UEM Sunrise Bhd., Malaysia’s second-biggest developer by market value, is betting the slide in the local currency and measures to curb property prices in neighboring Singapore will boost sales at its largest projects.
UEM may surpass its new sales target of 3 billion ringgit ($948 million) for the year, Chief Executive Officer Wan Abdullah Wan Ibrahim said. UEM is the biggest landowner in the Iskandar region in Malaysia, an economic development zone almost three times the size of New York City in the southern state of Johor that borders Singapore.
Iskandar “is more attractive and so cheap in comparison to Singapore,” Abdullah said in an interview in Singapore yesterday.
The ringgit has dropped 5.2 percent against the Singapore dollar over the past four months, according to data compiled by Bloomberg. The city-state across the Straits of Johor has been implementing curbs to cool an overheated property market, prompting Singaporeans to look for cheaper property across the border.
Singaporeans account for 74 percent of overseas buyers, making them the largest foreign and second-largest group of purchasers of UEM’s properties after Malaysians, Abdullah said.
UEM, based in Kuala Lumpur, 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.
Malaysian 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.
UEM, 65 percent owned by Khazanah Nasional Bhd., Malaysia’s state-investment company, plans to start selling 6.29 billion ringgit worth of new projects in Iskandar by the end of the year, Abdullah said. UEM has planned developments for 5,442 acres of land in the area, in addition to 1,239 acres outside Nusajaya, one of the five zones in Iskandar, the developer said.
Home prices for UEM properties are expected to rise 5 percent each year for the next couple of years, Abdullah said.
“Other developers may be opportunistic and may raise selling prices more but we are here for the long term,” he said.
Selling prices per square foot for new condominiums developed by UEM in Nusajaya have risen to 775 ringgit in 2013 from 539 ringgit in 2011 , Abdullah said, citing past sales.
UEM shares rose 0.4 percent to 2.72 ringgit at the close in Kuala Lumpur trading. The shares have declined 13 percent in the past three months, making them the worst performers on the benchmark FTSE Bursa Malaysia KLCI Index.