Market Assessment of

Gerbang Nusajaya and

Iskandar Puteri.
COMPLETED BY DTZ CONSULTING AND
RESEARCH MALAYSIA AND SINGAPORE

Gerbang Nusajaya will spearhead the

next wave of growth in Iskandar Malaysia
Prepared for : UEM Sunrise Berhad
30th April 2015

Gerbang Nusajaya is set to be a major commercial hub, making

Nusajaya the engine of growth in Iskandar Malaysia.
Potential for 257,000 jobs to be created by catalytic developments in
Gerbang Nusajaya.
Future population growth will drive housing demand.
Concerns on oversupply and demand slowdown in Iskandar Malaysia
are of a short-term nature, unlikely to impede the progress of
Gerbang Nusajaya.

Contacts:
Saleha Yusoff
Director, Consulting &
Research
+ 603 2161 7228 ext 302
saleha_yusoff@dtz.com.my
Brian Koh
Executive Director,
Investment/Consulting &
Research
+ 603 2161 7228 ext 300
brian_koh@dtz.com.my
Choon Fah Ong
Chief Operating Officer
Regional Head (SEA),
Consulting & Research
+ 65 6293 3228
choonfah.ong@dtz.com

Strong fundamentals and opportunities

Iskandar Malaysia (IM), particularly Nusajaya, continues to benefit from
various committed investments and planned catalytic developments. Its
value proposition is increasingly attractive to Singapore.
Short-term concerns on oversupply and demand slowdown in Iskandar
Malaysia are actually driven by large scale launches of residential units in
Flagship A (Johor Bahru city centre), especially those launched by Chinese
developers. These are less threatening for Gerbang Nusajaya due to its
location and immediate connectivity to Singapore, served by the
Malaysia-Singapore Second Link.
With the presence of key catalytic developments ranging from tourism
and leisure, healthcare and wellness, education, creative to business and
industrial sectors in place to stimulate job creation and economic
activities, Gerbang Nusajaya is poised to generate strong population
growth that will drive housing demand.

DTZ Nawawi Tie Leung Property Consultants Sdn Bhd

Suite 34.01, Level 34, Menara Citibank
165 Jalan Ampang
50450 Kuala Lumpur

DTZ Debenham Tie Leung (SEA) Pte Ltd

100 Beach Road
#35-00 Shaw Tower
Singapore 189702

Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Huge potential lies ahead

DTZ believes that the 4,551-acre Gerbang Nusajaya, which has been
comprehensively master-planned by UEM Sunrise, will ensure long-term
sustainable growth and become a successful business hub in its own right.
With various planned catalytic developments, coupled with its ability to
capitalise on the proposed High-Speed Rail (HSR) station which is likely to
be located in Gerbang Nusajaya, it is capable of creating up to 257,000
jobs, resulting in rapid population growth and housing demand in
Nusajaya. Its developments will drive the commercial success of Nusajaya
from its strategic location between Malaysia and Singapore.

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Johor and Iskandar Malaysia outperforms the nation

Higher GDP growth
Figure 1: GDP Index

Johors economy has outperformed the nation

since 2009. On an average basis, Johors GDP
amounted to 9% of the Malaysias annual GDP
during 2005 2013.

140

Johor

Index (2009 : 100)

130

Iskandar Malaysia, being the destination of 11%

of approved investments in Malaysia,
contributed about 70% of Johors GDP. Highvalue jobs have been created, as evidenced by
its GDP per capita, which is 7% higher than the
national level.

120

Malaysia

110
100
90
80

Lower unemployment rate

2009

2010

Malaysia

The labour market also performed better, with

an unemployment rate of just 2.6% in 2014,
lower than the 2.9% recorded at the national
level. This can be partly attributed by a number
of pioneer projects in Iskandar Malaysia, which
have commenced their operations. Based on
census data, there is no shortage of labour
supply as more young people are entering the
workforce. Official census conducted in 2010
revealed that 42% of the Johor population aged
between 25 to 54 years old. It is projected that
this ratio will increase to 44% by 2030.

