PETALING JAYA: Property players with exposure to Iskandar Malaysia could see a rerating in the pipeline, following the planned listing of Iskandar Waterfront Holdings Sdn Bhd (IWH) in the fourth quarter of this year.
Maybank IB Research analyst Wong Wei Sum said better connectivity in the area via the rapid transit system (RTS) between Singapore and Johor and the KL-Singapore high speed rail, coupled with rising business activities and an increasing population should further lift land and property prices in Iskandar.
Wong highlighted in the report on property developers in Iskandar that the key beneficiaries include UEM Land Holdings Bhd, Sunway Bhd, Genting Plantations Bhd, IJM Land Bhd, S P Setia Bhd, Dijaya Corp Bhd, Crescendo Corp Bhd, Eastern & Oriental Bhd and KSL Holdings Bhd.
Kenanga Research analysts said that in 2012, most developers faced compressed valuations due to slower loan approvals, which was brought about by a change in mortgage assessment using net pay instead of gross pay.
The research house reckoned the market had adjusted to the sector's structural changes, evidenced by developers that continue to chalk-up record-breaking sales. Furthermore, it appeared Iskandar was giving investors a reason to re-look at developers, it said.
“Since 2012 saw record sales and earnings for most developers while share prices were not reflective of their performance, we reckon 2013 will be a year of share price performance as valuations play catch-up with fundamentals,” Kenanga said.
PublicInvest Research commented that rail connectivity would add more appeal to Iskandar.
“Preliminary completion targets for these high-impact projects are by 2020. All told, the real long-term outcome of these projects could be warmer relations between Malaysia and Singapore,” it said.
Kenanga analysts have also been bullish on Iskandar and have increased the frequency of visits to Johor over the past six months.
“There is an increased level of economic activity from increasing migration of Singaporean small and medium enterprises, commencement of Educity, oil and gas (O&G) plays in Pengerang and Tanjung Piai, crowd-drawing contents like Legoland and Puteri Harbour's indoor theme park, more government-to-government deals and presence of big names,” the analysts said.
Also, the customs, immigration and quarantine (CIQ) facility located in Puteri Harbour's is almost ready for the ferry services operations, which will be the first between Singapore and Iskandar.
Although there are concerns of the potential oversupply of properties in Iskandar, Kenanga analysts said there are some game-changing factors, which included the fact that Johor had not seen the same array of lifestyle concepts in properties as the Klang Valley or Singapore.
They said this was because many developers had always opined Johor as a “bread-and-butter” driver as opposed to a growth engine. Another game-changing factor is the migration factor.
“We expect lower income earners in Singapore, who have more mileage with their Singapore dollar income, to set up homes and work in Iskandar, particularly when the Johor-Singapore mass rapid transit is up and running,” Kenanga said.
It added that the increasing student population in the area would eventually result in organic population growth, as seen in areas like Subang Jaya.
“We also take comfort in the strong rental yields,” it said.