WHY INVESTING IN ISKANDAR MALAYSIA IS A BAD IDEA

So why is investing in Properties in Iskandar Malaysia currently a bad idea? Here are some of my reasons:

1. Limits on Foreigners There are 2 parts to this. The 1st one, which is arguably superficial, is that in every project, certain units are always reserved for the local Malay populace. There are informally called ‘Bumi Units’, named after the ‘Bumiputera‘, the policy. You can read more about it here. In practice, you’ll find that some of the best units will not be available for purchase because you’re not a local Malay. An annoyance for those buying for yourselves, though probably not as big of an issue if you’re planning to rent the place (There are of course loopholes to get around the problem, but we’ll focus on the ‘official’ stuff only, yea?). The most important thing though, is that foreigners are only allowed to buy property above a certain limit. It was RM500,000, and as of 3rd March’14, it has been raised to RM1,000,000. Understandably, this is to prevent rapid rise in prices due to over-speculation, which is a good thing for the locals. As an investor however, this will be a problem for your exit strategy, which we’ll talk about later.

2. Are Businesses Moving In? Who are your Tenants? Iskandar Malaysia is being sold as a holistic nirvana where anybody can work, play, and live a balanced life. Be that as it may, there’s 1 fundamental a lot of new investors miss when they’re considering an investment here; Are businesses moving in? Think about it. In any new town, businesses must set up shop first before the people (employees of these businesses) move in. I’m not sure that’s the case with this region. The next time you bring yourself and/or your family along to Johor for your shopping and seafood, keep your eyes open and pay attention to the commercial spaces. Are the shops doing well? Are their customers mostly locals or weekender Singaporeans? Where are the offices, warehouses and other non-retail spaces? Are they filled or mostly empty? etc. This is important information because you need to figure out who’s going to rent your property and if there’s demand. From what I see so far, demand from local business staff is extremely low. The other side of this argument is that because of the increasing cost of living in Singapore, more people will starting living cross-causeway livelihoods, working in Singapore while staying in Johor. A valid point, I concede, but honestly, when will the demand start to rise? How many are willing to spend the extra time, at least twice a day, 5 times a week, enduring traffic jams going to and fro work via the check points? Until Singapore and Malaysia stop bickering and solve this fundamental logistical issue can large scale cross-causeway livelihoods become a reality. This, and the recent measures to (finally) increase supply of houses in Singapore, means that most people will still opt to stay here. So, who’s going to rent your property?

To read more, follow this link: http://www.theaaronloy.com/iskandar-malaysia-property-investments-5-reas...