Johor: Transitioning Into A Supercharged Growth Phase – RHB IB

"Greater Johor Bahru should be positioned as the nation's second metropolitan region after the Klang Valley…" — Iskandar Puteri MP Liew Chin Tong

A Malaysia Thematic Report from RHB Investment Bank, released 18 September, argues that government-led catalytic developments and rising foreign and domestic direct investment will drive job growth in construction and spill over positively into the property market. Upcoming announcements on the Johor-Singapore Special Economic Zone and the proposed Kuala Lumpur-Singapore High-Speed Rail (HSR) are flagged as key events to watch.

Developers remain confident on Iskandar Malaysia

Despite a difficult stretch for Iskandar Malaysia's (IM) property market from 2015-2021, major developers remain bullish on its long-term outlook. Sunway recently acquired the remaining 40% stake in its 1,071-acre landholding in Pendas, while Eco World bought 404 acres in Kulai for industrial development — both signalling continued confidence in IM as a key market.

The RTS Link is a game changer

Progress on the Johor Bahru-Singapore Rapid Transit System (RTS) Link has meaningfully lifted buyer confidence. The report describes the RTS as a genuine game changer — increased cross-border traffic and the "SGD factor" should benefit housing, retail and hospitality alike, with rental and housing demand in central Johor expected to grow significantly as new investment lifts the state's GDP per capita and long-run housing affordability.

Construction activity is surging

Johor's quarterly construction work reached MYR3.8 billion in Q2 2023, its highest in 13 quarters and second-largest among all states. As of end-August 2023, the state had MYR9.6 billion in construction projects awarded across 913 projects year-to-date — trailing only Selangor's MYR16 billion across 1,423 projects.

Contractors well positioned to benefit

Favourable labour conditions and steadier building material prices put contractors in a strong position to capture Johor's infrastructure boom, including remaining RTS packages, the Iskandar Rapid Transit (IRT), and industrial park data centres, with residential contractors also benefiting from IM's spillover growth. RHB IB favours UEM Sunrise and Sunway in property, and Sunway Construction, Kerjaya Prospek and Malaysian Resources Corp (MRCB) in construction, maintaining an Overweight call on the sector overall.

Source: Business Today