JB-S'pore RTS won't topple S'pore retail, in part due to narrowing price gap: OCBC

The Johor Bahru (JB)–Singapore Rapid Transit System (RTS) Link is "not expected to topple" the retail sector in Singapore, said OCBC Group Research.

The Apr. 9 research note said that retail spending in Singapore is expected to remain stable, in part due to a "narrowing price gap" between malls in the two cities.

However, the retail outlook could be affected by the ongoing Middle East situation, reported The Business Times (BT).

Singaporeans spend a lot in Johor on essentials

OCBC analysts noted "strong consumer activity" among Singaporeans in JB.

Most Singaporeans travelling there spend the most on food and drinks, groceries, and retail.

This is echoed by the bank's credit card data, which shows that nearly one in five overseas dollars spent by its cardholders in Malaysia goes to merchants in JB.

They added that around three million Singaporeans visited JB in the first two months of 2026. Singaporeans also made up about 76 per cent of foreign tourist arrivals in Johor in January and February 2026.

S'pore businesses need to up their game

Once the RTS Link starts operating in January 2027, the increased accessibility will likely bring about a "new dimension" to spending patterns in JB.

Singaporean retailers are hence advised to "enhance their competitiveness" ahead of the RTS Link launch.

However, the potential impact is unlikely to topple the retail sector in Singapore.

This is unlike Hong Kong, where improved accessibility to neighbouring Shenzhen has driven a "structural decline" in the city's retail sector.

One reason is the narrowing price gap between JB and Singapore.

JB prices have risen to "Singapore pricing", causing residents to feel priced out and potentially worsening inflation.

In addition, the ringgit has strengthened by more than 10 per cent against the Singapore dollar over the last two years.

These may reduce the incentive for Singaporeans to shop in Malaysia, analysts said according to BT.

Tourism spending here up

Furthermore, while Singaporeans are spending more overseas, tourists are helping to fill the gap in retail spending here.

Tourism receipts in Singapore hit a record S$23.9 billion in September 2025, up 6.5 per cent year on year.

However, analysts said that other external factors, such as the Middle East situation, could still impact Singapore retail.

Retail sub-sector landlords may face higher utility costs, and potentially pass these costs on to tenants.

These costs may then reach customers.

Higher construction material costs and supply-chain disruptions may also lead to works in the retail sector being delayed or facing cost overruns, analysts said.

But the extent of the impact will be determined by factors such as the duration and severity of the war.

Top photo via RTS Link JB-SG/Facebook