AmWatch - Property Sector : Airbase relocation by end-next year OVERWEIGHT, 3 Jul 2015

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Property Sector : Airbase relocation by end-next year    OVERWEIGHT

The Edge Financial Daily reported that relocation activities for the Royal Malaysian Air Force (RMAF) Sg. Besi airbase has commenced with expected completion by the end of next year.  The airbase – also known as Sg.Besi old airport – is located in Jln Lapangan Terbang Lama. The airbase has been earmarked to be relocated to different sites in the country to make way for the development of Bandar Malaysia, of which 1MBD Real Estate Sdn Bhd (1MDB RE) is the master developer.

The proposed Bandar Malaysia development will then be located at the current Pangkalan Udara KL (RMAF) site in Sg Besi. To be sure, 1MDB RE has been tasked with developing the new air force sites for the RMAF, Royal Artillery Regiment (31 RAD) and the air wing of the Royal Malaysia Police (PDRM).

RMAF will be relocated to five sites – Subang (Selangor), Kuantan (Pahang), Sendayan (Negeri Sembilan), Buterworth (Penang) and Gong Kedak (Terengganu). Meanwhile, PDRM will be relocated to Subang in Selangor as well as Ipoh in Perak. The 31 RAD will be relocated to Kajang in Selangor. The construction of Bandar Malaysia is expected to begin in 2017. In our previous sector updates, we had indicated that the results of the expressions of interest (EOI) to participate in the Bandar Malaysia redevelopment could be known by October.

Bandar Malaysia (along with the TRX, KWASA Damansara, and Menara Warisan Merdeka), is among several prime government redevelopment projects that are set to take off over the next few years. We retain our OVERWEIGHT call 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. On a bottom-up approach, we continue to favour Mah Sing, MRCB, Titijaya Land and E&O Properties for leverage to any recovery in the property market.

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