Complete Property Market Updates of Singapore

May 12, 2008

UEM Land eyes new projects

Filed under: Developer News,General,Malaysia — Propertymarketupdates @ 3:33 am

Move comes ahead of its Sept listing; firm may also invest overseas from 2010

UEM Land Sdn, developer of Malaysia’s biggest commercial and housing project, plans to start real estate investment trusts (Reits) and new property developments as it prepares for a listing this year.

State-controlled UEM Land may also invest overseas from 2010 to emulate CapitaLand Ltd, South-east Asia’s largest property company, managing director Wan Abdullah Wan Ibrahim said on Tuesday. The Kuala Lumpur-based company now derives almost all its earnings from the Nusajaya development in Johor state.

‘We aspire to be something of that size and that diversified,’ Wan Abdullah said in an interview in Kuala Lumpur, referring to Singapore-based CapitaLand. ‘We even have initiatives like Reits on the table. We cannot rely on just Nusajaya to be our bread and butter.’

UEM Land, controlled by UEM World Bhd, is due to start trading in Kuala Lumpur by September in a reorganisation to attract investors to the group’s real estate unit. The company wants to cut its reliance on Nusajaya, a 9,712ha development backed by the Malaysian government.

Malaysia’s ruling coalition, in power since independence in 1957, suffered its worst election losses on March 8. Some analysts raised concern the result may slow state-backed projects such as Nusajaya.

‘Investors still fear for some reason that projects may not be deployed as strongly as they would have been,’ said Vincent Khoo, head of research at Aseambankers Malaysia Bhd in Kuala Lumpur. ‘There’s enough uncertainty on this project.’

Shares of UEM World, Malaysia’s third-biggest construction company, yesterday climbed 1.8 per cent to RM3.38 as of 11.01am in Kuala Lumpur, giving the company a market value of RM4.7 billion (S$2 billion).

UEM World has dropped 18 per cent since the plan to list UEM Land was announced on Feb 15, and is down 14 per cent this year. Other government-linked stocks including power producer Tenaga Nasional Bhd have declined since the March election.

CapitaLand is up 8 per cent in 2008 and valued at S$19.1 billion. Its Reits and investments span more than 20 countries, according to the company’s website.

Under the UEM reorganisation, investors in UEM World will receive 125 UEM Land shares and RM125.8 in cash for every 100 UEM World shares held.

Wan Abdullah said UEM Land plans to sign an agreement next month to buy a 100 acre plot in Selangor, the state surrounding Kuala Lumpur, for about RM110 million. The company is also considering buying land in Kuala Lumpur and Penang, he said.

The Nusajaya project in Johor includes a marina, a hospital, offices and homes. Malaysia’s government said last month it is in talks with Walt Disney Co and other theme park operators for a resort at the development.

Any overseas investments by UEM Land will be made in 2010 ‘at the earliest’, Wan Abdullah said. Even with other investments in Malaysia, Nusajaya will provide about 80 per cent of the company’s profit, he said.

‘For the next two years, we have to focus on the delivery on Nusajaya,’ he said. ‘But that does not mean that we totally hide ourselves from global opportunities.’

The company plans to announce as early as this month the sale of 16 ha of land to a foreign company at the Nusajaya marina, and a joint venture with a local business, Wan Abdullah said. He declined to give a value for the transactions. — Bloomberg

Source : Business Times – 8 May 2008

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