Shanghai-based state developer Greenland Holding Group has established a joint venture with Iskandar Waterfront City to acquire 128 acres of land in South Johor for RM2.4bn. The JV will develop a RM3bn new waterfront city on the land in Tebrau Bay. (Bursa).

Comment:  We are upbeat on the development, as despite the current soft property  outlook  as  well  as  the  oversupply  issues  in  Iskandar  region,  the transacted  value  at  c.RM430  psf  is  the  highest  recorded  within  the  area. Recent  transactions  include;  i)  Iskandar  Waterfront  Holdings  sale  of   55 acres of land in Danga Bay to Country Gardens for RM376 psf in Dec-12; ii) Iskandar Waterfront Holdings’ sale of 37 acres of land in Danga Bay t o Hao Yuan Investment for RM998 psf in Dec-13; iii) Sale of 12 acre land to Macrolink Real Estate in Johor for RM322psf in Jan-14.

This suggest continued interest in the Iskandar region and may potentially have a positive spill-over impact on other developers. Developers under our coverage with presence in Johor includes Sunway Bhd (BUY; RM3.60 ) with about 1,830 acres of land and Tropicana (BUY; RM1.83) with 631 acres of land in the Southern region. Maintain NEUTRAL on the sector.

Source: Affin Hwang Capital Research - 22 Jan 2015