Maybank Investment Bank Bhd (Maybank IB) has maintained a NEUTRAL stance on Malaysia's property sector following the recent announcement of the Johor-Singapore Special Economic Zone (JS-SEZ). The move is expected to generate job creation and long-term property demand, driven by Singapore-facilitated investments.
The research house has acknowledged the potential of the JS-SEZ, but has noted that much of the positive impact is already reflected in current property valuations, which is why Maybank IB has stuck with its NEUTRAL call. The bank's top picks remain ECW and SPSB.
The JS-SEZ, covering the Iskandar Development Region and Pengerang, will now also include new priority areas such as Sedenak, Forest City, Pengerang Integrated Petroleum Complex, and Desaru. In addition to the existing focus areas of digital economy, manufacturing, and logistics, five new sectors— aerospace, electrical and electronics (E&E), medical devices, pharmaceuticals, and chemicals— have been added.
These sectors will benefit from special corporate tax incentives aimed at high-growth, value-added investments. The government is targeting the establishment of 50 projects within the first five years of the JS-SEZ's operation.
The strategic collaboration between Malaysia and Singapore offers a win-win situation for both countries. Malaysia's relatively cheaper real estate and labour costs make it an attractive location for Singaporean companies looking to expand, while Singapore's financial and logistical expertise will drive investments into the zone.
This is expected to significantly boost demand for residential, commercial, and industrial properties in the long run, fueled by population growth and the wealth effects of rising employment.
To support infrastructure development and business expansion within the JS-SEZ, both countries are expected to establish funds, further strengthening the zone's economic potential. Maybank IB believes that companies with strong track records and capable management will be well-positioned to benefit from the zone's growth.
Among the companies in the region, UEM Sunrise (UEMS), a major landowner with a sizable land bank of 4,783 acres in Iskandar Puteri, stands to benefit the most from the zone's expansion. However, the research house warned that much of the potential upside for UEMS may already be priced into the stock, and investors should consider capitalising on expectations that have been building since mid-2023.
