The Rapid Transit System (RTS) Link between Johor Bahru (JB) and Singapore is changing not only transportation but also impacting property prices and rental rates in JB, as well as cross-border work patterns. This article expands on the previous discussion regarding the potential impact of the RTS on Singapore rental rates. It also explores property investment opportunities in JB and a conservative alternative for those seeking passive income: Singapore dollar-denominated large-sum savings insurance policies.
RTS and Johor Bahru Property Market
Property Appreciation and Rental Income
The RTS is a significant factor in the appreciation of property values in JB. The speaker's personal experience highlights this: a property purchased for RM450,000 is now valued at over RM700,000. Furthermore, the speaker generates a monthly rental income of over RM4,000 from several rental properties.
The Impact of the RTS on Property Prices
The speaker believes that the RTS has caused property prices in Johor Bahru to increase by at least 30%. The area has become attractive to those working in Singapore due to the improved connectivity.
Commuting Challenges Remain
Despite the RTS, daily commuting between JB and Singapore can still be arduous. Queueing at immigration can take one to two hours, especially during peak times and holidays. The total commute time for those working in the city center can be at least three hours each way. While the RTS may alleviate congestion, it is unlikely to cause a significant decrease in Singapore rental rates due to the length of the commute.
Renovated Property Showcase
The speaker provides a tour of a renovated property, showcasing two bedrooms designed for rental.
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First Bedroom: Features a single bed, desk, and air conditioning.
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Second Bedroom: Similar in concept to the first, with a bed, desk, artwork, and air conditioning. Both rooms rent for approximately RM600-700 each.
The property also includes a small living area for tenants. The speaker mentions having six rental rooms, generating a monthly income of over RM4,000. Most tenants commute to Singapore, leaving early in the morning and returning in the evening.
Investment Opportunities: Property and Insurance
Identifying Trends and Locations
The key to successful property investment lies in identifying trends and targeting the right locations. The speaker cites a data center being built near his properties, attracting tenants and increasing rental income.
Data Centers and Johor Bahru
The construction of data centers by companies like Tencent, Microsoft, Nvidia, and Google is driving demand for housing in Johor Bahru. JB offers stable electricity and cheaper land compared to Singapore, potentially saving companies up to 50% on costs.
- Data Center Impact: Data centers are attracting engineers and IT professionals, boosting the local economy. The area is seeing improvements in infrastructure such as new roads to alleviate traffic, new supermarkets and the opening of coffee shops.
Opportunities for Cross-Border Employment
Many international companies are offering Singaporean salaries to employees willing to work in their JB offices. Some companies are even establishing branch offices in JB and tasking Singaporean employees with managing them.
Data Center's Infrastructure Collaboration
Singaporean company Singtel and Malaysian company NEXRA are collaborating to build fiber centers and enhance connectivity between the two countries. This is done by linking them through a subsea cable.
Conservative Investment Alternative: Singapore Dollar Savings Insurance
For those seeking a more conservative investment with passive income, the speaker recommends Singapore dollar-denominated large-sum savings insurance policies.
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Benefits: These policies offer long-term wealth accumulation with a stable financial environment.
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Target Audience: Suitable for long-term investors who are not in a hurry to spend their money. This allows them to maximise the compounding interest effect.
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Minimum Investment: A single payment of US$250,000, or spread over five years with annual payments of US$50,000. Promotional deals can lower the minimum deposit.
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Returns: For a USD250,000 policy with a 6% annualized yield, the breakeven point is around the 6th year. At year 18, it will become USD515,000, and at year 35, it will become USD1,250,000.
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Key Features: The policy offers the option to split the policy into smaller portions and flexibility in changing beneficiaries.
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Guaranteed vs. Non-Guaranteed Returns: While guaranteed returns may be lower, the high rate of realization and long-term compounding minimize investment risks.
The policy also does not provide annual dividends. Instead, the dividends will be reinvested into the plan. You may use the funds for your children's education fees, or towards a downpayment for your first house.