AmWatch - Property Sector : Bandar Malaysia taking shape OVERWEIGHT, 29 Jun 2015

SECTOR FOCUS OF THE DAY

Property Sector : Bandar Malaysia taking shape OVERWEIGHT

The Star, quoting property consultancy firm CH William Talhar, reported over the weekend that the development of Bandar Malaysia will likely be carried out via a consortium of developers. CH Williams is the transaction advisor for 1MDB RE Sdn Bhd, which is the master developer for the 486-acre Bandar Malaysia. Earlier last week, interested parties were invited to submit expressions of interest (EOI) to participate in the project. The deadline for submission has been set on 10 July. If things go as planned, the entire exercise could be wrapped up by October.

Unlike some other large redevelopment projects such as KWASA Damansara, Bandar Malaysia will not be carved out nor developed via a series of joint ventures. Instead, it will likely involve equity participation in nurturing the overall make-up of Bandar Malaysia. Via a screening process, we reckon that each potential bidder is required to make their own respective assumptions (e.g. land value, payment terms, and level of equity participation). The indicative land value will be determined on a gross basis, we understand. We believe it is still too early to pre-empt any potential beneficiaries as key details remain unknown (e.g. indicative land cost, plot ratio and effective land use) at this juncture. Likewise, the type of property components that can be absorbed by the market is another key consideration for the bidders to consider, we opine.

Maintain OVERWEIGHT on the property sector. While transaction volumes could remain insipid in the near term, we expect a bottoming of the property market towards the end of the year, as the market remains awash with liquidity. We also note of a gradual pick-up in presales activities of late, particularly within the landed segment or condos in strategic/good locations within the Klang Valley. We continue to favour Mah Sing, MRCB, Titijaya Land and E&O Properties for leverage to any recovery in the property sector.

Others :

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QUICK TAKES

Eastern & Oriental : RM31mil gain from Sg. Besi land sale               BUY

Plantation Sector : Newsflow for week 22 to 26 June       OVERWEIGHT

NEWS HIGHLIGHTS

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Automotive and Plantations Sector : Concerns about B10 mandate

DISCLAIMER:

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