12 hours ago
Johor's billion-ringgit property market braces for higher foreign buyer tax
[KUALA LUMPUR] Johor's property market is recording a spike in activity as foreign buyers scramble to close deals just weeks before a planned hike in levies kicks in.
The short notice given for the hike, announced on Jun 18, has sparked some disgruntlement, especially among Singaporean investors who say they have been left with little time to make big-ticket decisions.
Veteran agent Matt Tian from PropNex Malaysia said his team has fielded numerous complaints from potential buyers, particularly Singaporeans, who are upset with the short notice. 'Many feel forced into making quick decisions or face higher costs,' he said.
'We have also heard concerns from buyers in Taiwan, China and Indonesia.'
Effective Jul 1, Johor will raise the levy on foreign property purchases to 3 per cent or a minimum of RM30,000 (S$9,060), up from 2 per cent or RM20,000. The new rates will not apply to sale-and-purchase agreements signed before the deadline.
While some buyers are adopting a wait-and-see stance, real estate professionals say interest in Johor remains resilient. Tian noted that even with the higher levy, Johor properties still offer better value than those in the Klang Valley, Penang or the buyers' home countries.
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For comparison, a two-bedroom, two-bathroom condominium near the Johor Bahru Custom, Immigration and Quarantine complex is priced at around RM750,000 or RM884 per sq foot (psf). A similar unit in central Kuala Lumpur near the Petronas Twin Towers is being listed at RM1.45 million or RM1,272 psf, according to PropertyGuru.
Other industry stakeholders also believe that the higher levy will not deter foreign interest, given the anticipated economic boost from the Johor-Singapore Special Economic Zone (JS-SEZ).
Lindy Tan, who chairs the Real Estate and Housing Developers' Association (Rehda) Johor, said developers are already fielding heightened interest from buyers looking to beat the July deadline.
'Many have expressed their intention to finalise deals quickly, though it's too early to quantify,' she told The Business Times. She added that this could pull forward demand and slow sales in the following quarter.
Tick tock on the levy clock
Announcing the changes on Jun 18, Johor Chief Minister Onn Hafiz Ghazi said this marks the first levy revision since 2004 and it is aimed to offset rising operational costs and improve service delivery for investors and the public.
The proposal also raises land transfer registration fees for properties priced above RM500,000, with an extra RM500 charged for every RM100,000 thereafter. This measure also includes industrial property purchases by foreign buyers or companies.
For example, a RM1.5 million property would now incur a RM45,000 foreign buyer levy and a RM5,000 registration fee. This brings total transaction costs to RM50,000, up from RM30,000 previously.
Effective July 1, the levy on industrial properties will also double from 2 to 4 per cent, on top of the existing 4 per cent stamp duty.
Once home to Malaysia's highest number of overhang properties, Johor has seen improvement since the resuming of cross-border travel with Singapore in 2022 after the Covid-19 restrictions were lifted.
In Q1 2025, the state recorded 3,034 overhang units – down from Kuala Lumpur's 3,668 units. In 2022, Johor led the nation with 5,992 overhang units.
Johor recorded 15,094 property transactions worth over RM11.1 billion in the first quarter of 2025, down from 18,106 transactions and RM14.6 billion in Q4 2024. This marks a 17 per cent drop in transaction volume and a 24 per cent decline in value.
Residential properties made up the bulk of activity, accounting for 64 per cent or 9,646 transactions worth over RM5 billion. Commercial deals comprised 15 per cent, with a total value of around RM2.2 billion.
Catalysts
The RTS is seen as a major game changer for Johor's cross-border appeal. PHOTO: BT FILE
Investor optimism has been buoyed by the progress of the JS-SEZ and the ongoing construction of the Johor Bahru–Singapore Rapid Transit System (RTS), set to begin operations by December 2026.
The 4 km high-volume shuttle will transport up to 10,000 passengers per hour in each direction between Bukit Chagar in Johor and Woodlands North in Singapore.
The Causeway – among the world's busiest land border crossings – currently sees about 350,000 daily commuters, often with hours-long wait times. The RTS is seen as a major game changer for Johor's cross-border appeal.
'Properties near the RTS station are selling like hotcakes,' said Samuel Tan, founder and CEO of Olive Tree Property Consultants. 'Prices have surged from RM800 to RM1,200 per square feet (psf), and commercial land prices have more than doubled from RM700 to around RM1,500 psf.'
Industrial property demand is also rising. Rehda's Lindy Tan said areas such as Senai, Kulai and Sedenak are attracting investor attention, supported by the JS-SEZ.
Senai and Kulai are well-known logistics hubs in Johor due to their proximity to Senai International Airport, while Sedenak has emerged as a popular destination for data centres, attracting several multinational corporations such as Yondr Group, Keppel, and ByteDance's Bridge Data Centres.
From January to March 2025, Johor concluded 353 industrial property deals worth RM1.9 billion. For the full year 2024, the state recorded 1,592 such transactions valued at over RM6.6 billion.
Spanning over 3,500 sq metre – nearly four times the size of Singapore – the JS-SEZ targets 11 key sectors including manufacturing, logistics and energy. Plans are underway to expand 50 projects in five years and 100 within a decade, potentially creating 20,000 skilled jobs.
On June 23, Onn Hafiz said Johor aims to attract RM100 billion in investments by end-2025, having already secured RM30.1 billion in the first quarter alone.
The Causeway, among the world's busiest land border crossings, currently sees about 350,000 daily commuters, often with hours-long wait times. PHOTO: BT FILE
Tian noted that the RTS appeals to Malaysians working in Singapore and to Singaporeans seeking a more affordable and laid-back lifestyle.
Samuel Tan added that other catalytic projects, including the electrified double-tracking rail, Forest City's Special Financial Zone, and a potential revival of the Kuala Lumpur-Singapore High-Speed Rail, are also driving optimism.
'Johor's property market is at a pivotal point,' he said. 'Any increase in fees, especially targeting foreign investors, must be handled with care.'
Samuel Tan urged the state to consider delaying the levy implementation until the JS-SEZ and Forest City Special Financial Zone gain more traction. 'To increase a higher tax rate and additional charges in such as a short notice, may give the impression that the authorities are cashing in on improving sentiment,' he said.
'Instead of front-loading the cost burden, the state can generate revenue through property taxes and quit rent, while welcoming job-creating investments,' Tan said. 'The timing and scale of the hike need a serious rethink.'