2011

2012

2013

Johor

Source: Department of Statistics Malaysia,

IRDA, DTZ Consulting & Research, 2015

Figure 2: Unemployment Rate

4.0%

Malaysia: 2.9%

3.5%
3.0%

2.5%
2.0%

Johor: 2.6%

1.5%

Given the continuous job creation in Iskandar

Malaysia, coupled with the increasing
workforce, the unemployment rate is expected
to remain low, going forward.

1.0%
0.5%
0.0%

Malaysia

Johor

Source: Department of Statistics Malaysia, 2014

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Singapore continues to complement Malaysias growth, including Iskandar

Malaysia
Iskandar Malaysias value proposition is
increasingly attractive

Opportunities for land-intensive

businesses

Singapore leads foreign investment in Iskandar

Malaysia, with a cumulative committed
investments totalled RM 12.1 billion during
2006 2014. Both the governments of
Singapore and Malaysia recognise the immense
benefit of twinning economic activities between
Iskandar Malaysia and Singapore. Bilateral cooperation has deepened in recent years,
evident from the setting up of the MalaysiaSingapore Joint Ministerial Committee of
Iskandar Malaysia (JMCIM) in 2013. This has
helped to facilitate the development of several
catalytic projects in Iskandar Malaysia, e.g. the
High-Speed Rail (HSR) and Rapid Transit System
(RTS).

Since it is increasingly challenging for landintensive industrial operations to find suitable

land plots in Singapore, the vast availability of
land and lower land cost in neighbouring
locations, such as Nusajaya, will continue to
attract land-intensive industries from Singapore
to relocate. For office-based activities, Nusajaya
offers opportunities for companies to further
reduce their operational costs as major
Business Process Outsourcing (BPO) and Shared
Services Centre (SSC) locations.

Spillover effect from Singapore

Cooling measures introduced by the Singapore
Government have encouraged outward real
estate investments, partly generating demand
for residential units in Iskandar Malaysia, as
transaction costs are significantly higher for
buyers of Singapore residential properties. The
Iskandar Malaysia residential market will also
benefit from the potential spillover effect of
population growth in Singapore, which is
projected to reach 6.9 million by 2030.

Potential for business relocation

Recent developments in Singapore have
encouraged companies to venture into Iskandar
Malaysia. Rising business costs and tightened
foreign worker policies present challenges for
companies operating in the island-state.
Besides, the government, via International
Enterprise (IE) Singapore, has rolled out various
incentives and programs with the aim of helping
Small and Medium Enterprises (SMEs) to grow
overseas and stay competitive. Moreover, the
Economic Development Board (EDB) is
encouraging land-intensive activities to be
located in neighbouring countries, although it is
also targeting companies to site their high-value
and headquarter operations in Singapore.

The proximity of Iskandar Malaysia offers

complementary locational advantage with
Singapore. It is an attractive proposition for
companies looking to invest in the region, as
they can position and develop their value chain
across both Singapore and Iskandar Malaysia.
With comprehensive infrastructure and
established labour pool, there is potential for
Nusajaya to attract companies from Singapore,
either to set up part of their operations, or for
complete relocation in the long term.

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Spearheading the next wave of growth

Figure 3: Job Creation in Gerbang Nusajaya

Gerbang Nusajaya is set to be the major

commercial hub in Iskandar Malaysia

300

257.1

250
'000 jobs

With key projects such as Nusajaya Tech Park,

FASTrack Iskandar and Gateway CBD, Gerbang
Nusajaya is well positioned as the major
commercial hub in Iskandar Malaysia, making
Nusajaya the engine of growth due to its
immediate connectivity from the MalaysiaSingapore Second Link and the proposed HighSpeed Rail station. Given the catalytic
investments in education, manufacturing,
healthcare, tourism, creative art and
entertainment, job creation and population
growth will trend towards Nusajaya.

200

164.2

150

177.8
82.1

100
50

116.7
2.5

58.3

2015
2020
without HSR

2025
2030
with HSR

Source: DTZ Consulting & Research, 2015

Increasing population and tourist arrivals

will spur leisure and retail sectors

According to UEM Sunrise, Gerbang Nusajaya

will create 213,000 high-skilled jobs. This is in
line with our base case scenario which
estimates a minimum creation of 177,800 jobs.
However, there is an upside potential as it is
able to capitalise on the proposed High-Speed
Rail. If Gerbang Nusajaya is chosen as the
location of the High-Speed Rail station, more
commercial activities can be expected and this
in turn will support the creation of more job
opportunities. With more business activities,
the potential for a more intensive usage of land
is positive and this could give rise to a higher
potential of 257,000 jobs.

