Property cooling measures hit IWH IPO

KUALA LUMPUR: The recent cooling measures to curb speculation in the local property market are likely to dampen Iskandar Waterfront Holdings Sdn Bhd’s (IWH) IPO on Bursa Malaysia.  

But the other master developer in the Iskandar region in Johor, Medini Iskandar Malaysia Sdn Bhd which also wants to float its shares, may be less affected thanks to its special economic zone status.

Analysts reckon that IWH’s listing may not be as exciting as before simply because of the turn of sentiment on property stocks.

Tycoon Tan Sri Lim Kang Hoo seems to have missed the boat to list his IWH, the master developer of 25km stretch of waterfront land at Danga Bay, facing Singapore.

“He should have got it listed early this year shortly after the company sold some land to those high-profile foreign buyers, such as Country Garden [Holdings Co Ltd] and CapitaLand [Ltd] … at that time there was much hype on the developments in the Iskandar region,” said a corporate advisor.  

“The recent cooling measures announced in Budget 2014 have made the IPO even harder to sell,” he said.

Also, executives familiar with the IPO pointed out that changes made by the state authorities in Johor have, to a certain extent, delayed the flotation as well.

Lim’s investment vehicle, Credence Resources Sdn Bhd, holds a 60% stake in IWH, while state-controlled Kumpulan Prasarana Rakyat Johor owns the remaining 40%.

Reuters, quoting sources, reported that IWH’s IPO has been postponed to the last quarter of 2014 due to the property cooling measures. The company initially aimed to float its shares by year-end or early 2014.

IWH is the master developer of 25km of waterfront land at Danga Bay in Johor.

“The assets have to be revalued now with the changes in the real property gains tax,” Reuters quoted a source as saying.

The rise on the minimum purchase price of Malaysian property for foreigners to RM1 million from RM500,000 is expected to hit projects in the Iskandar region hard as many are targeted at foreign buyers, especially Singaporeans.

In addition, the real property gains tax (RPGT) is also being doubled from 15% to 30% for foreign owners who sell their properties within the first five years of purchase. Also, the developer interest-bearing scheme offered by developers to spur sales will be scrapped.

Foreign demand for Malaysian properties would be affected as foreigners buy properties mainly for investment purposes, said analysts. Many reckon such measures would drive Singaporeans away from Malaysia to other countries, such as Australia.

It is said that IWH’s listing may raise more than RM1 billion while Medini Iskandar, which is controlled by Iskandar Investment Bhd (IIB), is planning to raise RM2.58 billion.

But Medini Iskandar may be unscathed by the tough measures because it is a special economic zone. Projects within Medini would be exempted from the RM1 million minimum price threshold for foreign purchase.

Also, projects in Medini enjoy privileges such as having infrastructure in place, being exempted from developing  low-cost housing and setting aside bumiputera quotas.

“These advantages allow developments in Medini to be more cost competitive compared with those outside it,” Dennis Ng, executive director of Lextrend Sdn Bhd, was quoted as saying by The Edge Singapore.

Lextrend, a unit of UEM Land Bhd, is an approved developer in Medini.


This article first appeared in The Edge Financial Daily, on November 06, 2013.