The rise of Iskandar Malaysia as a regional hub has profoundly altered the domestic landscape, generating a knock-on effect on Johor's housing development, both economically and politically. Housing policy and development in Johor, as illustrated in the formation of Iskandar Malaysia, is riddled with conflict along two dimensions — bumiputra versus non-bumiputra and federal government versus state government. The first one is entangled with international real estate development and foreign investment, while the latter has more to do with the rise of sub-national autonomy in Johor. Particularly in southern Johor, housing policy has increasingly been influenced by foreign investment through implementations of mega projects (e.g., Forest City). These mega housing projects not only boost the states coffers, but also change the way housing is produced, financed and governed. Given the importance of sub-national governments in many large-scale housing projects in Iskandar Malaysia, the changing political conditions urge us to rethink the long-standing practice of national-centric development policy in Malaysia. Taking housing as a point of departure, the timing is ripe to revisit the role of state government in policy-making and urban governance.