UOBKH Research said the incentives will further improve Johor’s property appeal.
PETALING JAYA: Forest City may soon shed its “ghost town” image and enhance its attractiveness compared to Singapore, thanks to the recently announced incentives for the Special Financial Zone (SFZ).
UOB Kay Hian (UOBKH) Research said the incentives, which include a 0% tax rate for family offices with RM30mil in assets under management and a 15% personal income tax rate, will further improve Johor’s property appeal.
“While none of the developers under our coverage have projects in Forest City, we believe these incentives could have ripple effects, driving property demand and economic activity in surrounding areas like Iskandar Puteri.
“Moreover, the recent US$1bil investment by GG56 Korea to develop Malaysia’s first Korean Culture Town signals growing international interest in Forest City.
“We view this as a significant move that positions the area for a dynamic future, not just as a financial hub.”
UOBKH Research noted that Johor property stocks Iskandar Waterfront City Bhd
and UEM Sunrise Bhd, which hold the largest landbank in Iskandar Malaysia, saw share price increases of 13% and 7%, respectively, within two days following the announcement of the incentives.
The positive momentum was further boosted by His Majesty Sultan Ibrahim, King of Malaysia, seeking investments from a Chinese state-owned company, including discussions on the High-Speed Rail during his recent visit to China.
Looking ahead, UOBKH Research said the expected news flow in the near term, including Invest Malaysia 2024 on Sept 26 and Budget 2025 on Oct 18, is likely to reignite trading interest in Johor property stocks.The research house maintains its “overweight” view on the overall Malaysian property sector, noting that domestic transaction values are hitting all-time highs, the overhang is decreasing and real estate investment is growing.
“Key drivers include expanding industrial development, which offers new growth opportunities beyond residential projects, and rising land values, boosted by special economic/financial zones, data-centre demand and infrastructure projects.
“Positive trends in Malaysia’s property market, particularly in Kuala Lumpur and Johor, reflect increased transactions and growth in the residential sector, driven by strategic locations and increased vibrancy in the areas,” it said.
UOBKH Research’s top picks for the sector are laggards IOI Properties Group Bhd (IOIProp) and Lagenda Properties Bhd.
IOIProp is preferred for its increased launches and large Johor landbank, while Lagenda is favoured for its high margins and impressive return on equity of over 16%.
“We also like developers with data-centre exposure like Mah Sing Group Bhd and Eco World Development Group Bhd.”
