Two years ago the world’s third-most densely populated country announced plans to increase its total population by nearly 25 percent. As you can imagine, the 5.3 million residents of Singapore were not exactly overjoyed by their government’s grand plans. Fears of overcrowding and further price escalation in an already exorbitant housing market provoked widespread public outcry. Meanwhile, on the opposite side of the famed Singapore straits, Malaysian real estate developers and investors rejoiced. Many had been making big bets on residential property in Iskandar, a development zone on the Malay side of the Johor Strait. Iskandar has been designed to capitalize on Singapore’s economic success in a similar manner to Shenzhen’s relationship with Hong Kong.
The excitement appears to have been short-lived. Hundreds of thousands of residential units are now currently in the pipeline, and sales have been wilting in what appears to be a substantial property glut. However, the few developers who had the foresight to focus on the less-appealing industrial segment are riding high as SMEs continue to snap up industrial land hand over fist. Seemingly unrelenting demand has pushed prices up 40% a year over the past five years. Following Singapore’s newly introduced restrictions on foreign labor and the depreciation of the Malaysian ringgit, SMEs attempting to combat Singapore’s rising costs are jumping across the border to Iskandar en masse.