Retire in Style for Singaporeans in Malaysia- Johor Bahru

We believe that the escalating costs in recent times have really made us wonder if retirement is even possible. Do we have to work till much older than the legal retirement age of 63 years old? Are we able to retire in style?

Therefore, quoting from Bruce Lee, we should: “Be like Water”, adapt to the conditions and be open-minded about the options available. We can create a greater lifestyle, lower our cost of living and embark on an incredible adventure.

With a lifestyle arbitrage, using the same amount of retirement funds, we could stretch our scarce funds or have an upgrade in living standards.

We decided to start a retirement series with Malaysia as our first coverage.

Our focus will be retiring on Johor Bahru as it might be one of the more viable options for Singaporeans. Other popular spots in Malaysia are Penang, Kuala Lumpur and Malacca.

 

Malaysia Long Term Visa

So for a start, we will look at the requirements for a visa to have this sort of living arrangement.

For Singaporeans, there is no need for a visa if you do not intend to stay for a period exceeding 30 days. So in theory, you just have to clear the customs every month in order to renew your 30 days.

We are not sure if there will be issues if you keep crossing the border especially if you are still working. There could be a need for you to pop by your office a couple of days a week.

From the interviewees from this article by Channel News Asia, Work from home in JB: Some Singaporeans are relocating amid border reopening, hybrid arrangements, it seems there should not be too much of a problem with regards to not obtaining visas for Singaporeans intending to embark on this lifestyle.

Nonetheless, for those who want everything sorted out and be by the book, there are two visas that you could find applicable:

Malaysia My Second Home Program

To qualify for this program, the applicant must be above 35 and have liquid assets of at least MYR500,000MYR1,500,000, a monthly offshore income of at least MYR10,000 MYR40,000 and make a fixed deposit in a Malaysian bank of MYR300,000 MYR1,000,000, partial of the fixed deposit can be withdrawn from Year 2 to buy a house, purchase health insurance or pay for their children’s education.

Further Requirements:

– A Malaysian sponsor is required to support the application and place a personal bond up to MYR2,000 before the visa is issued.
– Have medical insurance from any insurance company that is valid in Malaysia.
– Undergo a medical examination in any private hospital or clinic registered in Malaysia.
– Police clearance certificate from the country of origin to prove that the applicant has no criminal record.

 

Malaysia Digital Nomad Visa

To boost its economy and digital adoption, the government have come up with the digital nomad visa since 1st October 2022.

You will be eligible for a Malaysia digital nomad visa if you meet the following requirements:

• You are older than 18.
• You are a digital freelancer.
• You are an independent contractor.
• You are a remote worker, meaning you are an employee of a company with flexible working arrangements.
• You have one of the following professions:
  • Digital marketing.
  • Digital creative content.
  • Digital content development.
  • Software development.
  • UX.
  • UI.
  • Cybersecurity.
  • Blockchain.
  • AI.
  • Machine learning.
  • Data-related etc.
• You have an annual income of $24,000 if you are a foreigner, whereas local digital nomads must have $7,863.
• You have proof of your work.

 

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Malaysia Property

The ideal place with the most convenience and with a more vibrant community should be around the Woodlands Causeway. This is especially so with the RTS up and running from 2027. It will make travelling to Singapore by the MRT a breeze.

 

For illustration purposes, we are looking at the nearest condo development in JB that is just smack next to the Johor Customs which is R&F Princess Cove. This is also covered by OGS in their YouTube video which is trying to explore the benefits of living across the Causeway for working Singaporeans.

This is a development that has a 650m sheltered walkway to the customs and is also within walking distance to the new RTS station. As for the prices, you could get a 2 bedroom with 2 baths of 800 sqft at the asking price of RM$730,000. That is around 208k SGD.

With 208k SGD, we are not sure if you can get anything in Singapore. Upon using the price filter in Property Guru, even a one and two-bedroom HDB flat of around 500 sqft in Singapore will set you back at SGD$300k. Below we will see what you can get in JB that is lesser in value than an HDB and we can do a visual comparison.

