Johor Property Market Update

Business Times Interview (September 25 2025)

1.    Johor recorded both strong new launches and one of the highest overhang numbers. How do you explain this situation of robust development activities but weak absorption of completed stocks?

Johor presents an interesting scenario of strong new launches alongside persistently high overhang numbers.  While it may seem contradictory, the two trends actually reflect different market dynamics.

Recent new launches particularly serviced apartments within or close to Johor Bahru city centre (about 5 km radius), have recorded strong take-up, with some achieving near 100% sales within months.  Similarly, landed housing continues to perform well due to limited supply and strong preference among local buyers for landed over stratified homes.  Reasonably priced landed projects have been able to achieve healthy sales rates.

The high overhang numbers, however, stem mainly from a different segment, ie. unsold completed units of which about 85% are high-rise serviced apartments.  These units typically face challenges such as:

• Physical obsolescence or outdated design;

• Less desirable locations;

• Leftover stocks from launches during the last property boom (around 10 years ago);

• High loan rejection rates, especially for “affordable” homes priced RM300,000 -RM500,000, as many buyers fail to meet banks’ Debt Service Ratio (DSR) requirements.

Therefore, the strong new launch sales and high overhang can coexist: the market absorbs new, well-located, and well-designed products, while older or less attractive stock continues to pile up.  Encouragingly, the overhang numbers have been trending down in recent years, reflecting improving market sentiment and gradual absorption of unsold stock.

2. Industrial property transactions rose 8.5 per cent, led by Selangor and Johor. How sustainable is this growth, and what is driving investor demand?

The 8.5% rise in industrial property transactions particularly in Selangor and Johor reflects genuine and sustainable demand rather than just a short-term spike.  Much of the growth is driven by multinational corporations (MNCs) especially those in data centres, logistics, and e-commerce.  These large-scale investments not only contribute directly to transaction value but also create a spillover effect, spurring demand from local downstream companies that support or service these industries.

Both Selangor and Johor continue to benefit from strong fundamentals, ie. strategic locations, infrastructure connectivity and established industrial ecosystems.  Johor, in particular has gained traction from cross-border trade with Singapore while Selangor remains the hub for domestic distribution and logistics.

The visibility of ongoing enquiries and active negotiations suggests that the pipeline of future deals is healthy.  As long as Malaysia maintains its competitiveness in cost, land availability and business environment, the industrial property segment is well-positioned to sustain this growth momentum over the medium term.

3. Johor is benefitting from spillover demand from Singapore and the Johor-Singapore Special Economic Zone (JS-SEZ).  Do you see the JS-SEZ has started to garner investors and property buyers’ interest?  And how transformative do you expect this cross-border dynamic to be in the coming years?

The Johor-Singapore Special Economic Zone (JS-SEZ) represents a pivotal shift in Johor’s economic structure.  Rather than relying primarily on traditional, labour-intensive sectors such as downstream manufacturing, construction, and real estate, Johor is now repositioning itself as a hub for the “new-age” economy, ie. one centred on capital, services, knowledge and talent.

The SEZ strengthens Johor’s role as a seamless partner to Singapore, underpinned by enhanced connectivity, transfer of technical expertise and stronger investment and capital flows. With both Federal and State governments actively backing the initiative, the cross-border dynamic is expected to be sustainable and transformative.

Investor sentiment has already turned positive, supported by clear policy direction and visible implementation on the ground.  Interest is not just speculative, many investors and property buyers have already taken positions within the JS-SEZ region, signalling confidence in Johor’s long-term growth story.

4.  Looking ahead, do you expect the second half of 2025 to show recovery? What are catalysts and areas with potentials that investors should look at?

The outlook for the property market in the second half of 2025 remains positive, supported by resilient demand from local buyers and renewed interest from foreign investors. Broadly, the sector is expected to continue its recovery trajectory.

The industrial segment will be the key driver, forming the backbone of market growth, underpinned by strong demand from logistics, manufacturing and data centre players.  Retail and healthcare-related real estate should also see stronger performance, fuelled by the steady rise in visitor arrivals — not only from Singaporean day-trippers but also from tourists from China, India and other countries post-pandemic.

The serviced apartment segment is likely to sustain good sales, especially in prime locations, though buyers are becoming more cautious given the large supply pipeline.  This means developers will need to differentiate through design, location and value-added features to meet rising buyer expectations.

In terms of catalysts, the Rapid Transit System (RTS) Link remains the most significant near-term game-changer with operations slated for early 2027, just over a year away.  The potential extension of RTS via the Elevated-ART system, as well as discussions around a possible second RTS in western Johor could further transform the region’s connectivity and unlock new growth hotspots.

Contributed by

Tan Wee Tiam

Executive Director

Olive Tree Property Consultants