According to MIDF Research, the JS-SEZ will increase investors’ confidence in Johor.
KUALA LUMPUR: Property demand is set to see a rise in the Johor-Singapore Special Economic Zone (JS-SEZ) area.
Consequently, a positive spillover effect would be the further improvement in the property overhang situation in the southern state, with demand seen to come from both local and international investors.
In such an environment, property players who have land bank in the vicinity of the zone are also set to see their prospects being boosted.
Their share price has dominated the active counter list of late with notable gains. While the Bursa Malaysia Property Index had seen some declines since Jan 6 on profit taking, it has gained about 5% since Christmas.
A key beneficiary appears to be UEM Sunrise Bhd
, which is seen to have the most land bank among the listed developers there, and thus set to be the biggest gainer in this sense.
UEM Sunrise rose by 3.64% to RM1.14 at yesterday’s close.
Maybank Investment Bank (IB) Research noted the recent JS-SEZ development provides a compelling tailwind for UEM Sunrise for the time being.
“UEM Sunrise is one of the major landowners in Iskandar Malaysia and holds a strategic and sizeable land bank totalling some 4,783 acres with a gross development value of RM61bil (including joint ventures) in Iskandar Puteri. It is a prime location near Singapore and is supported by strong infrastructure and a growing population, particularly among those commuting to Singapore,” it said.
With the revised Gerbang Nusajaya master plan placing greater emphasis on industrial properties, long-term prospects appear to be promising for the group.
“We believe UEM Sunrise stands a good chance of securing some of the targeted 50 projects.
“That said, we believe much of the positives have already been priced in, and key concerns remain around the execution challenge and the ability to meet high investor expectations at the current pricing.
“UEM Sunrise is trading at 0.8 times the calendar year 2025 forecast price-to-book value compared to other government-linked companies, namely, S P Setia Bhd at 0.46 times and Sime Darby Property Bhd at 1.1 times,” Maybank IB Research said.
Another prominent gainer is likely to be IOI Properties Group Bhd (IOIProp).
Its shares have seen gains of some 5.24% since Christmas, given its sizeable land bank in Johor.
IOIProp has close to 3,800 acres of remaining land bank in Johor, according to MIDF Research. “Besides, IOIProp is planning to increase more industrial parks in its township in Kulai which should benefit from the JS-SEZ,” it said.
Sunway Bhd has some 740 acres of land in Sunway Iskandar, while Eco World Development Group Bhd (EcoWorld) has about 1,200 acres of undeveloped land in Johor with a few business parks in the southern state.
MIDF Research said EcoWorld’s business parks could benefit from the potential higher trade investments into Johor, moving forward.
Meanwhile, Mah Sing Group Bhd has around 900 acres of land in Johor township Meridin East and another 155 acres of land in its M Tiara development.
MIDF Research noted Mah Sing had further strengthened its foothold in Johor with the proposed acquisition of 5.99 acres of land in Taman Pelangi, Johor Baru which is located three km from the Bukit Chagar Rapid Transit System (RTS) Link Station.
Also, the research house noted Glomac Bhd had 238 acres of land bank left in Johor.
Apart from property developers, construction players have also seen notable gains.
The Bursa Malaysia Contruction Index has gained some 9.4% since Christmas.
Gainers were led by Gamuda Bhd, adding some 12.6%, and Sunway Construction Group Bhd with gains of about 10.5% since Christmas.
Construction companies are also expected to be beneficiaries, given their close links to the property development industry.
The JS-SEZ encompasses an area of over 3,500 sq km in the state of Johor.
Each flagship area will have its own targeted industry such as manufacturing, logistics, energy, financial services and tourism.
According to MIDF Research, the JS-SEZ will increase investors’ confidence in Johor since it is expected to boost trade and strengthen economic connectivity between the state and Singapore.
“In addition, more jobs are expected to be created from JS-SEZ and that will benefit the property market in Johor due to the expected stronger buying interest there,” it said.
MIDF Research also noted the improving residential overhang situation in Johor which declined to 3,030 units in the third quarter of 2024 from 3,219 units in the previous quarter and 4,500 units in the third quarter of 2023.
The overhang in the serviced apartment segment in the state also saw an improvement.
“The declining property overhang in Johor was mainly attributed to the stronger buying interest there in anticipation of the better economic outlook for Johor and better connectivity between Johor and Singapore on the expected completion of the RTS Link in January 2027. The signing of the JS-SEZ is expected to further improve the property overhang situation in Johor as buying interest in property is expected to be stronger,” said the research house.
It added that property developers that have land bank in Johor are forecast to see better land value due to the improving property landscape in the state, moving forward.
