Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: HWANGDBS
Property sector
Gaining traction: We sense an improved appetite for Malaysia after meeting 26 funds in six cities over five days during DBS Vickers' roadshow in the US.
Few have heard of Malaysia's Economic Transformation Programme (ETP), although most have yet to invest in Malaysia.
Most of the funds found our mass rapid transit (MRT) property story fresh and agreed that the RM48 billion MRT will be a huge structural catalyst for Kuala Lumpur real estate given the large multiplier effect (RM210 billion over 10 years) and 12 years of under-investment in KL.
They concur that the major winners will be owners of large landbank near interchanges with potential for high density mixed developments (benefit from plot ratio expansion).
While contractors and banks will also benefit, existing landowners will be direct winners and reap better margins. Malaysia is also seen as a safe haven with lower policy risk, a young population, strong commodity-led economy, and strengthening ringgit.
Key concerns include execution risks, political support and funding, which we have addressed as non-show-stoppers.
We understand the MRT Circle Line study is in the final stages and will likely be presented to the Cabinet next month. Land grab for MRT sites has started, including a possible legal tussle for Johor Corp's commercial blocks at Pusat Bandar Damansara (interchange for MRT Blue Line and Circle Line ' largest landowners in the area are Selangor Properties with 13.7ha and Guocoland 3.4ha).
We expect more news flow on the redevelopment of government land along MRT lines.
The sector is seeing new benchmarks for price and volume: (i) Binjai On The Park@KLCC luxury condominiums were recently transacted at RM3,000 psf (+15% y-o-y), while Mansions@Desa Park City link houses achieved 86% take-up at RM2.7 million to RM7.5 million a unit; and (ii) S P Setia launched KL Eco-City condos last weekend to priority registrants at RM1,200 psf (10% above the RM1,100 psf initial target), with 70% to 75% booked (loft units almost fully sold at RM1,400 to RM1,500 psf). The public launch will be sometime this week.
The average selling price is more than 40% above the prices of adjacent properties ' demonstrating S P Setia's pricing power. At 708 units, this is one of the biggest launches at-one-go since the 1990s property heyday, following YTL Land's Capers@Sentul East's 466 units launched in April this year, which was sold out in a week.
The attractiveness of KL Eco-City's location ' opposite Mid Valley ' is further boosted by an MRT station (Circle Line) and S P Setia's strong branding. ' Hwang DBS Vickers Research, May 23
This article appeared in The Edge Financial Daily, May 24, 2011.
Company Name: SP SETIA BHD
Research House: HWANGDBS
Property sector
Gaining traction: We sense an improved appetite for Malaysia after meeting 26 funds in six cities over five days during DBS Vickers' roadshow in the US.
Few have heard of Malaysia's Economic Transformation Programme (ETP), although most have yet to invest in Malaysia.
Most of the funds found our mass rapid transit (MRT) property story fresh and agreed that the RM48 billion MRT will be a huge structural catalyst for Kuala Lumpur real estate given the large multiplier effect (RM210 billion over 10 years) and 12 years of under-investment in KL.
They concur that the major winners will be owners of large landbank near interchanges with potential for high density mixed developments (benefit from plot ratio expansion).
While contractors and banks will also benefit, existing landowners will be direct winners and reap better margins. Malaysia is also seen as a safe haven with lower policy risk, a young population, strong commodity-led economy, and strengthening ringgit.
Key concerns include execution risks, political support and funding, which we have addressed as non-show-stoppers.
We understand the MRT Circle Line study is in the final stages and will likely be presented to the Cabinet next month. Land grab for MRT sites has started, including a possible legal tussle for Johor Corp's commercial blocks at Pusat Bandar Damansara (interchange for MRT Blue Line and Circle Line ' largest landowners in the area are Selangor Properties with 13.7ha and Guocoland 3.4ha).
We expect more news flow on the redevelopment of government land along MRT lines.
The sector is seeing new benchmarks for price and volume: (i) Binjai On The Park@KLCC luxury condominiums were recently transacted at RM3,000 psf (+15% y-o-y), while Mansions@Desa Park City link houses achieved 86% take-up at RM2.7 million to RM7.5 million a unit; and (ii) S P Setia launched KL Eco-City condos last weekend to priority registrants at RM1,200 psf (10% above the RM1,100 psf initial target), with 70% to 75% booked (loft units almost fully sold at RM1,400 to RM1,500 psf). The public launch will be sometime this week.
The average selling price is more than 40% above the prices of adjacent properties ' demonstrating S P Setia's pricing power. At 708 units, this is one of the biggest launches at-one-go since the 1990s property heyday, following YTL Land's Capers@Sentul East's 466 units launched in April this year, which was sold out in a week.
The attractiveness of KL Eco-City's location ' opposite Mid Valley ' is further boosted by an MRT station (Circle Line) and S P Setia's strong branding. ' Hwang DBS Vickers Research, May 23
This article appeared in The Edge Financial Daily, May 24, 2011.
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