Source: PropertyGuru- R&F Princess Cove 2 bedder at 208k SGD

Source: PropertyGuru- 2 bedder HDB Flat at 300k SGD

Though we know it is not an apple-to-apple comparison, lifestyle arbitrage is just so prevalent. Not forgetting, the Princess Cove development is one of the higher-priced projects in JB. So if you do not mind going slightly further away from this location, you could get even cheaper housing options.

Source: PropertyGuru- Price Trend of Princess Cove

Princess Cove was launched in 2018 at RM$1000 psf and it has dropped to a low of RM$800 psf. It is currently hovering at RM$900 psf which is below the launch price and adding to the depreciation of the ringgit through the years, the value proposition seems to be worth a look at.

With the current rental of a 2 bedder going at RM$3000, we would forecast a net yield of 4.2% With Malaysia mortgage rate at around 4%, it might not sound like a good deal if you are taking a loan for the purchase.

The rental of RM$3000 is equivalent to SGD$850 which in Singapore, at best we can get just a room, whereas in JB you are getting a full facilities 2 bedder higher end condo.

So a wise move for those with no other considerations such as kids and you have remote work arrangements. By relocating and renting out your 3-room HDB flat on a conservative $2k per month, you have a spare 1.2k SGD (RM$4.2k) to spend. It certainly seems an attractive proposition.

 

Cost of Living In Malaysia

The cost of living in Singapore based on a study by the Lee Kuan Yew School of Public Policy in 2019 shows that a retiree would need SGD $1379 for their basic needs. It would assume that the house that they are staying in is free of mortgage.

Here is a compilation by MoneyOwl on the items that they have taken into consideration:

Source: MoneyOwl

Given the recent escalating prices, I would put $2,000 as a reasonable amount.

So doing the sums, from this website, the average cost of living for a single person in Johor Bahru will be SGD$650. This is sort of in sync with the CNA article earlier, where one of the interviewees put the groceries to be 50% cheaper in JB compared to Singapore.

Our cost of living in Singapore will be an outlay of $2,000 as we will be staying in our mortgage-free house.

Let us see what if we are living in JB. If we rent out our 3-room flat for SGD $2,000, renting a nice 2 bedder for SGD $850. Our net inflow from the property arbitrage will be SGD $1,150. We will deduct this from our living expenses in JB of SGD $650, it will give us a surplus of SGD $500.

So instead of an outlay of $2k, if we stay in Singapore, we will have no outlay but surprisingly an income from the lifestyle arbitrage of SGD $500 which can be used to upgrade our lifestyle. Alternatively, it will definitely stretch our retirement funds to handle unforeseen expenses.

 

Other Factors Retiring in Malaysia

Here are some other factors that can tilt those standing on the fence:

Advantages

1. The pace of life is slower and hence people tend to have better conversations
2. You eat better as the food is fresher as in chicken, fish and vegetables.

Disadvantages

1. The efficiency of getting things done which is a side effect of a slower pace of life
2. Crime Rates

Here is a survey by Numbeo on the crime rate perception with a comparison between Singapore and Johor Bahru.

Source: Numbeo

If the survey is credible, we would be very cautious walking alone during the night in JB with a score of just 35.73. To be fair, most of the indicators are pointing towards a moderate level, hence it does not look too bad based on the data presented.

This YouTube video is of someone who has done it and 5 changes he experienced since his move. Worth a look.

 

Summing Up

With the Singapore Dollar at a record high to the Malaysian Ringgit at 1 to 3.5, it has really made a proposition to retire or work remotely in JB a consideration for some. 

Coupled with the escalating inflation which has led to a loss of purchasing power, the idea of retiring to a less expensive city might be a mode of survival to stretch their retirement funds for those less well off. 

The ability to leverage the good rental market in Singapore and having a lifestyle arbitrage is looking really doable and attractive.

From our number crunching, instead of an outflow monthly during your retirement years, it could even result in an income from embarking on this initiative.

Not forgetting the good and fresher food, plus the slower pace of life which could be great for mental wellness.

However, the crime rate in JB which is moderate on the Numbeo survey is still a serious consideration.

In essence, it is not going to be a no-brainer but is definitely worth serious thought. 

 

Also Read: Propnex A Value Play- Is Spore Property Prices Correcting?

 

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Disclaimer:

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. The content is not directed to any investor or potential investor and may not be used to evaluate or make any investment. Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stockbroker or financial advisor.