Property Sector (AmResearch) - Sungai Buloh land main kicker for 10MP

OVERWEIGHT

• Prime Minister, Najib Tun Razak unveiled 10MP yesterday, unveiling some plans that could provide further boost to the property sector. Nonetheless, there were no surprises as most of it has been mentioned previously.

• One of it being, the unlocking of the massive 3400acres land in Sungai Buloh for a township development. We are certainly keen on this proposed development mostly due to the scarcity of landbank in the Klang Valley area.

• Property prices in the Klang Valley have also increased significantly as a result. This is evident with double-storey link-houses in the secondary market are now priced at RM0.7mil-RM1mil per unit e.g. in TTDI and Petaling Jaya.

• We believe MRCB would be the front runner to be the master planner of this development albeit other property players would certainly be involved a well given the sheer size of the project.

• Established township players such as SP Setia and Sunway City would surely benefit in the long run given their proven track record and have recently declared their interests of this prime landbank.

• Another in line is the Sungai Besi airport land. The government is redeveloping the 162ha (400 acres) land into an integrated commercial hub. This could be the catalyst for the growth of the southern part of the Klang Valley.

• It is understood that Qatar Investment Agency (QIA) is keen to invest up to US$5bil into this development. The fund is in the process of selecting the master planners for the project.

• It was also mentioned that the government would focus on urban rejuvenation efforts to restore and protect heritage buildings as well as to unlock development value of land e.g. Kg Baru. While positive, we think the ownership issues would be a drag for this project. We are keener on the planned redevelopment of the Pusat Bandar Damansara.

• In addition, an international financial district is being mooted although details are very sketchy. We suspect this is one of the efforts to strengthen government’s plan to turn Kuala Lumpur as the world’s Islamic financial hub.

• We maintain our OVERWEIGHT stance on the sector with BUYs on SP Setia, IJM Land and Sunrise. We have HOLD ratings on BRDB, Glomac and IGB Corporation.