MNC spending a boon for Penang developers

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KUALA LUMPUR: Property developers in Penang are set to benefit from the opening of new factories by both local and multinational corporations (MNC) as well as state government projects and population growth.

In a sector report, Maybank Investment Bank Research (Maybank IB) identified S P Setia Bhd, Tambun Indah Land Bhd, IJM Corp Bhd and Eco World Development Group Bhd (EcoWorld) to be among the main beneficiaries from the growing Penang property market.

“More job opportunities have been created with the opening of more local and MNC factories and this has drawn demand for new residential and commercial properties, the former due to housing needs of the rising population base.”

The research house also pointed out that the Baru Kawan area could benefit from the Penang state government’s intention to develop a medical hub there as well as 1,156 acres within the Batu Kawan Industrial Park (BKIP) 2 in Byram, Nibong Tebal.

“These projects augur well for population growth and should continue to boost the demand for properties,” the research house noted in the report.

It added that Penang’s residential property sales rebounded strongly by 50% year-on-year in the third quarter of 2022, due to the economic recovery and despite the three overnight policy rate hikes since May 2022.

Maybank IB said S P Setia’s Setia Fontaines project in Bertam, on the Penang mainland, offers a similar eco theme as Setia Eco Park, but is more affordably priced like Setia Alam (both of which are in Shah Alam, Selangor).

“The project, which mostly offers landed properties, is expected to have a remaining development period of at least 25 to 30 years.”

Since the launch of Setia Fontaines in 2018, Maybank IB said the project has generated stable and growing sales for S P Setia.

“In 2021, Setia Fontaines contributed RM157mil sales or 4% of S P Setia’s Malaysian property sales.

“Catalysts to the project include an industrial park (850 acres) nearby, which could offer employment opportunities and attract new population to the area over the longer term.”

Separately, the research house said EcoWorld’s Eco Horizon project is strategically located in the heart of the Batu Kawan commercial area and is riding on booming job opportunities and commercial activities there.

“The property development projects in Batu Kawan have become more mature.”

Maybank IB noted that the completion of Penang’s second bridge in 2014 and the new BKIP are the game changers for the Batu Kawan area.

“Apart from its prime location, we attribute the success of Eco Horizon to right product offerings, namely landed properties versus its peers that are mostly involved in high-rise.”

“In its financial year 2022 (FY22), Eco Horizon contributed 12% to EcoWorld’s total sales,” Maybank IB noted.

Meanwhile, Maybank IB said IJM’s The Light City project in Gelugor, Penang, will be a mega integrated waterfront project comprising two towers of premium condominium units, a retail mall, offices, a convention centre and a hotel.

“The retail mall, offices, hotel rooms and convention centre are slated for completion by 2025.

“By then, we believe The Light City would reshape the commercial market of Penang island as the major commercial spaces are currently located at the north of Penang island,” it said.

It added that IJM is in advanced stages of negotiations with a hotel operator from China but is making no changes to its earnings forecasts for the group, at the moment.

Separately, Maybank IB said Tambun Indah’s Pearl City project in Simpang Ampat is a good proxy to the booming Batu Kawan area.

“Tambun Indah has been careful in launching new projects and has focused on clearing unsold stocks over the last few years.

“Its average take-up rate continued to improve to 81% as at September 2022 (from 79% as at June 2022).”

Maybank IB noted that Tambun Indah’s main products are generally affordable, landed properties. In the third quarter of this year, the company will be launching Dahlia Garden in Pearl City.

“Dahlia Garden, which has an estimated gross development value of RM107mil, will comprise residential terraces (185 units) and semi-detached houses (24 units) priced between RM470,000 to RM650,000 per unit.”

For the nine-month period of Tambun Indah’s FY22, Maybank IB estimated the developer’s locked-in property sales stood at RM133.2mil, which is 2.3% above its FY22 sales target of RM130mil.

“Tambun Indah usually has relatively lower unbilled sales (RM90mil as at end-September 2022) than its peers, as it only launches a new project when the project is 20% to 30% completed, hence it will hasten revenue recognition.”