“Forest City SFZ incentives expected to drive Iskandar Malaysia’s property growth, with potential benefits for developers like UEM Sunrise, Sunway, and EcoWorld.”
Kuala Lumpur, 23th Sept 2024, 01.17pm – The recently announced incentives for Forest City’s Special Financial Zone (SFZ) are anticipated to boost the real estate sector, especially in the Iskandar Malaysia region.
RHB highlighted in a note on Monday that the incentive package for Forest City SFZ is substantial and is expected to positively impact Iskandar Malaysia in the long term, particularly in terms of increased demand for property, as well as commercial and retail activities.
Additionally, the research firm pointed out that developers such as UEM Sunrise, Sunway Bhd, and Eco World Development Group Bhd stand to benefit from this surge in activity.
The incentives aimed at positioning Forest City as a hub for family offices are expected to draw both local and international investments, boosting property demand and creating long-term job opportunities.
RHB noted on Monday that if the ecosystem, including regulations and infrastructure, is well established, Forest City’s push for family offices is logical, given its proximity to Singapore—a regional hub for family offices.
Forest City’s location near Singapore, a major financial center in the region, makes it a strategic choice for asset management companies, financial institutions, and high-net-worth individuals.
Additionally, some institutions based in Singapore have already expressed interest in the Special Financial Zone (SFZ), awaiting official guidelines from the Securities Commission Malaysia (SC).
Although the incentives are anticipated to attract high-net-worth individuals to Forest City, they may have less appeal to the ultra-wealthy segment.
To further encourage property investments, the incentive package offers a harmonized 0% real property gains tax for foreign buyers after five years, along with a 50% stamp duty exemption on property transfers.
“While the incentives are primarily focused on Forest City, the creation of more job opportunities is expected to stimulate business activities in surrounding areas like Nusajaya and Medini, positively impacting the retail, entertainment, and F&B sectors,” the note stated.
RHB maintained its “overweight” rating on the real estate sector, citing a favorable macroeconomic environment with stable interest rates, improving economic growth, and increased investment inflows.
The research house also highlighted that the potential revival of the Kuala Lumpur-Singapore high-speed rail (KL-SG HSR) project could significantly boost the property market.
“If this mega infrastructure project is brought back, it would act as a major catalyst for the entire property sector. Not only would developers in Iskandar Malaysia, particularly in the Nusajaya area, benefit, but those with landbank along the route from Singapore to Kuala Lumpur would also see improved development prospects,” the note added.
The bank’s top picks in the sector include Sime Darby Property Bhd (target price (TP): RM2.00), Mah Sing Group Bhd (TP: RM2.26), UEM Sunrise (TP: RM1.60), and Sunway (TP: RM5.00), all of which are given “buy” ratings.
