The KL Property Index (KLPI) outperformed the broader market, rising 25% YTD as of July 19, compared to the KLCI’s 8% increase.
Strong gains were seen for companies with exposure in Iskandar Malaysia, especially Iskandar Puteri and Kulai-Sedenak, following the announcement of the Johor-Singapore Special Economic Zone (JSSEZ) location.
Stocks involved in data centers (land sales or as asset owners) saw significant share price surges, including ECW, SWB, UEMS, AME Elite, Crescendo Corp, SDPR, and Mah Sing.
Developers undergoing corporate exercises, like listing investment properties (SPSB, IOI Property Group, WCT) or diversifying into healthcare (SWB), also experienced share price increases. SWB’s rise was bolstered by JSSEZ news, plans to list its healthcare business by 2025/2026, and a land sale to a data center in July 2024.
Property Sales Performance
Two developers (SDPR, TILB) reported stronger-than-expected sales and earnings in 1Q24.
Other developers (ECW, ECWI, SWB, UEMS, SPSB) met expectations.
Earnings are projected to increase significantly in 2Q-3Q24 (for SPSB) and 2H24 (for UEMS), driven by land sales and stake disposals.
Key Property Market Developments in 1H 2024
SPSB’s Significant Land Sale
SPSB completed a 960-acre land sale in Johor for MYR564 million (MYR13.50 psf) in June 2024 as part of its de-gearing strategy. The estimated net gain of MYR332 million will be recognized in the 2Q24 results, announced in August 2024.
UEMS Share Sale Agreement
UEMS entered a Share Sale Agreement with KLK Land to dispose of its remaining 40% stake in a JV for MYR386.2 million (MYR8.87 psf). The JV owns 2,500 acres of agricultural land in Kulai.
SDPR’s Data Center Venture
Photo: LatestMalaysia
SDPR, with a healthy balance sheet (0.23x net gearing at end-1Q24), is building and leasing a hyperscale data center to Pearl Computing (linked to Google) for 20 years, with a lease value up to MYR2 billion. Completion is expected by 1Q 2026.
ECW’s Land Acquisitions
ECW proposed to acquire 240 acres of freehold land in Iskandar Puteri for MYR450 million (MYR54 psf) in early 2024. The land will be developed into Eco Botanic 3 with an estimated GDV of MYR3.9 billion. ECW is actively seeking more land in Iskandar Malaysia and Klang Valley, maintaining a healthy net gearing of 0.24x at end-April 2024.
In February 2024, SWB and JV partner Hoi Hup acquired a 5-acre land parcel in Singapore’s Tengah, with a total GDV of SGD676 million. Sunway holds a 35% stake in this JV project.
NAPIC 1Q24 Property Market Overview
Residential Sales Performance
Residential property sales in 1Q24 increased by 21% YoY to MYR25.2 billion but declined by 9% QoQ (4Q23: MYR27.8 billion; 1Q23: MYR20.9 billion). The QoQ decline is not a major concern due to the seasonally weaker 1Q sales, with expectations for improvement in the 2H of the year.
Unsold Residential Stocks
Unsold residential units decreased by 4.2% YoY but increased by 6.2% QoQ to 90,100 units as of end-1Q24 (4Q23: 84,900 units; 1Q23: 94,100 units). Major cities saw a QoQ increase in unsold units, notably in KL (+94% QoQ, +48% YoY) and Penang (+20.7% QoQ, +19.5% YoY). Even landed property-dominated states like Perak and Negeri Sembilan saw significant increases in unsold units.
House Price Index (HPI)
The nationwide HPI weakened by 1.9% QoQ but rose by 0.5% YoY to 216.9 in 1Q24. Notable declines were observed in KL (-2.2% QoQ, -1.0% YoY) and Selangor (-2.5% QoQ).
The increase in unsold units, especially in KL, Penang, Negeri Sembilan, and Perak, will be closely monitored in the coming quarters.
