mr funny
12-04-07, 04:59
Published April 12, 2007
M'sian property stocks fly on global interest
Rosy outlook comes on heels of govt's moves to woo more foreign investors
By S JAYASANKARAN
IN KUALA LUMPUR
THE prospect of international investors entering Malaysia's property market has sent shares of property firms - especially those with land in the Iskandar Development Region (IDR) in Johor - soaring.
The standout example is state-owned UEM World, the largest landowner in the region. Its stock price has more than quadrupled in the past three months to above RM4.
Part of the allure could be a change in government mindset, with Kuala Lumpur seemingly determined to woo foreigners to increase Malaysia's share of foreign direct investment, which has been dropping relative to gross domestic product.
Prime Minister Abdullah Badawi first removed restrictions on foreign ownership of residential property. And he followed that up by scrapping a 30-year-old tax on property gains in late March. He has also indicated that he will make a 'significant' announcement regarding property this Friday.
'The property sector is set to boom and the gains could be spectacular,' said Lim Beng Leong, a director of UOB Kay Hian in Kuala Lumpur. 'Over the next two or three years we could see land price increases of between 50 and 300 per cent.'
Jason Chong, a fund manager with UOB-OSK Asset Management, isn't so sure about land prices but agrees that property stocks are a buy. 'Some of these counters are grossly undervalued as they are trading at hefty discounts to their book values,' he told BT.
The optimism over property is underpinned by the fact that a regional boom in real estate, fuelled by rising equity markets and commodity prices, has so far not spilled over to Malaysia. Malaysian property, for example, trades at a 20 per cent discount to similar property in Bangkok and is at least 80 per cent cheaper than Singapore. And house sales in Malaysia actually declined 7 per cent last year.
Analysts say foreign interest in Malaysian real estate is increasing. Last year, foreign investors sank RM11 billion (S$4.8 billion) into Malaysian property. And interest is growing. 'These guys look at Singapore and Bangkok and think that Malaysia is cheap in comparison,' said Previndran Singhe of Zerin Properties in Kuala Lumpur. 'Frankly, my phone hasn't stopped ringing since the PM announced the cancellation of the property gains tax.'
A new phenomenon is the emergence of Middle Eastern investors on the Malaysian real estate scene. In March, the Saudi Al-Batha group teamed up with local builder Glomac to buy 0.5 hectares of land in the Kuala Lumpur City Centre area for RM1,000 a square foot, 20 per cent higher than the previous transaction in the area.
Also that month, a Saudi prince bought the Four Seasons Resort on Langkawi island for RM435 million - a record for Malaysia.
But the biggest draw could be the Johor development. Mr Previndran of Zerin Properties helped launch Malaysian firm S P Setia's property development at Nusajaya in the IDR in Singapore yesterday and was amazed by the response. 'There is tremendous interest in the project over here,' he told BT. 'This thing is going to fly.'
M'sian property stocks fly on global interest
Rosy outlook comes on heels of govt's moves to woo more foreign investors
By S JAYASANKARAN
IN KUALA LUMPUR
THE prospect of international investors entering Malaysia's property market has sent shares of property firms - especially those with land in the Iskandar Development Region (IDR) in Johor - soaring.
The standout example is state-owned UEM World, the largest landowner in the region. Its stock price has more than quadrupled in the past three months to above RM4.
Part of the allure could be a change in government mindset, with Kuala Lumpur seemingly determined to woo foreigners to increase Malaysia's share of foreign direct investment, which has been dropping relative to gross domestic product.
Prime Minister Abdullah Badawi first removed restrictions on foreign ownership of residential property. And he followed that up by scrapping a 30-year-old tax on property gains in late March. He has also indicated that he will make a 'significant' announcement regarding property this Friday.
'The property sector is set to boom and the gains could be spectacular,' said Lim Beng Leong, a director of UOB Kay Hian in Kuala Lumpur. 'Over the next two or three years we could see land price increases of between 50 and 300 per cent.'
Jason Chong, a fund manager with UOB-OSK Asset Management, isn't so sure about land prices but agrees that property stocks are a buy. 'Some of these counters are grossly undervalued as they are trading at hefty discounts to their book values,' he told BT.
The optimism over property is underpinned by the fact that a regional boom in real estate, fuelled by rising equity markets and commodity prices, has so far not spilled over to Malaysia. Malaysian property, for example, trades at a 20 per cent discount to similar property in Bangkok and is at least 80 per cent cheaper than Singapore. And house sales in Malaysia actually declined 7 per cent last year.
Analysts say foreign interest in Malaysian real estate is increasing. Last year, foreign investors sank RM11 billion (S$4.8 billion) into Malaysian property. And interest is growing. 'These guys look at Singapore and Bangkok and think that Malaysia is cheap in comparison,' said Previndran Singhe of Zerin Properties in Kuala Lumpur. 'Frankly, my phone hasn't stopped ringing since the PM announced the cancellation of the property gains tax.'
A new phenomenon is the emergence of Middle Eastern investors on the Malaysian real estate scene. In March, the Saudi Al-Batha group teamed up with local builder Glomac to buy 0.5 hectares of land in the Kuala Lumpur City Centre area for RM1,000 a square foot, 20 per cent higher than the previous transaction in the area.
Also that month, a Saudi prince bought the Four Seasons Resort on Langkawi island for RM435 million - a record for Malaysia.
But the biggest draw could be the Johor development. Mr Previndran of Zerin Properties helped launch Malaysian firm S P Setia's property development at Nusajaya in the IDR in Singapore yesterday and was amazed by the response. 'There is tremendous interest in the project over here,' he told BT. 'This thing is going to fly.'