More developers turn optimistic on property sector

PETALING JAYA: More developers are turning optimistic on the local property market amid positive news flow on potential infrastructure projects, active land transactions and influx of investments.

RHB Investment Bank noted that major developers – except for UEM Sunrise Bhd, Sime Darby Property Bhd and S P Setia Bhd – are guiding for sales targets that are 10% to 15% higher year-on-year for financial year 2024 (FY24).

“Although UEM Sunrise has set a lower sales target of only RM1bil compared with RM2.1bil achieved in FY23, we think the company may have something more exciting ahead.

“This is as management just revealed its revised master plan for Gerbang Nusajaya in Johor that saw a significantly higher proportion of industrial development,” said the research house in a report yesterday.

Additionally, RHB Research said the KL Property Index, comprising the listed shares of property companies, had appreciated 18% year-to-date.

“While it is no longer as cheap as before, we think positive news flow ahead should continue to support valuation. Investors should also focus on laggard plays that have the right market exposure.”

The research house added that the broader equity market should stay healthy as the political landscape stabilises.

“We expect the property sector to continue to be driven by positive news flow on potential infrastructure developments such as the high-speed rail; Johor Baru light rail transit (LRT) and Penang LRT; active land transactions, particularly in Iskandar Malaysia; the influx of foreign direct investment (FDI), and the expansion by local manufacturers.

“Developers with sizeable land bank and exposure to industrial developments should benefit more,” it said.

While many developers are still busy looking for land parcels, RHB Research said it expected end-users – namely industrial players or manufacturers and “land bank collectors” – to also join the competition for land banking, particularly in Iskandar Malaysia, Johor.

“AME Elite Consortium Bhd, Mah Sing Group Bhd and Eco World Development Group Bhd are the major developers that have been on a lookout for industrial land as well as residential developments.

“However, in recent years, the rising pool of end-users, driven by the influx of FDI – namely manufacturers and data centre users and players – as well as expansion plans by some electrical and electronics companies have also intensified the competition for land.”

RHB Research noted that in early April, Crescendo Corp Bhd sold another parcel of land in Pulai, Johor, to Microsoft Payments (Malaysia).

“All in, the company has sold four parcels of land measuring 3.72 million sq ft in Johor to data centre operators and users in less than a year. The land parcels were transacted at RM120 per sq ft to RM125 per sq ft.

“Lately, ‘land collectors’ such as Scientex Bhd and Lagenda Properties Bhd have also been buying large tracts of land for long-term development. Land prices, in our view, are expected to escalate further, given such momentum,” it said.

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