PETALING JAYA: Eastern & Oriental Bhd
(E&O) is expanding its footprint in Kuala Lumpur’s luxury property market as it seeks to sustain growth beyond its existing flagship developments.
The group’s latest land acquisition is expected to strengthen its premium project pipeline while reinforcing its long-term presence in one of the city’s most sought-after residential enclaves.
RHB Research has maintained its “buy” recommendation on E&O, while raising its target price to RM1.08 from RM1.05, implying a 44% upside alongside an estimated financial year 2027 yield of about 3%.
The research house said it is positive on the latest land acquisition at Jalan Kia Peng via a joint venture, stating: “This land will extend the company’s premium market segment presence at KLCC area given Conlay and The Peak projects are almost fully sold.”
The acquisition is being undertaken by a joint venture company formed by E&O and Majestic Gen in a 2:1 ratio.
The venture is acquiring a 1.4-acre freehold site along Jalan Kia Peng for RM189.9mil, with the purchase to be funded through internal funds and borrowings. The transaction is expected to be completed in the first quarter of 2027.
RHB Research estimated the purchase price translates into a land cost of RM3,106 per sq ft, which it considers attractive compared with recent transactions in the vicinity.
It noted that EXSIM Development acquired a nearby site next to W Hotel Kuala Lumpur at about RM6,000 per sq ft, while Mah Sing Group Bhd paid RM4,019 per sq ft for the Corus Hotel site along Jalan Ampang.
RHB Research said the existing 30-storey condominium on the site is currently occupied by short-term tenants and E&O will vacate the building once all the lease contracts expire.
“Including E&O’s latest acquisition, these three transactions mentioned above over the last one year within the KLCC vicinity could possibly signal market confidence towards the high-end segment in the city centre,” it said, adding that foreign buyers and local wealthy individuals are fuelling the demand for the premium property segment in the recent years.
RHB Research noted that Conlay in the city centre and The Peak at Damansara Heights are completed and now almost fully sold, creating room for a new flagship development.
Based on the management guidance that the site has a plot ratio of 10 times and an average selling price no lower than Conlay’s RM2,200 per sq ft, it estimated that the project could generate a gross development value of RM1.1bil.
