JOHOR BAHRU: Mere kilometres from the Woodlands Causeway and the bustle of Johor Bahru’s city centre, Taman Pelangi feels like a throwback to a quieter era.
Long known for its rows of landed homes, vintage shophouses and ageing shopping arcades, the township has – depending on who one asks – either retained much of its old-world charm or lost its lustre.
At the heart of its commercial strip sits Pelangi Leisure Mall, a modest two-storey complex with peeling paint and grime-streaked walls that houses a Giant supermarket, bowling alley, massage parlour, eateries and small retailers.
For some shoppers, its appeal has waned. Singaporean retiree Godwin Tang, who crosses the border for shopping at least twice a month, said he visits the mall occasionally, typically when he needs to pick up groceries quickly.
“Most of the time it’s quite deserted,” said the 67-year-old. “If I have a choice, I’d rather go to bigger malls like Mid Valley Southkey or AEON Tebrau. They have more modern stores and a better vibe.”
But change could be coming to the quiet township.
Rising land values, fuelled in part by the upcoming RTS Link, are driving interest in the redevelopment of older sites, including Pelangi Leisure Mall, across Taman Pelangi.
According to business news outlet The Edge, the mall, which sits on a six-acre freehold site, has attracted interest from developer Exsim Group and could be transformed into a high-density, mixed-use development with residential and commercial components.
The report cited how Exsim is known for its portfolio of high-density, modern residential and mixed-use projects.
In response to CNA’s queries on the deal for Pelangi Leisure Mall, Exsim said it is “not in a position to comment or disclose further details” as the matter involves “ongoing considerations”.
Property experts said the Johor Bahru-Singapore RTS Link, about 2km away and slated to begin operations in January 2027, is likely to increase the area’s appeal for both housing and retail.
Samuel Tan, chief executive of Olive Tree Property Consultants, said recent transactions indicate land values in key parts of Taman Pelangi have risen by 50 to 60 per cent from five years ago.
This, he added, could drive the replacement of ageing malls and older shophouses with integrated developments, high-rise projects and more upscale retail offerings.
“This is a fascinating time for Taman Pelangi. We are likely seeing the ‘RTS effect’ move from speculative chatter into actual physical transformation,” he said.
“The area is pivoting from a nostalgic suburban enclave to a high-density, integrated lifestyle hub, similar to what we see in Singapore,” added Tan.
THE NEXT BANGSAR?
The transformation of Taman Pelangi is expected to be anchored by the potential redevelopment of two ageing malls owned by government-linked investment company (GLIC) Permodalan Nasional Berhad (PNB).
Besides Pelangi Leisure Mall, there is Plaza Pelangi, a five-storey IT-centric complex located at a busy junction off Jalan Tebrau.
Tenants at Plaza Pelangi told CNA they were informed in a Mar 12 letter that PNB had entered into a sale and purchase agreement for the mall and its adjoining office tower, Menara Pelangi.
“The transfer of ownership is currently in process,” the letter said, without naming the buyer.
It added that existing leases and service contracts would not be terminated but transferred to the new owner, who would assume all rights and obligations under those agreements.
The planned divestment comes as PNB reviews its portfolio in pursuit of more sustainable, higher-yielding returns, property experts and economists said.
Johor-based economist Nanthakumar Loganathan said the move also reflects broader global uncertainties, including tensions stemming from the United States-China trade war and instability in the Middle East.
“In this environment, GLICs like PNB are increasingly diverting their focus towards higher-return investments,” said Loganathan from Universiti Teknologi Malaysia’s Faculty of Management.
“It is well known that PNB is sanctioning asset sales to achieve its target of RM400 billion in assets under management by 2027,” he added, referring to how the company is selling older, lower-performing assets at a good price so it can reinvest the capital into better-performing investments and grow its total portfolio.
“With land values rising significantly, these disposals can be monetised and ultimately reflected in dividends for unitholders,” said Loganathan.
Property consultant Tan said divesting both Pelangi Leisure Mall and Plaza Pelangi could allow PNB to capitalise on market sentiment driven by the RTS Link.
“Selling these assets now, at the height of RTS-induced optimism, allows them to exit at a premium,” he said.
Land values in Taman Pelangi have climbed sharply, with prime plots now estimated at between RM600 (US$152) and RM700 per square foot, up from around RM400 five years ago. Tan estimated that the site occupied by Pelangi Leisure Mall alone could be worth about RM180 million.
“For a GLIC like PNB, holding an ageing, low-density, two-storey mall is no longer the highest and best use of the asset,” he added.
Much of this uplift is tied to the impending launch of the RTS Link, a 4km rail connection between Bukit Chagar in Johor Bahru and Woodlands North in Singapore.
The system is expected to carry up to 10,000 passengers per hour in each direction, with projected daily ridership of about 40,000 when operations begin.
With improved connectivity, future developments in Taman Pelangi are likely to target higher-income groups, including Singaporeans seeking homes across the border and Malaysians working in Singapore.
“This area is now being transformed into a residential enclave, as developers anticipate rising demand from daily cross-border commuters,” said Loganathan.
