KUALA LUMPUR: RHB Research has maintained its "overweight" rating on the property real estate sector, with top choices UEM Sunrise Bhd and Sunway Bhd.
This followed Prime Minister Datuk Seri Anwar Ibrahim's announcement on Friday that Forest City, a multibillion-dollar development project in Iskandar Puteri, southern Johor, had been classified as a Special Financial Zone (SFZ).
Analyst Loong Kok Wen believes that given the huge land resources and well-developed infrastructure and connectivity, more catalytic activities may likely shift towards the Second Link area.
"UEM Sunrise remains the best proxy for this Johor thematic play, followed by Sunway, given their sizeable exposure to the state's property market," she said in a note today.
Loong said that the move will help to reinvigorate the Forest City township, which has received a lot of negative press in recent years.
This SFZ, located immediately next to the southern Malaysian gateway, wants to attract corporates facing high operational costs in Singapore, as well as residents experiencing high housing and education costs in Singapore, she said.
"While details are still lacking, these incentives should help to encourage more business activities around areas near to the Second Link going forward," said Loong.
Nearby Forest City, major landowners include UEM Sunrise (Gerbang Nusajaya 2,419 acres) and Sunway (Sunway City Iskandar Puteri, 1,800 acres) and SP Setia (Tanjung Kupang, 307 acres).
Depending on the extent of the spillover, these developers should benefit from greater commercial activities and population flow as more job opportunities are created at Forest City in future.
Among the incentives proposed are multiple entry visas, fast track entrance for individuals working in Singapore, and a 15 per cent flat income tax rate for knowledge workers.
She believes industry participants would be anticipating the launch of the SFZ because it will cover certain industrial and new economic sectors (such as data centres and renewable energy).
The governments of Johor and Singapore are also discussing the possibility of launching further ferry services, and will study the sustainability of a prospective new route between Puteri Harbour and Tuas.
Unlike the already congested Johor Bahru city centre or the area surrounding the causeway, the Second Link area has lots of landbank as well as well-developed infrastructure and facilities.
Furthermore, it is close to a large seaport, the Port of Tanjung Pelepas, and the intended Kuala Lumpur-Singapore High Speed Rail (HSR) station may be relocated to Gerbang Nusajaya (as it was previously planned).
This should allow for effective future development planning, Loong said.
RHB's top selections include UEM Sunrise, which is still a BUY with a TP of RM0.92, IOI Properties, which is a BUY with a TP of RM1.46, and Matrix Concepts, which is a BUY with a TP of RM1.88.