1MDB: Real estate project stake sale likely to boost property sector

1MDB: Real estate project stake sale likely to boost property sector

KUALA LUMPUR (NewsRise) - 1 Malaysia Development Bhd's 60 per cent stake sale in a Kuala Lumpur real estate project for 7.41 billion ringgit (S$2.4 billion) is likely to be a shot in the arm for the country's property sector as new investors are expected to flock in to participate in an ambitious 25-year development exercise that is estimated to amount to US$35 billion (S$50 billion) upon completion.

1MDB, a state investment firm, which is selling the stake in the so-called Bandar Malaysia project to Iskandar Waterfront Holdings and its partner China Railway Engineering Corp., hopes to ink a definitive agreement with the buyers by June this year. If the deal is successful, it will help kick start development of the 495-acre project - an old air base flanking the city centre - that was initially mooted more than five years ago.

The sale is also expected to accelerate property development initiatives, that analysts say could spark broader multi-year economic benefits cascading through the sector. While the Bandar Malaysia project is likely to set a pricing benchmark for similar land parcels, it is expected to attract fresh investments and offer varied opportunities to construction-to-transport-to-hospitality sectors, boosting gains for the Malaysian property market.

"We only expect the actual development of Bandar Malaysia to take off in 2018," said AmResearch analyst Mak Hoy Ken. "Yet, we believe the monetisation of Bandar Malaysia -- either directly or indirectly -- has significant positive implications on the Malaysian property market."

Bandar Malaysia is estimated to generate a gross development value of 150 billion ringgit when it is fully developed in 25 years, according to 1MDB. Apart from residential, commercial and other facilities, the project will also be the terminus for a proposed high speed rail road linking Singapore.

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