UEM taps land-starved Singapore

KUALA LUMPUR: UEM Land Holdings Bhd., Malaysia's biggest developer by
market value, will start selling RM4 billion of new residential and
commercial projects this year, targeting Singaporean buyers.

About
three-fourths of new developments will be at Nusajaya city in the
southern Malaysian state of Johor where new condominium prices have more
than doubled since 2009, said Chief Executive Officer Datuk Wan
Abdullah Wan Ibrahim. That's within the 550,000-acre (222,600-hectare)
Iskandar Malaysia economic zone, promoted by the government to tap
demand from neighboring Singapore for everything from seafront homes to
oil storage.

"Land value in Nusajaya is gaining momentum," Wan
Abdullah said in a May 23 interview in Kuala Lumpur. "Investors are
seeing a trend that they like very much."

UEM Land is taking
advantage of the closer ties being fostered by the two Southeast Asian
countries after decades of arguments over issues including land
ownership have been resolved.

UEM Land announced RM4 billion
worth of projects in Iskandar in December, including an F1 racing test
track and an exhibition mall.

Malaysian Prime Minister Datuk Seri
Najib Razak and his Singapore counterpart Lee Hsien Loong have
announced plans for a high- speed rail link by 2020 that would cut the
300-kilometer (186- mile) journey from the island-city to Kuala Lumpur
to 90 minutes, with Lee saying the two capitals could be seen as twin
cities like London and Paris.

New Jersey

Singapore
companies have invested about S$2.5 billion (US$2 billion) in Iskandar
since it was set up in 2006, making the nation the largest foreign
investor, according to the Iskandar Regional Development Authority. The
zone is almost three times the size of New York City, while Singapore,
with 5.3 million inhabitants, is smaller than the U.S. metropolitan
area.

"The wealth they have in Singapore could certainly benefit
Malaysia as well, and Malaysia's hinterland will benefit Singapore,"
Najib said in an interview in April. "I told Prime Minister Hsien Loong
‘I don't mind, you can be the Manhattan, we'll be New Jersey. But we'll
prosper together.'"

UEM Land, based in Kuala Lumpur, is the
biggest landowner in the Iskandar region, according to brokerages Hwang
DBS Vickers Research Sdn. and CIMB Group Holdings Bhd. The company still
has 6,100 acres of land in the area to be developed, in addition to
3,500 acres outside Nusajaya, Wan Abdullah said.

The company, 65
percent owned by Khazanah Nasional Bhd., Malaysia's state-investment
company, is overseeing the development of Nusajaya, one of five zones in
Iskandar.

Price Surge

Selling prices per square foot for
new condominiums developed by UEM Land in Nusajaya have risen from RM310
in 2009 to RM480 in 2011 and RM800 in November, Wan Abdullah said,
citing past examples of several key projects.

Investors are
starting to pay attention. UEM Land has soared 57 percent this year,
outperforming a 4.9 percent advance in the benchmark FTSE Bursa Malaysia
KLCI Index and giving the stock the biggest gain on the 30-member stock
gauge.

The stock rose 1.2 percent to RM3.30 as of 9:09 a.m. in Kuala Lumpur trading, set for the largest increase in a week.

Eleven of 19 analysts tracked by Bloomberg recommend buying the stock, with five calling for a hold and three saying sell.

This
year is "absolutely" the right time to sell real estate in Iskandar,
said Terence Wong, an analyst at CIMB with the equivalent of a buy
rating on UEM Land.

"This year is better than any other year,"
Wong said in a telephone interview on May 23. "The corridor is getting a
lot of media attention, if you look at the press it's coming out
practically every day. Sales have been strong for any launches that have
taken place."

‘All-Time High'

Developers including UEM
Land are set to benefit from Najib's election victory earlier this month
that may spur more infrastructure spending, according to Bank of
America Corp.'s Merrill Lynch unit. The win gave the premier a mandate
to continue promoting an economic transformation program aimed at
drawing private-sector led investments this decade, including an oil and
gas hub around the Iskandar area.

"There was always this
suspicion that if Singapore doesn't accept, or doesn't play along with
all possibilities that Iskandar is presenting, then the Iskandar story
will not fly as high," Wan Abdullah said. "What is evident in the last
year, two years maybe, is the strengthening of the relationship. I'd say
the Malaysia and Singapore relationship is at an all-time high." --
BLOOMBERG