Sunday, June 11, 2023

Some thoughts on whether it is wise to buy Malaysian property and retire in JB


For the past 4 days, I've been in JB to meet distant relatives who are on a business trip from China. Fortunately, a secondary school classmate was kind enough to bring me around JB for breakfast and share with me his latest property move which is to buy a piece of landed property unit at Eco Botanic Gardens.

Eco Botanic Gardens is primarily owned by Malaysians who work in Singapore and Singaporeans who want to live in Malaysia. The pricing is well above $1.5M MYR, so Singaporeans are legally entitled to own these properties. 

Of course, my classmate wants to promote his estate and suggests that I either rent/buy a unit in Malaysia there  The idea is that we can all retire in style, given that our conversations are not tainted by modern professional comparisons and tend to be more like banter between secondary school pals. On top of that, Eco Botanic Gardens looks posh with a fairly nice gentrified row of shophouses with fusion restaurants such as Marui.

My pal means well, but I am in the process of getting legal rights to all my mum's properties in JB with the eventual aim to sell them at a reasonable price. So logically, I'm doing the opposite of what my friends suggest. I'm doubling down on Singapore. I'm penning my thoughts here not to demonstrate my impeccable logic, which will have its share of supporters,  but to chronicle my thoughts on how I'm likely to be wrong. 

For some background. My property in Malaysia is currently stuck at a current yield of about 6.1% and rents have not increased for the past 30 years! Even worse, real estate agents actually believe that the rent I'm charging is relatively high for the area. I'm hesitant to sell because converting it to a portfolio of high-quality S-REITs may just give me a yield of about 5.3% but it will have the advantage of dispensing with currency risk. 

In my view there are just too many considerations to living a blissful life in Malaysia:

a) At the personal level you need to change yourself to adapt to a different environment.

First off, I'm a public transport guy from Singapore. I need to pick up a refresher to drive if I move to JB. Then I need to develop a rugged DIY kind of attitude to living in Malaysia and become some kind of handyman. These are great skills to develop for anyone, but it's not exactly what I want to build given that I'm more interested in AI, quantum computing and investing. 

Also, Singaporeans need an attitude adjustment as there are no Town Councils to complain to. 

b) We need to imagine the state of the property after 10 years to determine whether this is really the beautiful life we will be getting

The reason why Singapore is so good at what we do is that we are excellent at maintaining and sustaining things. Over the years, Singaporeans have been seduced by many real estate development projects, but often they result in becoming ghost towns like Forest City. Even if your property does ok over the years, a layer of algae will eventually grow around it. Entropy is a very powerful force in JB.

So we cannot just look at one development and see just how beautiful it is, we need to imagine what it will look like in 10 years. There is a real probability that your development will become a ghost town. I remember going to the sales office for Forest City and there were horse carriages to bring potential buyers around. I was even told that this development has the personal oversight of the Sultan. 

But look what Mahathir did to it?

Anything can happen.

c) You just need one mugging incident to change your mind about the place

If half your family is Malaysian like mine, then you will know that crime levels are not like in Singapore. There are of course terrible incidents and stories of crime and I was advised never to pump petrol or withdraw money at night in JB. But muggings are real - someone hit my late father-in-law on the head when he was doing morning exercise in Kulai.

In such cases, the solution in JB is always to wall up the estate and hire security. But in my head, the question is always who is going to keep you safe from security?

Security cannot come fully from just guards and cameras. It has to come from legal systems, procedures and swift execution of justice. Good luck with that.

d) What needs to happen for me to be wrong?

This point is more important because Singapore wants to see real change before we are happy to part our strong currency for Malaysian land. At this point in time, if you read financial planning journals from Malaysia, you will hardly be impressed with what you read. Right now a Singapore journalist (I  dunno what drugs he is on) is openly writing about comparing CPF Life being better than buying investment property. In Malaysia, they are debating whether to draw out their EPF for personal expenses. You can imagine how these two societies will evolve over time. 

As expectations are not high in Malaysia, I hope to see the RTS gets built as a baseline to consider that I might have misjudged the country. After that, the current government must survive its term in power. Beyond this one term, if the Anwar government can win an election without needing to form a coalition with UMNO, then I can consider my judgement to be incorrect, but this will only improve the probability of profiting from our investments.

What is the probability of this happening? This is something we can debate about and monitor. 

If they let Najib out of jail, this is a big negative and we gotta adjust the probability downwards, If Mahathir dies, then it's a great positive and we can adjust it in the opposite direction.

Whatever it is, I don't think it's within a Singaporean's power to come up with reasons for how things are going to work. We've been losing money on projects in JB since we've existed as a country. My relatives remember the days 1 SGD = 0.90 MYR. 

If anything, Malaysia needs to prove that it's an investable place. They need to respect the ownership of private property, ease up on currency controls, and stop penalising folks who just want to come to your country to spend money.

Finally, if you can FIRE in Singapore, it's the best scenario because you've succeeded in retiring in one of the most expensive places in the world. If anything, your assets and physical body are safe. Retiring in a place like JB makes more sense if you are somewhere in the twilight zone of retirement planning. 

Still, nothing beats coming in occasionally to JB to enjoy the power of the SGD. 


  1. I can still remember 1 sgd = 1 myr and the years when both currency notes could be used interchangeably in wet markets & provision shops .... and I'm not even 55.

    The forex trend between 2 countries is a report card on the relative viability & progress of the countries.

    I daresay your relatives are likely upper middle class in M'sia & even they cannot immunize themselves against street violence & lawlessness.

    For desperate twilight zoner S'poreans, their best bet is to retain the bulk of their cash/assets in S'pore, rent out their HDB, and rent in JB .... with a quick escape route back in case shtf.

    1. You are absolutely spot on about my relatives. We basically had a medical professor drive us around vietnamese red light districts getting durians. I know I gotta temper my analysis because I never interacted with rural Malays who hold the trump card in Malaysian politics.

  2. One more thing that could happen to make you to be wrong is if Singapore governance mean reverts back to average.

    Would be interesting to hear your thoughts on the probability of Singapore continuing to remain exceptional and what factors would allow it to remain exceptional. The trend would suggest mean reversion has taken its first steps.

    1. Nice idea that deserves a full blog article. I think if we believe in our mean reversion and fight hard for our future, mean reversion will not occur. But if we just casually brush it aside, we will languish. But we should examine this idea in greater detail.