- Starbiz reported today that MRCB is in the lead in the race to acquire the French embassy land in KL under a competitive tender. The tender exercise had reportedly closed on 12 February.

- The French embassy land, comprising two parcels, has a combined acreage of ~8 acres. One portion has a residential title, while the other sits on an institutional land.

- It is located along Jalan Ampang, opposite the former British High Commission which was sold to SP Setia in 2012. The latter then bought the said 3-acre tract of land for RM2,200psf or at a 47% premium to its reserve price of RM1,500psf.

- According to the report, the French embassy land – conducted via a competitive tender – will be sold for ~RM1.1bil or c.RM3,188psf.

- If the news is true, this is the second tract of embassy land that MRCB is eyeing after it won a tender for the German embassy land (~2-acres) located at Jln. Kia Peng within the city centre.

- The German embassy land – on which sits a house with an attached ancillary building – was also acquired at ~RM3,188psf or RM259mil. This translates into a ~6% premium to the value appraised by independent valuers.

- More importantly, this latest development vindicates MRCB’s increasing capabilities to source for prime development land within the Klang Valley. The 7.9-acre French embassy land is one of the last remaining tracts of sizeable land within the Klang Valley with an immediate development potential, and possibly, an attractive plot ratio.

- Overall, the news validates our earlier conviction of sustained levels of property transactions that may imply a continuation of landbanking newsflow in the months ahead.

- By extension, we believe select property developers (e.g. MRCB, IJM Land, Mah Sing Group and Gamuda Land) are capitalising on the current property downcycle to rebuild their landbank in anticipation of the next property upcycle.

- We retain our OVERWEIGHT call on the property sector, as we believe the deep discount that developers within our coverage are currently trading at, have already priced-in any market weaknesses in the near term.

- Aside from MRCB, our other top property picks are Mah Sing, IJM Corp (post-merger with IJM Land), E&O Properties, and Titijaya Land.

Source: AmeSecurities Research - 13 Apr 2015