UEM Land Holdings Bhd., Malaysia’s biggest developer by market value, will start selling 4 billion ringgit ($1.3 billion) of new residential and commercial projects this year, targeting Singaporean buyers.
About three-fourths of new developments will be at Nusajaya city in the southern Malaysian state of Johor where new condominium prices have more than doubled since 2009, said Chief Executive Officer Wan Abdullah Wan Ibrahim. That’s within the 550,000-acre (222,600-hectare) Iskandar Malaysia economic zone, promoted by the government to tap demand from neighboring Singapore for everything from seafront homes to oil storage.
“Land value in Nusajaya is gaining momentum,” Wan Abdullah said in a May 23 interview in Kuala Lumpur. “Investors are seeing a trend that they like very much.”
UEM Land is taking advantage of the closer ties being fostered by the two Southeast Asian countries after decades of arguments over issues including land ownership have been resolved. UEM Land announced 4 billion ringgit worth of projects in Iskandar in December, including an F1 racing test track and an exhibition mall.
Malaysia Prime Minister Najib Razak and his Singapore counterpart Lee Hsien Loong have announced plans for a high-speed rail link by 2020 that would cut the 300-kilometer (186-mile) journey from the island-city to Kuala Lumpur to 90 minutes, with Lee saying the two capitals could be seen as twin cities like London and Paris.
Singapore companies have invested about S$2.5 billion ($2 billion) in Iskandar since it was set up in 2006, making the nation the largest foreign investor, according to the Iskandar Regional Development Authority. The zone is almost three times the size of New York City, while Singapore, with 5.3 million inhabitants, is smaller than the U.S. metropolitan area.
“The wealth they have in Singapore could certainly benefit Malaysia as well, and Malaysia’s hinterland will benefit Singapore,” Najib said in an interview in April. “I told Prime Minister Hsien Loong ‘I don’t mind, you can be the Manhattan, we’ll be New Jersey. But we’ll prosper together.’”
UEM Land, based in Kuala Lumpur, is the biggest landowner in the Iskandar region, according to brokerages Hwang DBS Vickers Research Sdn. and CIMB Group Holdings Bhd. (CIMB) The company still has 6,100 acres of land in the area to be developed, in addition to 3,500 acres outside Nusajaya, Wan Abdullah said.
The company, 65 percent owned by Khazanah Nasional Bhd., Malaysia’s state-investment company, is overseeing the development of Nusajaya, one of five zones in Iskandar.
Selling prices per square foot for new condominiums developed by UEM Land in Nusajaya have risen from 310 ringgit in 2009 to 480 ringgit in 2011 and 800 ringgit in November, Wan Abdullah said, citing past examples of several key projects.
Investors are starting to pay attention. UEM Land has soared 59 percent this year, outperforming a 4.6 percent advance in the benchmark FTSE Bursa Malaysia KLCI Index and giving the stock the biggest gain on the 30-member stock gauge.
The stock rose 2.5 percent to close at 3.34 ringgit in Kuala Lumpur today, the largest increase in a week.
Eleven of 19 analysts tracked by Bloomberg recommend buying the stock, with five calling for a hold and three saying sell.
This year is “absolutely” the right time to sell real estate in Iskandar, said Terence Wong, an analyst at CIMB with the equivalent of a buy rating on UEM Land.
“This year is better than any other year,” Wong said in a telephone interview on May 23. “The corridor is getting a lot of media attention, if you look at the press it’s coming out practically every day. Sales have been strong for any launches that have taken place.”
Developers including UEM Land are set to benefit from Najib’s election victory earlier this month that may spur more infrastructure spending, according to Bank of America Corp.’s Merrill Lynch unit. The win gave the premier a mandate to continue promoting an economic transformation program aimed at drawing $444 billion of private-sector led investments this decade, including an oil and gas hub around the Iskandar area.
“There was always this suspicion that if Singapore doesn’t accept, or doesn’t play along with all possibilities that Iskandar is presenting, then the Iskandar story will not fly as high,” Wan Abdullah said. “What is evident in the last year, two years maybe, is the strengthening of the relationship. I’d say the Malaysia and Singapore relationship is at an all-time high.”
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