Strong response to 'The Mansions'

Property sector
Maintain overweight: Desa Park City's latest offering — The Mansions, comprising 127 units of terrace houses — was launched over the weekend with about 85% of the units sold at average pricing of RM620psf to RM650psf. The Mansions came in three variants — 2½-storey, 3-storey and 3½-storey units.

The 2½-storey houses — 33 units on offer — have been expected to sell well given the overwhelming interest. Hence, the sale was done via balloting with prices starting at RM2.7 million. Each unit has a built-up of about 4,400 sq ft with a land area of 2,200 to 4,000 sq ft. We understand the bulk of the purchasers for these units are investors.

The response to the 3-storey and 3½-storey units with prices starting at RM3.6 million and RM4 million — which come with a lift in each unit — was strong as well with an average 80% take-up. The 3-storey units boast a bungalow-like built-up of 6,100 sq ft with land area ranging from 3,100 to 4,200 sq ft . Each of the 3½-storey units has a built-up of 6,500 to 7,200 sq ft.

We are not surprised that the take-up has been strong despite the premium pricing given that Desa Park City is a matured and very well-planned township featuring good security, accommodating the ever-changing demands of property buyers.

We believe The Mansions will establish new market clearing prices which may lead to a re-pricing of future pre-sales as well as secondary units in the suburbs. This was the case when Casaman was launched in Desa Park City at the then unprecedented price of RM600psf in 2010.

On the flipside, we expect news flow centring on the redevelopment of some 3,300 acres of prime land in Sungai Buloh to sustain buying interest in property equities. The land has high immediate development potential. The accretion to net asset value should be significant for developers. Kwasa Land, the property arm of the EPF, is the master developer and will establish joint ventures with selected developers for several parcels.

We believe S P Setia would be the leading candidate given its strong township track record. Sam Ling's Desa Park City and Gamuda Land are other good partners, given their strong niche in developing premium residential projects that serve as industry benchmarks. IJM Land and Sime Darby may also play a role, while MRCB will be eyeing the commercial precincts. We believe the tender for the JV parcels may take place after the award of the MRT construction packages this year.

We reaffirm our "overweight" stance on the property sector with our top pick being S P Setia (FV: RM5.41 per share) followed by IJM Land (FV: RM4) and Ivory Properties (FV: RM1.77). We have "holds" on BRDB, Sunway City, Glomac and IGB Corp. — AmResearch, May 16