Johor’s emergence as a retail and industrial hub is a boon for Malaysia Reits: report
Driving this growth are the upcoming RTS Link, JS-SEZ and strong Singaporean spending
[SINGAPORE] Johor is rapidly emerging as a premier retail and industrial hub, buoyed by major infrastructure developments and robust cross-border demand from Singapore, said Maybank Investment Bank in a sector research report.
This ascent reinforces a positive outlook for Malaysian real estate investment trusts (Reits) with significant assets in the southern state, the Oct 7 report added.
It identified a trifecta of catalysts driving this growth: the upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link, the planned Johor-Singapore Special Economic Zone (JS-SEZ), and continued strong spending by Singaporeans capitalising on a favourable exchange rate.
The agreement for the JS-SEZ was signed in January 2025, with the intention to facilitate smoother movement of goods and people, creating a more integrated business environment for Malaysia and Singapore.
The RTS Link, a 4 km rail line connecting Johor Bahru’s Bukit Chagar station with Singapore’s Woodlands North station, to be completed by the end of 2026, aims to ease traffic congestion on the Causeway.
These factors are expected to improve connectivity, deepen economic integration and increase property values near key nodes – a boon to Reits with tactical exposure in the region.
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In particular, retail and industrial-focused Reits with strategic Johor assets are poised to benefit from sustained tenant demand, positive rental trends and potential valuation uplift, the report said.
Maybank’s picks are Paradigm Reit, CapitaLand Malaysia Trust (CLMT), Al-Salam Reit, AME Reit and Axis Reit.
Retail thrives on cross-border spending
Johor’s retail sector is a prime beneficiary of the synergistic relationship with Singapore.
The report noted the strong performance of dominant regional shopping centres such as Paradigm Mall Johor Bahru, Komtar JBCC and The Mall, Mid Valley Southkey.
It said that Paradigm Mall, an asset of Paradigm Reit, enjoys near-full occupancy at about 99 per cent, with up to 60 per cent of its weekend shoppers coming from Singapore on the back of the currency advantage and highway accessibility.
Similarly, Al-Salam Reit’s Komtar JBCC saw its occupancy recover to 69 per cent from a trough of 46 per cent in the first quarter of 2022. Its foot traffic is driven mainly by Singaporean shoppers.
The management aims to further reposition the mall ahead of the RTS completion, with a focus on food and beverage expansion and targeted asset enhancement initiatives.
Maybank also noted that an influx of Singaporean brands and healthy domestic consumption continue to support strong leasing momentum across the board.
IGB Reit is also set to enter the market when it completes its acquisition of the Mid Valley Southkey mall by the fourth quarter of this year.
Solid demand in industrial sector
The state’s industrial corridors are attracting significant interest from precision manufacturing, electrical and electronic (E&E), and logistics tenants, bolstered by Johor’s cost advantages and proximity to Singapore, the report found.
Axis Reit has a substantial presence in Johor, with its assets there making up about 30 per cent of its total portfolio value, the report indicated. These properties, concentrated in Pasir Gudang, Gelang Patah, Senai, Kulai and Nusajaya – key industrial and logistics corridors – are all fully occupied.
Meanwhile, CLMT is actively expanding its Johor industrial footprint, with its six factories in Nusajaya Tech Park and Senai Airport City fully leased by manufacturing tenants in medical sectors. The Reit plans to grow its industrial assets to account for 20 per cent of its portfolio by 2027.
CLMT also noted increasing enquiries from E&E, life sciences and logistics tenants, driven by Johor’s improving cross-border connectivity.
Similarly, Johor-centric industrial player AME Reit maintains an occupancy rate of about 98 per cent across its 39 properties. It aims to grow its asset base to RM1 billion (S$307 million) by 2027, leveraging the momentum from the JS-SEZ.
Maybank noted that this confluence of infrastructure integration, industrial diversification and resilient cross-border consumption is setting the stage for a multi-year growth phase in Johor, cementing the positive outlook for Reits strategically positioned within the state.
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