Recently, there are more and more Singaporeans flocking to invest in the property market in Malaysia. Most experts believe that there will be even more Singaporeans come to buy Malaysia properties for the coming days. Even there have certain restrictions implemented in the country for foreigners to own property in the country, but compared to the past, the restriction have been relaxed a lot. The relaxation of the restriction is the major factor that makes a lot of Singaporeans come to Malaysia for buying properties.
For this trend, many real estate consultancy firms in Malaysia think that it is actually a good sign for Singaporeans to enter into Malaysia real estate market. This is because Malaysia needs more foreign investment to invest in local fixed assets, and the Singaporeans have always been the major foreign buyers for Malaysia real estate. By consolidated different views from all parties, we can conclude that there are 3 major factors causing Singaporeans to buy in local property.
Factor 1: More Affordable
The first factor is because the property price in Malaysia is still cheap. People are able to buy a 1000 square feet apartment for RM500,000 in Kuala Lumpur, or double story semi-detached terrace house with 3,000 square feet in Johor Bahru. While back in Singapore, with RM500,000 (approximately $210,000 Singapore dollars) you can’t even get a 700 square feet of HDB(Housing & Development Board) house.
By having the same price, Singaporeans only afford to buy HDB house with limited space, but they can own a double story semi-detached house in Johor Bahru. If phasing out the living standard and income issues, the gap between the two different property prices is evident.
Although the Malaysian government stipulated that foreigners can only buy properties that are priced at RM500,000 or above, and there is even more stringent regulations on foreign home ownership in Johor, the state doesn’t allow foreigners to buy in the single story terrace houses and second-hand double story terrace houses. But this did not affect Singapore’s determination to invest in Malaysia real estate, mainly because the regulations is not as stringent as compare to last time and also buying a property with RM500,000 is still relatively cheap for most of them.
In addition, even though currently the Ringgit is continue to appreciate, but in comparison, the Singapore dollar is appreciated even more. As a result, the value of Singapore dollars is carry more weight and this make the investment of Malaysia real estate become more affordable for them.
According to the data revealed by Singapore HDB, the average HDB housing price been raised for more than 25% from S$285,000 to S$390,000 from the first quarter of 2008 till now. However, at the same time, the average wages in Singapore is increased by only 4%. This means that are lesser Singaporeans who are afford to buy a house in their home land. As a result, even if the overall property prices are pushing higher by Singaporeans for 10-15%, they are still worth for Singaporeans to buy.
According to a survey conducted by Singapore’s real estate website PropertyGuru.com, 79% of respondents believe that all sectors of Singapore’s real estate are overpriced, while 75% of respondents believe that HDB prices are too high. Both are higher compare to the first quarter of this year, which are 75% and 68% respectively. The situation is causing an ordinary Singaporean facing difficulty to rely on their income to buy a house. Therefore, more and more Singaporeans are crossing the causeway to Malaysia to buy houses. Some Singaporeans even choose to live in Johor Bahru, and travel back and forth to Singapore to work.
Factor 2: Geographical Proximity
The relationship between the government of Malaysia and Singapore are increasingly become better, and this is the second factor that more Singaporeans are willing to buy properties in Malaysia, especially in Johor Bahru. Johor Bahru is favourable because there is a mega Iskandar Development project taking place in the region. Furthermore, the issue on Malaysian railway bureau (KTM) with Singapore land authority been resolved, and the two railroad services will be extended to each other’s territory. All these happen to be favourable factors for the property market.
Due to the high prices of Singapore property, many of the buyers are now turn to source properties from other countries. Malaysia is their first choice, and the strategic location of Iskandar Development Area is the key to attract Singaporeans making their investment. The local government seems to well promote the Iskandar Development Area as the area been successfully change the impression in the eyes of Singaporeans.
Also, the Singapore MRT to Woodlands station for the terminal of the new subway Thomson Line, will be completed in 2018. Singapore Immigration Customs is located in Woodlands, which will be able to reduce the round trip time in Singapore and Johor Bahru, this is helping to improve the number of immigrants. By that time, it will be easier for both residents to enter into these two countries. And will cause more Singaporeans to consider of buying properties in Johor Bahru.
Factor 3: Similar Culture
There are similarity in culture for both Malaysia and Singapore. Compared with other countries, Malaysia is geographically close to Singapore. And more importantly, the cultural practices between the two countries are very similar. Singapore ever belongs to Malaysia and despite the long separation the two has always maintained close ties.
The historical factors and family relationship is also encourages Singaporeans to invest in Malaysia real estate. Among them are those who been working in Singapore for many years and already be the permanent residence in Singapore; while some of them still having older generation who are still living in Malaysia. For example, many Singaporeans who choose to buy property in Penang are actually originated from Penang. Since Penang is the state that they are most familiar with, therefore they are returning to there to buy property.
In future, regardless of any policy introduced in Malaysia, the government must always take Singapore into consideration. This is because Singaporeans are making direct investment into Malaysia real estate market and can give a big boost for Malaysia economic growth.
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