan.
“We just don’t have the land here and Iskandar is close enough for companies to have manufacturing there but the finance and R&D in Singapore.”
In fact, some Singapore companies have already relocated a portion of their operations in Iskandar. For instance, a firm involved in machine tools reconditioning transferred its workshop to a hangar in the Malaysian region.
“Our sales office is 30 minutes from here, in Singapore. There’s a lot of walk-in customers and we can bring them here to test the machines,” said its Manager Angela Pang.
“Our rental in Singapore was going to expire and this is cheaper,” she noted, explaining that the rental cost of commercial space in the city-state is more expensive than those in Iskandar by about three times.
However, real estate investments in Iskandar have recently plummeted due to worries over a supply glut of residential properties.
In the year to March 2017, overall property investment there plunged to only US$86 million compared to US$1.4 billion during the corresponding period in 2013.
“The drop in volumes between now and 2013 is highly noticeable,” noted Real Capital Analytics Director for Asia Pacific, Petra Blazkova.
“Our view is that it stemmed from an imbalance between the supply of land or property and demand from real estate investors.”
One major factor behind the oversupply is the fact that China’s Country Garden is building a massive development on four reclaimed island off the coast of Johor.
Known as Forest City, the US$100 billion development is forecasted to have a population of 700,000 people in about 20 years.
However, Beijing’s restrictions on money outflows has affected the apartment sales in the project as most of its buyers are from China. The developer even closed down its sales galleries in the country and is planning to attract other buyers from other nations.
Iskandar Regional Development Authority’s (IRDA) CEO Ismail Ibrahim also admitted that there is a “temporary” oversupply of homes in the region. Nevertheless, he is confident that the excess units will be eventually absorbed by the market as Iskandar’s economy is anticipated to flourish.
Among top properties in Iskandar Malaysia are:
Image sourced from Iskandar Properties