Singapore spending in Johor Bahru could reach $2.1b after RTS: report

F&B and services would likely be the most affected sectors.

Singapore consumers could drive up to $2.1b in additional spending in Johor Bahru after the Johor Bahru–Singapore Rapid Transit System (RTS) Link begins operations on 1 January 2027, according to DBS.

The bank said the RTS Link could accelerate Johor Bahru’s transformation from a price-driven shopping destination into a broader cross-border leisure hub, supported by new retail, hospitality, and lifestyle developments.

DBS expects the RTS Link to generate a spending boost of $1.5b to $2.1b in Johor Bahru, equivalent to around 4% to 5% of Singapore’s retail sales. “JB’s diverse culinary variety, and distinct local specialties remain a key draw."

Additionally, the rail link is expected to support around 40,000 daily journeys between Singapore and Johor Bahru, representing a 32% increase in travel volume as capacity rises by about 35%.

The firm said its latest assessment differs from its July 2024 view, when it estimated that retail leakage from Singapore would be around 3% to 4% of total retail spending. At the time, it identified food and beverage and services as the categories most exposed, whilst supermarkets were expected to remain more resilient.

A joint study by the Singapore Business Federation, Restaurant Association of Singapore and Singapore Retailers Association estimated that Singaporeans could spend an additional $1.05b annually in Johor Bahru after the RTS launch. After accounting for $756m in inbound spending, the study estimated a net $290m outflow from Singapore.

However, DBS said this estimate may not fully capture Johor Bahru’s potential transformation as it assumes a static market and “overlooks its possible transformation into a ‘holiday destination’ for Singaporeans and potentially tourists from Singapore.”

Price gap remains a key attraction

DBS said the price gap between Singapore and Johor Bahru remains a major driver of cross-border spending, especially in food and beverage and services.

Based on recent site visits, the firm observed savings of around 30% to 70% in these categories compared with Singapore.

“Whilst groceries still exhibit notable price differences, the absolute savings remain relatively small,” it noted. “In addition, certain items within the fashion and apparel segment can be cheaper in Singapore which means less impact.”

However, the gap has narrowed as Johor Bahru prices increased and the Malaysian ringgit strengthened. The ringgit has appreciated by around 10% between 2024 and 2026.

DBS expects stronger demand from Singapore visitors to push up rents, wages and consumer prices in Johor Bahru, gradually reducing its cost advantage over time.

JB malls expand ahead of RTS launch

Johor Bahru’s retail sector is upgrading ahead of the RTS opening as malls seek to attract more Singapore visitors.

Johor Bahru City Square is undergoing a major asset enhancement initiative targeted for completion in 4Q27. The upgrade includes a 15,000 sq ft children’s adventure park and a 41,300 sq ft health and wellness hub.

The mall could also be repositioned as an integrated development with potential Shangri-La branded hotel apartments by 2Q28.

KSL City Mall is refurbishing facilities and renovating its Lotus supermarket, Mid Valley Southkey is expanding after parent company IGB Berhad secured 860,000 sq ft of additional land for future mixed-use development, which DBS said could support its position as Malaysia’s largest mall.

SKS City Mall is also a part of a pipeline of integrated developments expected from 2029.

Longer-term projects, including Coronation Square and Bukit Chagar Integrated Development, could further strengthen Johor Bahru’s retail appeal through direct RTS connectivity.

DBS said Johor Bahru is gradually evolving beyond a low-cost shopping destination for Singaporeans as investments expand across retail, hospitality, healthcare, and entertainment.

New retail formats such as SKS City Mall, Beletime Danga Bay and Sunway Big Box are adding dining, entertainment, wellness and family-oriented experiences.

International hotel brands including Sheraton, JW Marriott, TUI Blue, Ascott and Shangri-La are also expected to support longer stays.

The report said improved connectivity and broader lifestyle offerings could reposition Johor Bahru as a cross-border leisure destination, although the city’s ability to capture more spending will depend on infrastructure improvements and maintaining competitive prices.

“JB’s transition into a compelling stay-eat-play destination will unfold over several years, and will be something to monitor,” RGB said.