Tan echoed this view, noting that persistently high rents in Singapore are shifting demand dynamics. Developers are increasingly targeting Malaysians working in Singapore, as well as digital nomads drawn to the area’s proximity to the border.
“Residential units offer a more predictable per-square-foot exit strategy for developers, compared to the risks of managing an ageing mall,” he said.
Nearby, several high-rise projects are already in the pipeline.
These include:
- M Grand Minori, a RM1.5 billion freehold mixed-use development by Mah Sing Group within the township;
- Maxim Pelangi’s The Address, a 72-storey serviced apartment project with a gross development value of RM1.7 billion set to be built in the neighbouring Taman Desa;
- The Arden, an RM800 million, 68-storey residential tower located a stone’s throw from Plaza Pelangi and slated for completion by 2030.
Beyond large-scale developments, change is also visible at street level.
Along Jalan Serampang, rows of shophouses that housed casual eateries and car workshops are being replaced by boutique retailers including bridal studios and high-end salons.
These shifts are reshaping the character of the neighbourhood.
“Taman Pelangi is evolving into a commercial and lifestyle district similar to Bangsar in Kuala Lumpur,” Tan said. Bangsar is generally considered an upscale residential suburb and vibrant lifestyle hub in Kuala Lumpur.
TALK OF MUSTAFA ACQUIRING PLAZA PELANGI; TENANTS UNCERTAIN
But speculation over who will acquire Plaza Pelangi and Menara Pelangi has caused uncertainty among tenants.
A PNB official involved in the mall’s management told CNA that Singapore-based retailer Mustafa is “in the process of acquiring” the entire development.
However, the official did not provide details on the value of the deal or when it might be finalised.
A PNB spokesperson declined to comment. “PNB does not comment on market speculation or unfinalised commercial discussions. Should there be any material developments that warrant public disclosure, we will communicate through the relevant official channels,” the spokesperson said.
CNA has also contacted Mustafa and its owner, Mustaq Ahmad, for clarification.
The potential acquisition comes as Mustafa continues its long-delayed expansion into Johor Bahru. The retailer’s first flagship store in Malaysia was to have opened at Capital City Mall in Tampoi in the fourth quarter of 2024, but has faced repeated delays.
Sources earlier told CNA that negotiations with strata title owners had slowed progress. When CNA visited the site earlier this month, construction work was ongoing and the mall had yet to reopen.
In a press release last week, Capital City Mall’s owner, Capital World, said Mustafa will occupy about 240,000 sq ft on the ground floor and serve as the anchor tenant of the one million sq ft development.
It added that fit-out works are now underway, marking a “culmination of years of patient negotiation”. The outlet is slated to open before the first quarter of 2027.
Even as its Tampoi project inches forward, analysts said Mustafa may be looking to diversify its footprint in Johor Bahru, including with a potential move into Plaza Pelangi.
The mall’s tenants include supermarket Mercato, Mr DIY and small IT retailers, but footfall appears thin.
During CNA’s visit earlier this month, only a handful of units on the second floor were open, with most shops shuttered.
Tenants said they have heard informally from leasing agents that Mustafa is likely to take over the mall, but some fear the change could leave them in a precarious position.
Based on Mustafa’s business model in Singapore, the retailer typically operates as a large-scale owner-operator rather than a conventional landlord that supports a mix of small tenants, said property consultant Tan.
“Small IT repair shops, tailor shops and traditional mom-and-pop kiosks in Plaza Pelangi may struggle to survive if rents rise beyond what their margins can support,” he said.
Ahmad Farman, 45, who manages IT repair shop Minsa Computer, said the uncertainty has made it difficult to plan ahead.
“We have a lease until 2027, but if the sale goes through, we don’t know what will happen next,” he said. “I’m not sure if the new owner will want to renew.”
Another tenant, KC Bandi, who runs a stall selling traditional Indian clothing, voiced similar concerns.
“They may have a completely different concept for the mall,” he said. “If they sell similar products, it will be hard for us to continue.”
Despite these concerns, analysts said a Mustafa outlet near the RTS Link could significantly boost Johor Bahru’s retail landscape.
Loganathan said replicating Mustafa’s Singapore model could appeal to both locals and cross-border shoppers.
“It offers a one-stop shopping experience with a wide range of goods at competitive prices, which is something both Johoreans and Singaporeans are familiar with,” he said.
Tan added that Mustafa’s high-volume, round-the-clock retail model could transform Plaza Pelangi into a destination in its own right.
“Its presence could reposition the mall, drawing Singaporeans looking for everything from groceries to gold and electronics under one roof,” he said.
Tan acknowledged this could lead to the relocation of smaller businesses.
“We will likely see these utilitarian businesses move into older shophouses in Taman Pelangi or shift to areas like Taman Sentosa, Larkin or other suburban locations where rents remain affordable,” Tan said.
The changes in Taman Pelangi could mirror a wider shift in Johor Bahru’s retail landscape, he said.
“In the RTS era, assets in areas like Taman Pelangi will need to be either large-scale and distinctive, like Mustafa, or redeveloped into high-density residential projects,” he said.
“The middle ground, the quiet neighbourhood mall, is becoming increasingly rare.”