Johor’s Supercharged Growth Phase Will Boost The Property & Construction Sectors

 Growth Phase

The local property and construction sectors are set to benefit from Johor’s supercharged growth phase, spurred by government-led catalytic developments as well as influx of foreign and domestic direct investments.

Although the Iskandar Malaysia property market went through a challenging period in 2015-2021, major developers remain confident on the long-term outlook for the region.

Just recently, Sunway Group acquired the remaining 40 per cent stake of its 1,071-acre land in Pendas, while Eco World Development Bhd bought 404 acres of land in Kulai for industrial development.

According to RHB Research, Iskandar Malaysia has been an important market for many developers due to its landbank exposure and expanding property sales.

The firm maintains an “Overweight” rating on the real estate and construction sectors.

“We like UEM Sunrise Bhd and Sunway in the property space,” said the business.

Johor is humming with building activity, with quarterly construction work totaling RM3.8 billion in 2Q23, the highest in 13 quarters and the second highest among all states.

Concurrently, as of the end of August 2023, Johor had received RM9.6 billion in construction projects divided across 913 projects. Johor is barely behind Selangor in terms of the value of projects granted year to date in August.

RHB Research likes Sunway Construction Group Bhd, Kerjaya Prospek Group Bhd, and Malaysian Resources Corp Bhd in the construction sector, with Ekovest Bhd as a non-rated option.

Recent announcements on the Johor-Singapore special economic zones and updates on the projected Kuala Lumpur-Singapore high speed rail are major forthcoming events for the industry, according to RHB Research.

Related link: Malaysia’s Labour Market Continues To Recover Slowly

Given the visibility of development potential, it observed that progress on the Johor Bahru-Singapore Rapid Transit System (RTS) link project has greatly enhanced purchasers’ confidence.

“The RTS is a game changer, as increased cross-border traffic and the powerful ‘SGD (Singapore dollar) factor” are expected to help the local real estate sector, including housing, retail, and hotel.

“Demand for rental and houses in Johor’s central region is likely to grow more significantly in the coming years, while the influx of new investments is expected to lift the state’s gross domestic product per capita over time, translating into higher housing affordability in the long run,” it said.

Contractors were able to capitalise on Johor’s infrastructure revolution because of favourable employment conditions and more manageable building material price trends.

Contracting prospects in Johor include the remaining packages of the RTS project, Iskandar Rapid Transit, and data centres in industrial parks.

“Spillover effects from the growth in Iskandar Malaysia will benefit residential property contractors,” according to RHB Research.

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