SINGAPORE/JOHOR BAHRU: More integrated developments could sprout in densely populated areas of Johor Bahru like Mount Austin and Tebrau, in the wake of news that a mixed-use development would be built next to the Johor Bahru-Singapore Rapid Transit System (RTS) Link’s Bukit Chagar station.

Such projects could be as successful as the ones in Kuala Lumpur and Singapore’s heartlands, but local authorities should ensure retail rentals do not rise beyond the reach of smaller mom-and-pop businesses, analysts say.

Their comments follow Malaysia transport minister Anthony Loke's announcement this month that a US$582 million mixed-use development would be built adjacent to the RTS Link’s Bukit Chagar station.

The 1.71-hectare (17,100 sq m) project will feature apartments, a shopping mall and car park. It will be integrated with Johor Bahru’s immigration complex and be built over about eight years. 

The Bukit Chagar integrated development could spawn similar projects co-located with other transport services in Johor Bahru such as the future bus-tram network called autonomous rail rapid transit (ART), and create more economic opportunities, observers said.

“As Johor continues to evolve, you can’t rule out that (the state) will be embracing an (integrated) model which has worked extremely well in neighbouring Singapore,” said Imran Qureshi, a marketing director at ERA Realty Network in Singapore.

In Singapore, mass rapid transit (MRT) stations integrated with residential and retail developments include Punggol, Tampines, Sengkang, Bedok and Boon Lay. 

Agreeing with Imran, Siva Shanker, chief executive of estate agency at property consultancy Rahim & Co, told CNA the Bukit Chagar project could be a “catalyst” for other integrated developments near transportation stations. 

Integrated developments in Malaysia refer to mixed-use projects that combine residential, commercial and recreational spaces, typically within a short walk or linked to public transportation nodes like bus interchanges or rail stations. 

These developments have been popular in Kuala Lumpur, as seen with the Tun Razak Exchange (TRX), the Golden Triangle around Kuala Lumpur City Centre (KLCC) and KL Sentral. 

The Golden Triangle is KLCC’s main shopping and entertainment hub, with premium offices, residences, hotels and upmarket malls connected to the city’s MRT system.

In KL Sentral, office towers, hotels, malls and residential properties are connected to major rail infrastructure including the KLIA Express, one of the fastest ways to travel between KL International Airport and the city centre. 

In Singapore, the integrated mixed-use concept has been adopted for years, especially in the heartlands. This month, the preview of ParkTown Residence, a condominium to be connected with Tampines North MRT Station and a mall, reportedly drew crowds of around 10,000.

Such transport-oriented developments are “inevitable” in Johor Bahru, with the city prioritising large-scale infrastructural developments with the RTS Link and the ART, said Samuel Tan, chief executive of Olive Tree Property Consultants.

“Transit-oriented development is undoubtedly beneficial for Johor Bahru’s long-term growth, as it promotes economic clustering, reduces congestion and enhances liveability,” added Lee Kun Thye, a director at Knight Frank Malaysia Johor Branch.

But unlike more compact cities like KL, integrated developments in Johor Bahru will need to be strategically located in “high density, high demand areas” to be effective, she added. 

With an elevated bus-tram ART system set to be built, areas like Tebrau and Mount Austin are “logical choices”, Lee told CNA. 

Mount Austin, one of Johor’s trendiest neighbourhoods, is known for its bustling entertainment scene.

PROPERTY DRAW FOR CROSS-BORDER COMMUTERS

Observers expect healthy occupancy rates and the value of properties around Bukit Chagar station to rise.

“When the RTS Link starts running, some prices in Johor’s central business district (CBD) can be higher than Kuala Lumpur’s CBD,” reckoned Ishmael Ho, chief executive of property information company Ho Chin Soon Research.

According to an article last year by The Malaysian Reserve, the median price per square foot for luxury condominiums and premium offices in the Golden Triangle area could range from RM420 (US$95) to RM1,300.

Lee of Knight Frank Malaysia said projects in prime locations with good connectivity, such as Bukit Chagar, could see “healthy capital appreciation and rental demand”, particularly from cross-border commuters. 