Tourist arrivals in Johor will continue to rise,

driven by leisure projects, as well as high-value
business sectors and industries, which attract
business travellers. According to the Ministry of
Tourism, Johor hosted 5.77 million of hotel
guests in 2013, 46% higher than in 2012. With
an assumed growth of 5% per annum, the
number of tourist arrivals is set to reach 13.23
million in 2030, giving rise to demand for an
additional 14,000 hotel rooms.
The increase in tourist arrivals, coupled with the
population growth, will spur the retail sector. In
order to cater to the rise in demand, an
additional 9.6 million square feet of retail
spaces, or approximately 15 new malls will be
required.

Future population growth to drive housing

demand in Nusajaya
About 30% of Iskandar Malaysia population will
be based in Nusajaya. With the presence of
High-Speed Rail, the number of households in
Nusajaya will be 14% higher than the base case
scenario, widening the residential demand from
57,600 units to over 85,000 units.

Gerbang Nusajaya is well positioned to cater for

such growth given its proximity to Singapore
and various catalytic developments in Nusajaya.

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Figure 4: Projected commercial-related jobs in Gerbang Nusajaya

Potential supply of 65.69 million sq ft of commercial space

70

159,058

Employment - Commercial

160,000

60

140,000

Supporting 159,058 commercial-related jobs

120,000

50

95,635

100,000
80,000

79,779
48,068

60,000

500

30
20

48,068

40,000
20,000

40

Million sq ft

180,000

10

24,284

2015

2020

2025

2030

Commercial NLA (million sq ft) with HSR (RHS)

Commercial NLA (million sq ft) without HSR (RHS)
Employment - Commercial without HSR (LHS)
Employment - Commercial with HSR (LHS)

Source: DTZ Consulting and Research, January 2015.

Figure 5: Housing Demand in Nusajaya

250,000
223,087
195,339

200,000
85,362 units

150,000
100,000
7,760 units per annum
50,000
0

Nusajaya : No. of Housing Units

Nusajaya : No. of Households without HSR
Nusajaya : No. of Households with HSR

Source: DTZ Consulting and Research, January 2015.

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Figure 6: Projected Population Growth in Iskandar Malaysia

Source: IRDA, DTZ Consulting and Research, January 2015.

Perceived downside risk of Iskandar Malaysia property market the perspective

from Gerbang Nusajaya
parcels in Johor Bahru city centre will have at
least 20,000 high-rise residential units.

The roots of perception

The state of Iskandar Malaysia property market
has been widely perceived as worsening
following the emergence of Chinese developers
who flooded the market with large-scale
launches of high-rise residential units located in
strategic sea-front areas in downtown Johor
Bahru. Their projects, coupled with those
launched by Malaysian developers, have
stiffened the market competition. Our
estimates revealed that these sea-front land

The aggressive move of foreign developers, plus

new cooling measures such as the revised RM 1
million floor price for foreign buyers, and
stringent lending conditions have exerted
pressures on Malaysian developers, resulting
amendments in their development strategies.
DTZ understands that some have lowered their
sale targets and are now becoming more
realistic than during the peak time of Iskandar
Malaysia.

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Less threatening for Gerbang Nusajaya

Huge supply of high-rise residential units in

Johor Bahru city centre

From the perspective of Gerbang Nusajaya, the

issue of oversupply of residential properties and
demand slowdown is less threatening due to
two reasons, namely the long term nature of
township development, and the key catalyst
projects that will generate the necessary
demand for commercial properties. Its location,
being at the western corridor of the Iskandar
Malaysia, coupled with the size of the land
which spans over 4,000 acres, offers untapped
opportunities to create synergies. This is
something which many developers, with their
limited land parcels in the much-focused Johor
Bahru city centre and Medini, are unable to
achieve. Although Medini is also situated within
the same flagship, it is developed by many
different developers; whereas Gerbang
Nusajaya is master-planned by a single entity.
This allows UEM Sunrise to create its own
demand drivers for the residential and
commercial components at its own pace.

