• Maintain OVERWEIGHT; Top Picks: Sime Darby Property, Mah Sing, Sunway, UEM Sunrise (UEMS). The signing of the formal agreement for the Johor-Singapore Special Economic Zone (JS-SEZ) is a boost of market confidence. The bilateral commitments so far represent an unprecedented level of progress and collaboration. The real estate in Iskandar Malaysia (IM) is expected to experience a multi-year growth phase. Major landowners in IM should benefit from the influx of more foreign direct investments (FDIs). They include UEMS, Sunway, and planter SD Guthrie (SDG MK, BUY, TP: MYR5.55).
• A boost of market confidence. These bilateral forums are set to play a pivotal role in shaping future policies, fostering stronger cooperation between the two countries, and ensuring mutual benefits for both nations. From a qualitative perspective, functional policies serve as the cornerstone for ensuring the success of the JS-SEZ. The signing (of the agreement) is especially important as we understand that some Singapore-based companies have been waiting for this confirmation by the Singapore Government when making decisions in their expansion plans due to rising cost pressure in Singapore. The establishment of infrastructure funding support from the Malaysia Government and facilitation funding support by the Singapore Government shows a strong bilateral commitment.
• Thriving industrial and tourism sectors to drive demand for properties in IM. The influx of FDIs, the opening of new offices by local and foreign financial institutions in Forest City, as well as higher number of travellers from Singapore due to better and smoother connectivity should have a strong positive spillover to the real estate sector in IM. We expect more companies, workers and skilled labour to take advantage of the tax incentives and reside in Johor in the coming years. Industrial, commercial, retail and leisure activities are likely to pick up strongly.
• Prefer major landowners. In our view, developers with readily available development land will be able to capture the most demand and opportunities. We continue to like UEMS given its vast landbank in IM. It is expected to receive its masterplan approval for its 2,334-acre development in Gerbang Nusajaya worth a GDV of MYR45bn in mid-2025. This includes re-zoning 1,136 acres to industrial. Note, UEMS has already inked renewable energy, and data centre deals. Logistics and warehousing could potentially be in the pipeline. Other major landowners include Sunway and SDG. The incentives for tourism would be good for Sunway especially for its theme park development in the future.
• Other infrastructure projects. We think the Malaysian Government will likely provide updates on other major infrastructure projects ie autonomous rail transit, light rail transit, or the Kuala Lumpur-Singapore high speed rail. Major FDIs may also boost sentiment from time to time.

Source: RHB Research - 8 Jan 2025