Besides having one of the busiest land-border crossings in the world, Malaysia and Singapore are working to develop the Johor-Singapore Special Economic Zone. It will consist of nine flagship zones catering to different economic sectors in areas such as JB City Centre, Iskandar Puteri, Desaru and Pengerang Integrated Petroleum Complex.

“The cost of living in Singapore is high, so given a choice, those having to work in Johor in the future will definitely look at this type of housing as an alternative for additional cost savings,” Imran from ERA said. 

“The attractive exchange rate coupled with no additional buyer’s stamp duty (for) a second property in Johor will make it a very appealing proposition,” he added.

For Singaporean travellers not looking to buy property, Johor’s relative affordability means the future hotel and serviced apartments at Bukit Chagar could be an attractive option, provided the RTS Link operates “seamlessly”, said Siva from Rahim & Co.

WHAT WILL HIGHER RENTALS MEAN FOR SMALL BUSINESSES?

The mixed-use development could transform Johor’s retail property landscape by offering diverse opportunities in the retail, food and beverage as well as services sectors, said Teh Kee Sin, advisor of the Small and Medium Enterprise (SME) Association of South Johor.

“Of course SMEs are excited about the high footfall in these areas; everyone is waiting for the RTS,” he told CNA.

“Imagine having a captive market with thousands of people landing at the mall every hour in the RTS (station). These shops will thrive,” Tan from Olive Tree Property Consultants said.

Property enthusiast and Singaporean YouTuber Ryan Khoo highlighted how malls like City Square and Komtar JBCC, located within walking distance of the Woodlands Causeway, are seeing good footfall with “retail rents among the highest in Johor Bahru”. 

In a report by The Edge Malaysia early this year, stockbroker BIMB Securities estimated that average rentals at Komtar JBCC could double once the JB-Singapore RTS Link begins operations in end 2026. 

The expected rise in retail rentals at developments poised to enjoy higher footfall from upcoming infrastructure projects such as the RTS and ART, has however, raised concerns among small businesses, Teh said.

“Our cost of business will go up. We hope that the federal government can give grants or soft loans for SMEs to play a part (in Johor’s retail growth) and not just reserve slots for big companies,” he said. 

Teh noted that popular malls tend to a have waitlist of potential tenants, and well-known international brands are usually prioritised. 

Spots offered to small businesses could be less strategic, he said. “Unless you are a very popular brand, (it can be) very hard for SMEs to make the cut.”

QUESTIONS LINGER OVER BUS-TRAM PICK

Analysts also lauded the government’s decision to partner private player Sunway Group for the Bukit Chagar venture, but some wonder if a bus-tram network is the best option for southern Johor.

“It mitigates the risk, (allows Sunway to) shoulder a bit of the burden. You also bring in new money, new ideas, new systems, new methods – very good economic sense to try to partner up,” said Siva.

Previous transport-related public-private partnerships include the North-South Expressway (PLUS), the Light Rail Transit (LRT) in Klang Valley and the Kuala Lumpur International Airport. 

Sunway has a strong reputation in Malaysia for managing mixed-use developments, noted Tan of Olive Tree Property Consultants.

For instance, the popular Sunway Resort near Kuala Lumpur connects Sunway Lagoon amusement park with a hotel as well as the Sunway Pyramid megamall.

There are pros and cons to involving the private sector, said Ho of Ho Chin Soon Research.

While a private company is better placed to minimise the risk of an integrated development becoming a “white elephant”, its core objectives are profits and viability, he said.

This could have contributed to the authorities picking an ART instead of an LRT system for southern Johor – it costs less and can be constructed more quickly, he said.

In Ho’s view, an LRT system is “the right choice” as it can carry a higher volume of passengers and incurs lower maintenance costs in the longer term.

“All in all, LRT would be a better experience (for passengers) down the road. We wouldn't want travellers who have experienced riding the (faster and better) MRT in Singapore ... to cross over to Johor only to ride the ART now, would we?” he said.