A Memorandum of Understanding (MOU) was signed on 19 July 2016 between Singapore and Malaysia to build the KL-Singapore High-Speed Rail (HSR). The rail link was expected to be completed as early as 2026, reducing travel time between Kuala Lumpur and Singapore to just 90 minutes.
An estimate by the Institute of Developing Economies, Japan External Trade Organisation found that the HSR could potentially deliver an annual benefit of US$1 billion to Malaysia and US$114 million to Singapore after it is completed. It was also expected to generate RM209 billion in Gross National Income (GNI) and 70,000 jobs for Malaysia.
So What Does It Mean For Singapore and Malaysia Property Investors?
Given that the HSR has been postponed after the recent Malaysia elections, what does it mean for Singapore and Malaysia property investors?
Responses on both sides of the causeway have been mixed.
The most affected regions are the Iskandar region in Malaysia and the Lakeside district in Singapore.
UEM Sunrise Bhd CEO, Anwar Syahrin Abdul Ajib told Bernama that the postponement will only have a minor impact on the Iskandar Puteri property market. He mentioned that Iskandar Puteri is already close enough to Singapore with the second link. There are also other projects like Nusajaya Tech Park, Puteri Harbour, FASTrack City, Legoland etc.. The take-up rate for mixed development projects such as Bayu Nusantara and Denai Nusantara has also been positive.
However, Ryan Khoo, Co-founder of Alpha Marketing, which specializes in marketing Iskandar Malaysia property said that many people in Iskandar and the rest of Johor will be disappointed because the impact of the HSR is large.
The URA Masterplan for the Lakeside district was actually launched without mention of the HSR but the HSR would have been the cherry on the cake for the district if it did go through. The HSR would have improved connectivity with Malaysia and given Singapore greater access to labor from Malaysia.
Recent private property launch prices in the west of Singapore, covering West Coast, Jurong and Lakeside would have factored in the proximity benefits of the HSR. With the postponement of the HSR, resale prices of such developments are likely to be muted.
Older developments in the area seeking en bloc sales might also have to taper their asking price expectations since developer interest in the area might cool slightly.
There Is Still Hope!
There might be some light at the end of the tunnel since the Johor Bahru-Singapore Rapid Transit System (RTS Link) is still on track. However, since it connects Johor Bahru and Woodlands in Singapore, the Lakeside area will still need to depend on the original URA Masterplan for the area to deliver its promise as Singapore’s 2nd CBD.
Potential Iskandar Puteri property investors should assess if there are other connectivity-related infrastructure projects announced before jumping in.
It may make sense for existing property investors in the Lakeside area to re-assess their timeline for disposal since the hype over the HSR has fizzled out and it may take a while to realize the full potential of the URA Masterplan. They may choose a quick sale and redeploy their funds on other properties or assets.
As a property investor, it may be worthwhile checking with your property agent to see if there are any good bargains in the area from distressed sales, especially from people who were hoping for a quick flip but got their hopes dashed after the HSR was postponed.
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