KUALA LUMPUR: Property developers in Kuala Lumpur may delay project launches due to new geotechnical investigation regulations, which could extend the approval process, according to CIMB Securities.
Construction approvals in the city were temporarily suspended after a sinkhole incident on Jalan Masjid India in late August 2024.
Under the new regulations, applications for Kuala Lumpur planning licenses must now include geotechnical assessments conducted by certified experts. The government is also considering expanding the requirement to include assessments of flat terrain in addition to sloped areas.
CIMB Securities expects developers such as SP Setia Bhd, Malaysian Resources Corp Bhd (MRCB), and IJM Corp Bhd to postpone their project launches.
"From our channel checks, SP Setia, MRCB, and IJM Corp have indicated that the new rulings have pushed back some of their planned launches in Kuala Lumpur," it said in a note recently.
"However, Mah Sing has not faced any issues in obtaining clearance for any of its Kuala Lumpur projects, which already incorporate certified geotechnical studies beforehand to expedite the application process.
"This includes its latest project in Kuala Lumpur, M Aspira, which officially unveiled its sales gallery on Nov 20, 2024," the firm said in a note.
Despite the year-to-date outperformance of Bursa Malaysia's Property Index compared to the FBM KLCI benchmark, CIMB Securities maintains a "neutral" outlook on the property sector.
While sector earnings and property launches in the first nine months of 2024 generally met or exceeded expectations, these were partly driven by strategic land sales.
"Moreover, we doubt sentiment-driven interest in Johor-related property names can hold up without the successful launch of the Johor-Singapore Special Economic Zone (JS-SEZ), which has been pushed back to January 2025, and the planned revival of the Johor-Singapore High Speed Rail project."
Looking ahead to 2025, CIMB Securities anticipates increased land monetisation deals, fuelled by growing demand for data centre (DC) investments driven by the expansion of cloud and artificial intelligence (AI) sectors in Malaysia.