Optimism rises in wake of progress in S'pore-M'sia issues
PROPERTY companies owning large tracts of land in Johor can expect greater investor interest as Singapore and Malaysia resolve previously sticky issues.
The biggest gainers may be the special economic zone of Iskandar Malaysia and Johor's real estate sector.
Given the proposals for a new rapid transit line between Tanjung Puteri in Johor Bahru and Singapore, as well as increasing bus and taxi services and reducing the Second Link toll rates, many analysts felt that Johor property developers 'could be back in play'.
Over the past two days, the bearish stockmarket sentiments notwithstanding, developers such as UEM Land and Tebrau Teguh which have large landbanks in Johor have seen a bigger spike in interest.
Government-linked UEM Land which owns an estimated 3,300 hectares in the southern state - much of it in key nodes in Iskandar - has been one of the most active counters, yesterday closing three sen up at RM1.33 after reaching an intra-day high of RM1.37.
The progress made on a number of outstanding two-decade-old issues including land owned by KTM in Singapore which will now be jointly developed by both countries' state investment agencies, as well as Singapore's commitment to a proposed wellness township in Iskandar, has raised optimism that development would now be speeded up rather than put on the back-burner.
'Oh yes, Johor and Iskandar have become more attractive, especially if Temasek comes in and brings others,' said CH Williams Talhar & Wong director Danny Yeo.
CLSA, which had previously written on improving Singapore-Malaysia relations, was also optimistic that 'the pieces were falling in place very quickly'. It expects more Singaporeans to be living in Iskandar.
In a client note, Macquarie pointed out that with Singapore helping to drive part of Iskandar's growth, Malaysia's potential economic growth and move up the value-added chain would be greatly boosted.
The proposed rapid transit link between the two countries is expected to smoothen cross border movements when it is completed in 2018.
Property players around the Johor city area are already rubbing their hands in glee. 'The South Key project just got better with the rail connection,' declared CH William's Mr Yeo. The promoters of the RM12 billion (S$5.1 billion) mixed development project on the former Majidi army campsite plan to launch the first phase involving three-storey shop lots in the coming months.
Sentiments have improved on the latest developments, Mr Yeo said, adding that with inflation likely to see a higher jump should the Goods & Services Tax be implemented next year, properties are a better hedge against inflation. 'All that coupled with the recent rate hike will only push buyers to commit earlier rather than later in order to lock in rates.'
Even so, the momentum is only expected to pick up once more Singapore money starts to trickle in.
Source: Business Times, 27 May 2010