DTZ noted that the concerns on the issue of

oversupply and the slowdown in demand are
actually driven by recent developments in the
residential sector in Johor Bahru city centre.
While the recent measures introduced by the
Government may have dampened the demand,
most of the high-rise residential projects tend
to target the same group of buyer, namely the
investors. Our site visit revealed that landed
projects, which are mostly located outside the
Johor Bahru city centre, have achieved good
take-up. Beside investors, these landed
residential projects also attract existing
homeowners who are keen to upgrade their
lifestyle. Demand for commercial properties is
positive as it will benefit from the spillover
effects of various committed investments. Also,
high-grade gated and guarded industrial units
with large built-up are highly sought.
Figure 6: Incoming and Planned Supply of
Residential Units in Iskandar Malaysia

A trending-upward demand is expected, given

their existing projects such as Nusajaya Tech
Park and FASTrack Iskandar which will create
high-income jobs. For instance, it is estimated
that the annual salary of an electrician working
at FASTrack Iskandar would be 3.5 times higher
than the national average. This is positive for
Gerbang Nusajaya as workers are able to afford
a better lifestyle. Moreover, the proposed
Gerbang Nusajaya High-Speed Rail station will
create positive spillover effects.

Nusajaya
26%

185,886 units
Rest of
Iskandar
Malaysia
74%

Source: NAPIC, DTZ Consulting and Research,

January 2015.

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Conclusion
long-term sustainable growth and become a
successful business hub in its own right. It is the
new catalyst that will spearhead the next wave
of growth in Iskandar Malaysia.

The Nusajaya of tomorrow will be totally

different from today. DTZ believes that Gerbang
Nusajaya, which has been comprehensively
master-planned by UEM Sunrise, will ensure

30th April 2015

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Market Assessment on Nusajaya and Gerbang Nusajaya

DTZ Consulting & Research

Malaysia and Singapore

Business Contacts
Business Space/Occupier Services
Yasmine Mohd Zamirdin
Associate Director
Phone: +60 (0)3 2161 7228 ext 288
Email: yasmine_zamirdin@dtz.com.my

Investment Advisory
Sr Low Han Hoe
Senior Manager
Phone: +60 (0)3 2161 7228 ext 278
Email: hanhoe_low@dtz.com.my

Consulting & Research

Brian Koh
Executive Director
Phone: +60 (0)3 2161 7228 ext 300
Email: brian_koh@dtz.com.my

Consulting & Research

Saleha Yusoff
Director
Phone: +60 (0)3 2161 7228 ext 302
Email: saleha_yusoff@dtz.com.my

Property Management
T.Subramaniam
Director
Phone: +60 (0)3 2161 7228 ext 310
Email: subra@dtz.com.my

Residential
Eddy Wong
Managing Director
Phone: +60 (0)3 2161 7228 ext 380
Email: eddy_wong@dtz.com.my

Residential
Chong Yen Yee
Associate Director
Phone: +60 (0)3 2161 7228 ext 381
Email: yenyee_chong@dtz.com.my

Retail
Ungku Suseelawati Ungku Omar
Executive Director
Phone: +60 (0)3 2161 7228 ext 330
Email: suseela@dtz.com.my

Retail
Wong Suet Pink
Associate Director
Phone: +60 (0)3 2161 7228 ext 338
Email: suetpink_wong@dtz.com.my

Valuation
Sr Daniel Ma Jen Yi
Director
Phone: +60 (0)3 2161 7228 ext 222
Email: daniel_ma@dtz.com.my

Valuation
Hanafi Abd Rahman
Manager
Phone: +60 (0)3 2161 7228 ext 225
Email: hanafi_rahman@dtz.com.my

Disclaimer
This report should not be relied upon as a basis for entering into transactions without seeking specific,
qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility
for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information
contained herein should not, in whole or part, be published, reproduced or referred to without prior
approval. Any such reproduction should be credited to DTZ.

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