KUALA LUMPUR: The government's efforts to rejuvenate Forest City are expected to create opportunities for construction jobs and lead to a potential spillover effect in the property market, according to analysts.
Hong Leong Investment Bank Bhd (HLIB Research) noted that with Forest City's designation as a Special Financial Zone (SFZ), future developments there are likely to witness increased government involvement.
As a result, it is possible that more local contractors will participate in the construction of Forest City, as opposed to the previous trend where Chinese contractors were primarily responsible.
"Broadly, we feel that Johor-based contractors such as Kimlun Corporation Bhd and Ekovest Bhd, as well as Sunway Construction Group Bhd (SunCon), which also has a strong presence there, could stand to benefit from this.
"For property developers, a more vibrant Forest City should have positive spill-over benefits to nearby areas, including townships such as Sunway Iskandar (Sunway) and Gerbang Nusajaya (UEMS)," it said in a note today.
HLIB Research reaffirmed its positive outlook on Forest City, pointing out that beyond the favourable macroeconomic factors (such as stable interest rates, improved economic growth, and a stronger ringgit), government incentives for special zones and an influx of investments are expected to continue supporting positive market sentiment for property stocks.
RHB Investment Bank Bhd (RHB Research) stated that it anticipates a growing demand for office space within Forest City and expects the existing residential properties to be gradually occupied over time.
"The real property gains tax for foreigners has also been "harmonised" to zero per cent after five years (just like the tax perk for Malaysians buying property there), and property buyers in Forest City will also enjoy a 50 per cent stamp duty exemption on property transfers and mortgage financing.
"Although the incentives are mainly centred around the Forest City, as more job opportunities are created, we will likely see more business activities in nearby areas like Nusajaya and Medini, benefiting the retail, entertainment, and food and beverage (F&B) sectors," it noted.
RHB Research also noted that UEM Sunrise Bhd, Sunway Bhd, and Eco World Development Group Bhd could potentially benefit from some spillover effects in the future.
The firm said the zero percent tax incentive for family offices within the Forest City SFZ initiative will position Forest City as a more affordable and tax-efficient alternative to Singapore for family offices.
"In Singapore, the number of single-family offices grew from 400 in 2020 to 1,400 in 2023 and 1,650 as of August 2024.
"Given that Forest City is developed by Country Garden—one of China's largest property developers—it could potentially attract family office setups from China.
"Though it is hard to quantify the impact, the potential flourishing of more family offices in Malaysia should be positive for Bursa Malaysia's average daily value (ADV) in the long run," it added.