Stranded labor hits Malaysian border rents

Overseas Property | 14 Jan 2021

Rents in johor Bahru in Malaysia plunged as Malaysian workers became stuck in Singapore due to the Covid-19 lockdowns, resulting in a wave of tenancy terminations, reports the Oriental Daily News in Malaysia.

The border between the two countries has been closed since March and many Malaysian laborers in Singapore who used to rent a flat in the border city of Johor Bahru have been unable to return, causing several lost tenancies.

A property agent in Johor Bahru, Hung, revealed that the rate of tenancy terminations had reached 70 percent in Johor Bahru.

Rents of three-bedroom and four-bedroom flats had fallen 50 percent from RM3,000 (HK$5,790) to between RM1,500 and RM1,600.

In the districts Skudai, Mount Austin and Bukit Indah, the tenancy termination rate is not as high, coming in between 30 and 50 percent.

But the rents, which used to be between RM1,300 and RM1,600, fell about 20 percent to between RM1,000 and RM1,300.

Hung said as more Malaysian foreign workers withdraw from renting urban properties, there is an oversupply in the market. Even if landlords lowered rents, the surplus will persist as there is insufficient demand from local tenants, so some landlords have decided to sell their properties.

Most Malaysian workers come from the midwest and north Malaysia. After the border closure, they've had to pay rents in both Singapore and Johor Bahru, property agent Lau said.

When they could not afford the rent in both places, they had terminated the lease on their Johor Bahru unit. Another reason for the rent withdrawals is that many workers have been laid off and returned directly to their hometowns in the midwest and north Malaysia.

Another agent, Lam, believes as long as the border opens up again, this wave of rent surrenders will end as rentals in Johor Bahru still have a competitive advantage over Singapore, where rents for a one-bedroom flat are between S$800 (HK$4,700) and S$900. The monthly salary of most foreign laborers is only S$1,000.

Moreover, most Singaporean landlords require their tenants to live together, lacking freedom and privacy.

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